BusinessStudiesEM041012 PDF

Lesson-1
INTRODUCTION TO BUSINESS
I. LONG ANSWER QUESTIONS (5 Marks)

1. What is business? Describe the characteristics of business.
Ans: Business refers to an occupation in which goods and services are produced, sold and
exchanged in return of money.
Features: The essential characteristics of business are as follows:
i. Deals in production and distribution of goods and services.
ii. Sale or exchange of goods and services.
iii. Production, buying and selling activities must be carried out on a regular basis.
iv. Requires some amount of investment in terms of land, labour or capital.
v. Aims at earning income by way of profit.
vi. Involves risk and uncertainty of income.
2. Distinguish between profession and business.
Ans:
Profession Business
i. It refers to an occupation, which requires i. It refers to regular production or purchase of
specialized knowledge and training to pursue goods and services for sale, transfer and
it. exchange.
ii. The primary objective is to provide service. ii. The main objective is to earn profit.
iii. It does not involve risk and uncertainty. iii. It involves risk and uncertainty of income.
3. Describe the importance of business in modern society.

Ans: Business is an integral part of modern society. It is an organized and systematic activity
for earning profit. The importance of business in modern society can be described as
follows:
i. Business improves the standard of living of the people by providing better quality
and quantity of goods and services at the right time.
ii. It provides opportunities to work and earn a livelihood.
iii. It utilizes the scarce resources of the nation and facilitates mass production of goods
and services.
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iv. It improves national image by producing and exporting quality of goods and
services to foreign counties.
v. It enables its people of a county to use quality of goods of international standard.
vi. It gives better returns to the investors on their investment.
vii. It promotes national integration by providing services, cultural programs etc.
viii. It facilitates international harmony and peace
ix. It helps to the development of science and technology.
x. It encourages research and development in search of new products and services.
4. What will happen if there is no business activity in the world? Express your opinion
in about 100 words. (Or) What are the implications in the absence of business
activity in the world? Express your opinion in about 100 words.
Ans:
i. In the absence of business activity mass production of essential goods will come to a
standstill thereby affecting the living standards.
ii. Employment potential will go down and there will be no sources of livelihood.
iii. Export and import of goods cease to exist and people will not find the accessibility to
essential commodities.
iv. In the absence of business activity, there is no scope for innovative business practices
and scientific technological advancements.
v. It will also affect bilateral relations between and among the countries.
vi. Lack of business ties among the nations will adversely affect peace and harmony.
Therefore, it may be concluded that the modern society cannot exist without
business.
II. SHORT ANSWER QUESTIONS (3 Marks)

1. Define economic and non-economic activities.
Ans: The activities performed by a human being with an objective to earn money are known as
“economic activity”. For example, a farmer grows crops, a labour works and gets wages,
a business man earn profit through trading.
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Activities, which are not performed to earn money but to get some satisfaction,
are called “non economic activities”. For example, gardening, listening to radio, watching
TV.
2. What is meant by an occupation? Mention different types of occupation.
Ans: When an individual is regularly engaged in a particular economic activity, it is known as
his/her “occupation”.
In simple words, economic activities undertaken on a regular basis to earn one‟s
livelihood are called occupations. Occupations are of three types viz. profession,
employment, and business.
3. Define the term “business”.
Ans: Business is “an activity involving regular production or purchase of goods and
services for sale, transfer and exchange with the objective of earning profit.
In simple words, any activity carried out with the objective of earning profit is
called “business”.
4. What is industry?
Ans: Industry refers to the production of goods and services through the use of human and
material resources. The process of extraction, production, processing of products is
described as industry.
5. What is commerce?
Ans: Commerce is concerned with the exchange of goods and services. It includes all those
activities which are related to the transfer of goods from place of production to the
ultimate consumer. It tries to deliver the right goods at the right time to the right persons
at the right place and at the right price. It brings the gap between the producers and
consumers. Hence, in an equation form commerce = Trade + Aids to trade.
6. What is meant by „employment‟?
Ans: Employment refers to an occupation in which a person works regularly for others and
gets wages/salary in return.
7. What are the features of employment?
Ans: The main characteristics of employment are as follows:
 Work for others
 Terms and conditions
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 Fixed income
8. Define the term profession?
Ans: Profession refers to an occupation, which requires specialized knowledge and training to
pursue it.
9. Explain the features of profession.
Ans: The main features of the profession are as follows:
 Specialized knowledge
 Service motive
 Regulated by professional body
 Code of conduct
10. Describe the broad categories of human activities.
Ans: The activities undertaken by a human beings are known as human activities. These are
broadly classified into two categories viz. economic activities and non economic
activities.
11. Explain the three types of occupations people are generally engaged in.
Ans: Occupations may be classified into three broad categories:
 Profession
 Employment
 Business
12. Distinguish between economic and non economic activities on the basis of purpose
and outcome.
Ans:
Basis Economic activities Non-economic activities
i. Purpose Economic motive Social and psychological motive
ii. Outcome Lead to creation of wealth and assets. Lead to satisfaction and happiness
13. Describe the broad categories of business activities.

Ans: Business is an organized and systematic activity for earning profit. Broadly, business
activities are classified into two categories:
 Industrial activities, and
 Commercial activities.
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III. VERY SHORT ANSWER QUESTIONS
(A) One Mark Questions
1. What is the primary objective of profession?
Ans: Providing/ rendering service.
2. List out the various types of occupations.
Ans: Profession, employment and business.
3. Which activities are performed to discharge social obligations?
Ans: Non-economic activities.
4. What in modern society the activities undertaken with the objective of earning profit is
known as?
Ans: Business.
Fill in the blanks with appropriate words:
1. The primary objective of business is ---------------
2. Activity, which an individual undertake is known as ---------
3. Activity, which is performed with an objective to earn one‟s livelihood is known as------
4. Activity, which is not performed with an objective to earn money but to get some
satisfaction is called ---------------
5. A doctor treating his/her patients in his clinic is engaged in ------------
6. Distributing food to beggars outside the temple is a -------
7. The economic activity in which one is engaged on a regular basis is called his/her --------
8. A professional requires ----------- and training in a particular field.
9. The occupation in which people work for others and earn fixed income is called ---------
10. The terms and conditions of employment are decided by the -------------
11. The business activities concerned with sale or exchange of goods and services are called
---------- activities.
12. ---------------- activities include production or extraction of goods using various resources.
13. The activities that help in carrying goods from the factory to the market, providing
money to business, storing of goods etc are known as --------------
14. A professional body regulates every profession by laying down the ----------------- for all
professionals.
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Ans: 1. Profit earning 2. Human activities 3. Economic activities 4. Non-economic activities 5.
Economic activities 6. Non-economic activity 7. Occupation 8. Specialised knowledge 9.
Employment 10. Employer 11. Commercial 12. Industrial 13. Auxiliaries to trade 14.
Code of conduct.
(B) 1/2 Mark Questions.
A. State whether the following statements are true or false, by writing „T‟ against true
statement and „F‟ against false statement.
i. A mother stitching clothes for her children is engaged in an economic activity. [ ]
ii. A tailor stitching clothes for his customers is engaged in an economic activity. [ ]
iii. Sachin Tendulkar playing cricket for the country is performing a non-economic [ ]
activity
Ans: i-F, ii-T, iii-F
B. In the following list of activities, state which economic activities are and which are
non-economic activities.
i. Playing football with friends
ii. Teaching in a school
iii. Attending to one‟s relative who is unwell
iv. Listening to radio
v. Selling fruits and vegetables in the local market
vi. Preparing food at home
vii. Working in an office
Ans: i. Non-economic, ii. Economic, iii. Non-economic, iv. Non-economic, v. Economic, vi.
Non-economic, vii. Economic.
C. Rohan, a shop-keeper is engaged in a number of activities, which he calls as
business. Examine each of them and state whether you agree with him.
Write „AGREE‟ or „DISAGREE‟ against each statement.
i. Rohan sold bread to customers in his shop
ii. He bought a pen to gift it to his younger sister
iii. He sold his old television to his neighbour for Rs.3000
iv. He bought eggs from the poultry farm to sell to his customers
v. He sells a packet of milk worth Rs. 30 to a customer for Rs.34.
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vi. He bought vegetables worth Rs. 30 for his house.
vii. He distributed biscuits free of cost to poor children from his shop.
Ans: i. Agree, ii. Disagree, iii. Disagree, iv. Agree, v. Agree, vi. Disagree, vii. Disagree.
D. Given below are some statements about business. Some are right and some are
wrong. Write „R‟ against right statements and „W‟ against wrong statements:
i. Business has no role to play in national integration as it only deals in goods and services.
ii. Business does not contribute to improvement in the standard of living of the people.
iii. Industrial research is carried out to develop new and innovative products.
iv. Business does not allow import of goods from foreign countries.
v. Business helps in reducing poverty by generating employment.
vi. Business creates a positive image of the country through display and sale of our products
in international trade fairs and exhibitions.
Ans: i-W, ii-W, iii-R, iv-W, v-R, vi-R.
E. Match the following.
i. Profession [ ] a. Earn money
ii. Employment [ ] b. Specialized knowledge and training
iii. Business [ ] c. Wages
Ans: i-b, ii-c, iii-a
F. Match the following
i Transport, banking, insurance and warehousing [ ] a. Industrial activities
ii Growing crops and plants, extracting oil, natural gas and [ ] b. None-economic activities
minerals, processing raw-materials into finished goods
iii Helping poor people, gardening, engaging sports [ ] c. Commercial activities
activities.
Ans: i-c, ii-a, iii-b

G. Match the phrases in column A with those in column B:
Column A Column B
a. Primary objective of business [ ] i. Special skill
b. Primary objective of profession [ ] ii. Making profit
c. Essential requirement for a vocation [ ] iii. Profession
d. Occupation of a Chartered Accountant [ ] iv. Providing service
Ans: a-ii, b-iv, c-i, d-iii
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Lesson-2
INDIAN BUSINESS HERITAGE
1. Describe how trade flourished in India during the ancient period.
Ans: There were a large number of settlements around Saraswati River, which sustained a
maritime civilization and metal based economy around 3000 B.C. The western coast of
India has been a scene of great maritime and commercial activity. India had flourishing
trade with Babylonia, Egypt, Greece and Rome in 6th century B.C. Since 7th century A.D.
India developed trade contacts with the Arabs. The Arabs gradually became a link
between India and Europe. The exports included birds, beasts, horses, iron, cotton goods,
spices, cereals and jewellery made of gold and silver, precious stones and above all silk.
2. What is the impact of the industrial revolution on Indian industries? Explain.
Ans: India became the major market for consumption of all the manufactured goods and it was
also the major supplier of raw materials. India‟s produced items could not stand in
competition with British items as they were cheap and of superior quality. Many
industries were started in India during this period because of and easy availability of
labour. These industries used to be place of exploitation of workers.
India entered into machine based mass production. The national economy was
shattered, the artisans of India were left with no option but to turn to factories as workers
and the farmers spent all their money in buying products. Cottage and handicraft
industries suffered adversely because the flow of textiles and machine based goods from
abroad.
3. Describe the important events that influenced Indian business during the British
rule.
Ans: The following events during the British rule influenced the shape of Indian business.
i. Railways: Railway revolutionized the Indian transport system. These mode of
communication opened new frontiers for business at distant locations. Movement of
people and goods fostered the growth of every business.
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ii. Post and Telegraphs: During the same period telegraph was introduced in India. These
played a major role in breaking the barriers of time and distance. Post and telegraphs
were modernized by passing Post and Telegraphs Act in 1854.
iii. Industrial Revolution: India became the major market for the consumption of all
manufacturing goods and it was also the major supplier of the raw materials. Cottage and
handicraft industries suffered adversely because the flow of textiles and machine made
goods from abroad.
4. “India has contributed significantly to the world of business”. Describe any two
such contributions to support this statement.
Ans: India has contributed significantly to the World of business right from the beginning.
The modern day mantras have their origin in the past practices of India. Let us look into
some of the major contributions.
i. The Number and Decimal System: Indians were the first to express the nine numerals
together with a zero sign and place notation. Indians understood the importance of
positive and negative quantities evolved system of extracting square and cube roots and
could solve quadratic type of equations. They developed an exhaustive vocabulary for
naming numbers to facilitate calculations, subtraction, multiplication and division.
Aryabatta calculated the value of pie.
ii. Joint Hindu Family Business System: A unique feature of the ancient Indian social life
has been the joint hindu family system, wherein all the members of the family used to
live together but the Kartha (the head) of the family used to manage the business for the
benefit of all its family members. It continues to be an important form of business
organization even today and is given a separate status in the Indian legal system.
iii. Division of Labour: It is an indispensable ingredient of any organization. It means, work
should be distributed among individuals on the basis of specialization.
iv. Hundies: For credit transactions, an indigenous financial instrument has been in use in
India since the Mughal period, called „hundi‟. The hundies were used for safe transfer of
money without carrying actual cash from one place to another.
v. Customer Orientation: The latest concern of business today is how to create and retain
customers. For this, the focus is now on customers. Starting from designing for a product
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to after sales service of the product, every thing now is customer focused. This system
was available in India since the ancient time.
vi. Emphasis on Quality: Indians had always given emphasis to quality over quantity.
Indian artisans used to produce goods of best quality and paid individual attention to the
products. This helped them specialized in producing a typical product, which varied from
area to area and earned them recognition.
All this suggests that India not only had a rich cultural heritage but it had also contributed
a great deal in influencing the system of business and trade to bring it to the modern
times.
1. What is meant by the „barter systems‟?
Ans: Goods exchanged for goods is known as barter system. In ancient period, trade was
mostly practiced under this system. But difficulty in handling goods and fixing the
exchange values of the goods led to the use of some common items like shells, conches,
food items etc. as medium of exchange.
2. What do you understand by the term „hundies‟?
Ans: For the credit transactions, an indigenous financial instrument has been in use in India
since the Mughal period, called „hundi‟. The hundi or bills of exchange were used for
safe and convenient transfer of money from one place to another. They bore no seal or
signature of witness, but were always honored.
3. What is meant by industrial revolution?
Ans: Industrial revolution refers to the shifting from a traditional agriculture based
economy to one based on the mechanized production of manufactured goods in large-
scale enterprises.
4. What are the major trade routes in India during the ancient period?
Ans: The main trade routes in India are as follows:
i. Grand trunk road.
ii. Agra linked-up with the Central Asian routes at Qandhar via Delhi, Lahore and
Kabul.
iii. Agra to Patna.
iv. Surat, Agra via Western Rajasthan.
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v. Agra to Surat via Malwa and Khandesh.
5. What is meant by joint Hindu family business system?
Ans: All the members of the family including the brother, sons and grand children used to live
together under the guidance and supervision of the head (kartha) of the family for the
benefit of all its members is called “joint hindu family”.
6. Explain the ship-building industry in ancient India?
Ans: Ship-building has been a great industry in India. India had been engaged in plying boats
and ships, carrying cargos and passengers, manufacturing vessels of all types and
dimensions, studying the stars and wind, erecting light houses and building ports, wharts,
dockyards and warkhorses. India was in the forefront in this field and Indians ships
flying its flag sailed-up and down the Arabian sea, the bay of Bengal, the Indian ocean
and far beyond.
(A) One Mark Questions.
1. What are the four varnas according to Rig Vedic society?
Ans: Bramhanas, Kshatriyas, Vaishyas and Sudras.
2. The great Grand Trunk Road was constructed that ranges between?
Ans: Indus River from West to Sonargaon (Bangladesh)
3. Name any two great Indian mathematicians of the past?
Ans: Aryabatta, Katyayan.
4. Who are the owners of a Joint Hindu Family business?
Ans: All the male members of the family, including the minors.
5. Where did industrial revolution brakeout?
Ans: Great Britain
6. Who introduced the rupee as a medium of exchange?
Ans: In 1835 the East India Company.
7. Why did Selucus send his men to ancient Indian tribes?
Ans: To learn the art of manufacturing swords.
8. How was the blue colour made by Indian dyers?
Ans: From herbs.
9. What is meant by „Karkhanas‟?
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Ans: The workshop where the articles of royal use e.g. caps, curtains, tapestry etc. were
produced.
10. List three items of Indian exports during the medieval period.
Ans: Jewels, pearls, ivory, sandal wood, clove, pepper
11. State any three items imported by India during the medieval period.
Ans: Silver, rawsilk, metals, coral, textiles.
Fill in the blanks with suitable words:
1. Arthashastra was written by ---------
2. Various items like ----------, --------------and ---------- were used as medium of exchange in
ancient trade.
3. -------------- has been a great industry in India during ancient period.
4. The ---------- system was used in ancient business practice to protect the interest of traders,
artisans and producers in India.
5. For credit transactions, an indigenous financial instrument has been in use in India since
Mughal period called ----------
6. A lot of market reforms had taken place during the rule of -----------
7. The first railway line was constructed between ------------ and ----------
8. Banking, insurance, warehousing and communication are called ---------- to trade
9. Cottage and handicraft industries in India suffered because of flow of --------- and -------
from abroad.
10. Due to industrial revolution, labour was transferred from the production of primary products
to the production of ---------------- and ---------------
11. The ------- in 1905 gave boost to Indian industries.
12. ---------- were the first to express the decimal system
13. ---------- ruler constructed the Grand Trunk Road.
14. Historical evidence shows that India has a rich heritage in trade and commerce, dating back
to as far as ------------
15. In textiles, handspun and handmade ------------- was the pride of India
Ans: 1. Kautilya, 2. Shells, conches, food items, 3. Ship building, 4. Guild, 5. Hundi, 6.
Allauddin Khilji, 7. Bombay, Thane 8. Aids to trade/auxiliaries, 9. Textiles, machine made
goods, 10. Manufacturing goods, services 11. Swadeshi movement, 12. Indians, 13. Shersha
Suri, 14. 5000 B.C, 15. Indian muslim
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(B) ½ Mark Questions
1. In which year, the first railway line was constructed in India?
a. 1850 b. 1953 c. 1853 d. 1947
2. Posts and telegraphs were modernized by passing of a law, the Posts and Telegraphs Act
in the year
a. 1854 b. 1852 c. 1864 d. 1862
3. Who were the first to express the numeral system?
a. Arabs b. Europeans c. Indians d. Greeks
Ans: 1-c, 2-a, 3-c.
Match the following
1. Grand Trunk Road [ ] a. Aryabatta
2. Market reforms [ ] b. Selucus
3. Pie value [ ] c. Allauddin Khilji
4. Learn the art of manufacturing swords [ ] d. Shersha Suri
Ans: 1-d, 2-c, 3-a, 4-b
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Lesson-3
OBJECTIVES OF BUSINESS

1. Explain the economic objectives of business?
Ans: Economic objectives of business refer to the objective of earning profit and also
other objectives that are necessary to be pursued by business which are as follows.
i. Profit Earning: Profit is the life blood of business, without which no business can
survive in a competitive market. Profits must be earned to ensure the survival of
business, its growth and expansion overtime.
ii. Creation of Customers: A business unit cannot survive unless there are customers
to buy the products and services. Again a businessman can earn profits only when
he/she provides quality goods and services.
iii. Regular Innovations: Innovation means changes, which bring about improvement
in products, process of production and distribution of goods. Business units, through
innovation are able to reduce cost by adopting better methods of productions and
also increase their sales by attracting more customers.
iv. Best possible use of Resources: Business activities require various resources like
men, materials, money and machines. The availability of these resources is usually
limited. Thus, every business should try to make the best possible use of these
resources. This objective can be achieved by employing efficient workers, making
full use of machines and minimizing wastage of raw materials.
2. Explain the importance of national objectives of business?
Ans: Being an important part of the country, every business must have the objective of
fulfilling national goals and aspirations. The following are the national objectives of
business.
i. Creation of Employment: One of the important national objectives of business is to
create opportunities for gainful employment of people. This can be achieved by
establishing new business units, expanding markets, widening distribution channels
etc.
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ii. Promotion of Social Justice: A businessman is expected to provide equal
opportunities to all the employees to work and progress. Towards this objective special
attention must be paid to weaker and backward sections of the society.
iii. Production according to National Priority: Business units should produce and
supply goods in accordance with the priorities laid down in the plans and policies of
government. One of the national objectives of business should be to increase the
production and supply of essential goods at reasonable prices.
iv. Contribute to the Revenue of the Country: The business owners should pay their
taxes and dues honestly and regularly. This will increase the revenue of the
government, which can be used for the development of the nation.
v. Self sufficient and Export Promotion: To help the country to become self-reliant,
business units have the added responsibility of restricting import of goods. Besides,
every business unit should aim at increasing exports and adding to the foreign
exchange reserves of the country.
3. Enumerate and explain the human objectives of business.
Ans: Human objectives refer to the objectives aimed at the wellbeing as well as
fulfillment of expectations of employees. The human objectives of business may include
the following.
i. Economic Wellbeing of the Employees: In business, employees must be provided
with fair remuneration and incentives for their performance. By this they feel most
satisfied at work and contribute more for the business.
ii. Social and Psychological Satisfaction of Employees: It is the duty of business units
to provide social and psychological satisfaction to their employees. This is possible
by making the job interesting and challenging, putting the right person in the right
job. Opportunities for promotion and advancement in career should also be provided
to the employees.
iii. Development of Human Resources: Business can prosper if the people employed
can improve their skills and developed their abilities and competencies in course of
time. Thus, it is important that business should arrange training and development
programmes for its employees.
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iv. Wellbeing of Socially and Economically Backward People: Business units being
inseparable parts of the society should help backward classes. While recruiting its
staff, business should give their preference to physically and mentally challenged
persons. Business units can also help and encourage meritorious students by awarding
scholarships for higher studies.
4. Explain the global objectives of business.
Ans: Today because of globalization the entire world has become a big market. The
goods produced in one country are readily available in other countries. So, to face the
competition in the global market, every business has certain objectives in mind, which
may be called the global objectives. These objectives are as follows:
i. Raise General Standard of Living: Growth of business activities across national
borders makes available quality goods at reasonable prices all over the world. This
improves the standard of living of people.
ii. Reduce Disparities among Nations: Business should help to reduce disparities
among the rich and poor nations of the world by expanding its operations. By way of
capital investment in developing as well as under developed countries it can foster
their industrial and economic growth.
iii.Make Available Globally Competitive Goods and Services: Business should
produce goods and services which are globally competitive and have huge demand in
foreign markets. This will improve the image of the exporting country and also earn
more foreign exchange for the country.
5. Distinguish between internal and external business environment.
Ans: The skill and ability of employees, their attitude to work, relations between managers and
sub-ordinates etc, may be regarded as internal environment of business. These are important
factors, which may affect business operations. But, these are within the control of the
businessman. By taking suitable steps the conditions can be improved.
On the other hand, external environment refers to all those aspects of the surroundings of
business which are not within the control of the managers and may affect business activities, to a
great extent. The external factors which influence business activities, operations are not
controllable by businessman. These factors may be classified as economic, social, political and
technological factors.
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1. Enumerate the social objectives of business.
Ans: Social objectives are those objectives of business, which are desired to be achieved
for the benefit of the society. Social objectives of business include the following.
i. Production and supply of quality goods and services.
ii. Adoption of fair trade practices.
iii. Contribution to the general welfare of the society.
2. What is meant by business environment?
Ans: Conditions or situations that affect business activities may be regarded as the
environment of business. In other words, business environment refers to the surroundings
and circumstances, which influence business operations. This environment consists of
forces and factors internal or external to a business firm.
3. Classify the objectives of business.
Ans: Business objectives are something which a business organization wants to achieve
over a specified period of time. The objectives of business may be classified as follows.
i) Economic objectives
ii) Social objectives
iii) Human objectives
iv) National objectives
v) Global objectives
4. “Profit earning is the main objective of business”. Explain.
Ans: Profit is the lifeblood of business, without which no business can survive in a
competitive market. Infact profit making is the primary objective for which a business
unit is brought into existence. Profit must be earned to ensure the survival of business, its
growth and expansion overtime. Profits help businessmen not only to earn their living but
also to expand their business activities by re-investing a part of the profits.
5. Explain how technological factors influence the business operations.
Ans: Technological advancement always leads to improvement in the process of
production, transportation and communication. Change in technology is mostly
associated with better service and cost efficiency. Now-a-days electronic appliances have
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replaced electrical equipments vary widely. Business activities are bound to suffer if
enterprises do not adopt up-to-date technology as and when necessary.
( A) One Mark Questions
1. State any two economic objectives of business.
Ans: Profit earning, creation of customers
2. Enumerate any two national objectives of business.
Ans: Generation of employment, promotion of social justice
3. Write any two global objectives of business.
Ans: Raise general standard of living, reduce disparities among nations.
1. To produce and distribute essential goods at a reasonable price is an ---------- objective of
business.
2. To help the country to become self-reliant business units should aim at increasing ------
3. Business units should pay taxes honestly and ---------------
4. Business should provide equal opportunities to all its ---------------
5. The primary motive of business is ------------
6. Conditions/situations that affect business activities may be regarded as the -------------
7. Business units through innovations are able to ------------- by adopting better methods of
production and also increase the --------- by attracting more customers because of improved
products.
8. The nature of goods and services in demand depends upon the changes in --------------- of
people in the society.
9. --------- refers to all those aspect of the surrounding of business, which are not within the
control of the management.
10. ------------ of business should be to adopt fair trade practices for the welfare of the consumers
as well as the society.
11. Helping physically handicapped persons in the society is an -------- of business.
Ans: 1.National, 2. Export, 3. Regularly, 4. Employees, 5. Earning profit, 6. Environment of
business, 7. Reduce cost, sales 8. Habits and customs, 9. External factors, 10. Social
objective, 11. Human objective.
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Given below are some statements relating to the economic objectives of business. Some
statements are true and some are false. Write „true‟ or „false‟ against each statement.
Creation of demand for goods is the primary objective of business.
i.
Profits are expected to be earned by businessmen in proportion to the amount of
ii.
capital invested in business.
iii. It is not always necessary for businessmen to make the best possible use of materials.
iv. Businessmen should use profits earned from the business only for their own living.
v. Generation of employment is the primary economic objective of business.
Ans: i. False, ii. True, iii. False, iv. False, v. False
Given below are some statements relating to the human objectives of business. Some
statements are true and some are false. Write „true‟ or „false‟ against each statement.
i. Businessmen should pay proper remuneration which will motivate the workers for
work.
ii. Business units should provide social and psychological satisfaction to the employees.
iii. Businessmen should not help disabled persons unless they are employed in business.
iv. Business units should ignore the suggestions given by the employees while taking
important decisions.
v. Helping physically handicapped persons in the society is an economic objective of
business.
Ans: i.True, ii. True, iii. False, iv. False, v. False

Which of the following statements relating to social objectives of business are right and
which are wrong? Write „right‟ or „wrong‟ against each statement.
i. Social objective of business is based on the assumption that what is good for business
is also good for society.
ii. Production and supply of quality goods to the consumer is the social objective of
business.
iii. Creation of demand for the product is a social objective of business.
iv. Establishment of sports complex for the public is the economic objective of business.
v. Hoarding and black-marketing are considered desirable on the part of business.
Ans: i. Wrong, ii.Right, iii. Wrong, iv. Wrong, v. Wrong
Match the following.
i. iLower interest rate [ ] a. Political factor
ii. Demand for packaged food [ ] b. Technological factor
iii. Strike in the factory [ ] c. Social factor
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iv. New methods of production [ ] d. Economic factor
v. Generation of employment [ ] e. Economic objective
vi. Reduce disparities among nations [ ] f. Social objective
vii. Well being of socially and economically [ ] g. Global objective
backward people
viii. Profit earning [ ] h. National objective
ix. Adoption of fair trade practices [ ] i. Human objective
Ans: i-d, ii-c, iii-a, iv-b, v-h, vi-g, vii-I, viii-e, ix-f
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Lesson-4
SOCIAL RESPONSIBILITIES OF BUSINESS
I.Long answer questions (5 Marks)
1. Define environmental pollution and state the types of environmental pollution.
Ans: Pollution simply means presence of any unwanted substance that creates
inconvenience in the natural behavior of living and non-living matter. Environmental
pollution is of three types:
i) Air pollution
ii) Water pollution
iii) Land pollution
i. Air Pollution: Air we breathe contains several gases, dust particles etc. Our body
mechanism helps us in filtering the unwanted ones and retaining those required for our
survival. However, if there is an imbalance in the proportion of gases and dust particles in
air, beyond a certain point, our body mechanism fails to filter them and we face problem.
Thus, air pollution refers to the presence of any unwanted gases, dust particles in the air,
which can cause damage to people as well as nature.
ii. Water Pollution: Water pollution refers to contamination of water due to the presence of
unwanted and harmful substances thus, making water unfit for use.
iii. Land Pollution: Land pollution refers to dumping of useless, unwanted as well as
hazardous substances on the land that degrades the quality of soil we use. Our land gets
polluted because of the human carelessness towards the soil.
2. State the important impacts of air pollution.
Ans: Air pollution has a lot of impact on our surroundings and on us. Some of them are-
i. Presence of gases in air, which are not required by human beings, animals and birds,
creates serious health problems.
ii. Air pollution creates smog in the winter, which is caused by smoke and dust when
they mix with fog. It reduces natural visibility and irritates the eyes and respiratory
tract.
iii. Ozone layer gets depleted because of air pollution and thereby causes gene mutation,
genetic defects and skin cancer.
iv. The temperature of the earth increases due to air pollution
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v. Air pollution causes acid rain
vi. The presence of various poisonous gases causes lot of damage to vegetation, trees and
marine life, buildings and monuments etc.
3. Write the responsibilities of business towards customers.
Ans: No business can survive without the support of customers. As a part of the
responsibility of business towards them the business should provide the following
facilities:
i. Products and services must be able to take care of the needs of the customers.
ii. Products and services must be qualitative
iii. There must be regularity in supply of goods and services
iv. Price of the goods and services should be reasonable and affordable.
v. All the advantages and disadvantages of the products as well as procedure to use the
products must be informed to the customers
vi. There must be proper after-sales service
vii. Grievances of the consumers, if any, must be settled quickly
viii. Unfair means like under weighing the product, adulteration, etc must be avoided.
4. Explain the social responsibilities of business towards the society.
Ans: A society consists of individuals, groups, organizations, families etc. They all are
the members of the society. They interact with each other and are also dependent on each
other in almost all activities. Business, being a part of the society, also maintains its
relationship with all other members of the society. Thus, it has certain responsibilities
towards society, which may be as follows:
i. To help the weaker and backward sections of the society
ii. To preserve and promote social and cultural values
iii. To generate employment
iv. To protect the environment
v. To conserve natural resources and wildlife
vi. To promote sports and culture
vii. To provide assistance in the field of developmental research on education, medical
science, technology etc.
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5. How does business pollute the environment? State any five points.
Ans: Business causes pollution in the following ways:
 Emission of gas and smoke from manufacturing plants
 Use of machines, vehicles etc. contributing to noisy pollution
 Deforestation due to acquisition of forest lands for setting-up plants
 Growth of urbanization and industrialization
 Disposal of solid wastes in the open space
 Mining and quarrying activities
 Increasing use of transport.
6. What are the different roles businessmen should play to reduce environmental
pollution?
Ans: Business can have three types of role – preventive, curative and awareness.
i. Preventive Role: It means business should take all steps so that no further damage is
done to the environment. For this, business must follow the regulations laid down by
government to control pollution. For example, more and more environmental friendly
products can be produced, filters can be used in chimneys, silencers can be fitted in
generators, instead of dumping industrial wastes into river and land it can be treated
properly for further productive use etc.
ii. Curative Role: It means business should rectify whatever damage has been done to the
environment. In addition, if it is not possible to prevent pollution then simultaneous
curative measures can be taken. For example, planting of trees can substantially reduce
air pollution near the industrial area.
iii. Awareness Role: It means making people aware about the causes and consequences of
environmental pollution so that they voluntarily try to protect rather than damage the
environment. For example, business can undertake public awareness programmes.
II. Short answer questions (3 marks)
1. What is meant by social responsibilities of business?
Ans: Every business must ensure a satisfactory rate of return to investors, provide good salary,
security and proper working condition to its employees, make available quality products
at reasonable price to its consumers, maintain the environment properly etc.
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2. What do you mean by social values in business?
Ans: Social values refer to the general recognition in society about which acts are good
and desirable on the part of people and which acts are not. In relation to business, social
values of business may indicate:
 The characteristics of good business
 Objectives which are desirable for business to follow; and
 The manner in which business activities should be conducted in the interest of
society.
3. What are the acts that the government has passed for protecting the environment?
Ans: Government has taken major steps in protecting the environment by passing the
Environment Protection Act, 1986 in addition to having Water ( Prevention and Control
of Pollution) Act, 1974, Air (Prevention and Control of Pollution) Act, 1981 and several
other Acts.
4. What are the effects of water pollution?
Ans: The effects of water pollution are:
 It can create health hazards among human beings, animals and birds
 It causes diseases like typhoid, jaundice, cholera, gastroentytis etc.
 It can endanger lives of various aquatic species
 It can lead to scarcity of drinking water as the water of rivers and canals as well as
underground water get polluted.
5. State the interest groups with whom business interacts in its day-to-day activities.
Ans: Every business is a part of society and the business is responsible towards every
elements of the society, which may be called as various interest groups. These interest
groups consist of owners, investors, employees, suppliers, customers, competitors,
government and the public.
6. In what way should the business be responsible to the government?
Ans: Business activities are governed by the rules and regulations framed by the
government. The various responsibilities of business towards government are:
 Setting-up units as per guidelines of government
 Payment of fees, duties and taxes regularly as well as honestly
 Not to indulge in monopolistic and restrictive trade practices
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 Conforming to pollution control norms set-up by government
 Not to indulge in corruption through bribing and other unlawful activities
7. Why should business be socially responsible?
Ans: Social responsibility is a voluntary effort on the part of business to take various
steps to satisfy the expectation of the owners, investors, employees, consumers,
government and the society. The business be responsible towards these interest groups.
Let us consider the following points:
 Good public image attracts honest and competent employees to work with such
employers
 Maintaining government regulations
 For business growth and survival, support from the society is very much essential
 Better employee satisfaction
 The business to protect the interest of the consumers by providing quality products at
the most competitive price.
8. Explain the various causes of air pollution.
Ans: Some of the common causes of air pollution are:
 Emission of fumes from vehicles
 Emission of smoke dust and chemicals from manufacturing plants
 Emission of gases and dust arising from atomic plants
 Emission of smoke from oil refineries, burning of trees and plants in forests, burning
of coal etc.
9. Describe the various causes of land pollution.
Ans: The main causes of land pollution are:
 Excessive use of fertilizers, chemicals and pesticides in cultivation
 Disposal of solid waste of industries, mines and quarries
 Disposal of solid waste from construction of roads, buildings
 Effluents of some plants like paper, sugar etc. which are not absorbed by soil
 Excessive use of plastic bags, which are non-biodegradable
 Dumping of non-composable wastes from households, hotel and hospitals as well as
from industries.
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10. State the effects of land pollution?
Ans: Land pollution has the following harmful effects:
 Reduces the quantum of cultivable land area
 Causes health hazards as it contaminates the sources of food
 Causes damage to the landscape
 Leads to water and air pollution
III. Very short answer questions
(A) One mark answer questions
1. The duty and obligation of business directed towards the welfare of the society is known
as?
Ans: Social responsibility
2. Which suggests ways and means to conduct the business affairs according morally
justified principles?
Ans: Business ethics
3. Name the pollution caused by plastic bags
Ans: Land pollution
4. What are the major types of environmental pollution?
Ans: Air, Water, and Land pollution
5. What are the three roles that the every business has to play for the control of
environmental pollution?
Ans: Preventive, curative and awareness roles.
1. Every business operates within a -----------------
2. Excessive use of fertilizers, chemicals and pesticides in cultivation causes ----------
3. Plantation near industrial areas helps to reduce ------------
4. Business ethics do not permit the business to sell ------------ goods
5. Paying taxes to the government honestly and regularly is guided by --------------
6. Our behavior should not be ------------ to others
7. Desirable acts and conduct of the people are recognized and ------------- in society.
8. Social values form the ------------- for social responsibilities.
9. Social responsibility of business refers to all such duties and -------- of business that are
directed towards the welfare of society.
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10. Giving good return to the investors by providing --------------- goods at high price to
consumers are not fulfilling social responsibility.
11. To avoid government regulations business houses should discharge their duty ------------
12. The earnings of business depend upon the public ---------- of its activities.
Ans: 1. Society, 2. Land pollution, 3. Air pollution, 4. Adulterated, 5. Business ethics, 6.
Harmful, 7. Appreciated, 8. Base, 9. Obligation, 10. Inferior, 11. Voluntarily, 12. Image.
Objective type questions:
1. The government has passed the Environment Protection Act in the year
a. 1996 b. 1986 c. 1974 d. 1981
2. Water (Prevention and Control of Pollution) Act, was passed in the year
a. 1981 b. 1972 c. 1974 d. 1986
3. Air (Prevention and Control of Pollution) Act was passed in the year
a. 1981 b. 1986 c. 1974 d. 1996
4. Which pollution causes diseases such as asthma, cough and cold etc.
a. Water pollution b. Sound pollution c. Air pollution d. Land pollution
5. Diseases such as cholera, typhoid, jaundice are due to the effects of
a. Air pollution b. Water pollution c. Sound pollution d. Land pollution
Ans: 1-b, 2-c, 3-a, 4-c, 5-b.
(B) ½ Mark answer questions
Which of the following statements are true and which are false. Write „true‟ or „false‟
against each statement.
1. Excessive use of fertilizer, chemicals and pesticides in cultivation causes air
pollution.
2. Excessive use of plastic bags causes land pollution.
3. Plantation near industrial areas reduces water pollution
4. Land pollution increases the quantum of cultivable land in our country.
5. Business houses should make the people aware about the causes and consequences of
environmental pollution.
Ans: 1-False, 2-True, 3-False, 4-False, 5-True.
Match the followings:
1. Environmental pollution [ ] i. Mixture of smoke, dust and fog
2. Air pollution [ ] ii. Responsible for noise pollution
iii. Presence of unwanted substances in the atmosphere
3. Water pollution [ ]
causing inconvenience
iv. Imbalance in the proportion of gases and dust
4. Smog [ ]
particles in air
v. Contamination of water due to excessive presence
5. Aeroplanes [ ]
of harmful Substances
Ans: 1-iii, 2-iv, 3-v, 4-I, 5-ii.
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Lesson-5
STRUCTURE OF BUSINESS
I.LONG ANSWER QUESTIONS (5Marks)
1. What is meant by auxiliaries to trade? Give examples.
Ans: Trade means buying and selling of goods and services on a continuous or regular
basis. A trader, who buys goods from a producer, must carry the goods to his shop
located in a market. He must hire a cart or truck or some other means of transport.
Having carried the goods to his place of business, he must arrange proper storage of the
goods to prevent damage or loss. Also he may have to insure the goods as a means of
protection against the risk of loss by theft or fire. He will also require money from the
bank. In the process of buying and selling he may have to contact a number of other
persons by using the telephone, fax or any other means of communication, etc., are
activities which facilitate the business of a trader. Taken together these activities are
known as auxiliaries or aids to trade. Thus, we can say that activities which support trade
are the auxiliaries or aids to trade.
2. What is a Statutory Corporation? How does it differ from a Government Company?
Ans: Any unit engaged in business activity is called business enterprise or business
organization. Business enterprises owned and managed by the government are called
public sector enterprises. These enterprises are formed by government as departmental
undertakings, statutory corporations or government companies.
„Statutory Corporations‟ are those enterprises which are established by special Acts of the
Parliament or state assembly. The major difference between statutory corporation and
government companies are shown in the following table.
Points of Statutory corporations Government companies
difference
Meaning These enterprises are
These enterprises are registered as
established by special Acts of
Joint Stock Companies under the
the Parliament Indian Companies Act, 1956
Examples Unit Trust of India(UTI), LIC,
Bharat Heavy Electricals Limited,
Food corporation of India Hindustan Machine Tools Limited,
Bharat Electronics Limited
Investment Government share of Majority of investment made by the
investment is very low government
Control Government has the power to These are fully controlled by the
control these enterprises government.
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3. What is home trade? How does home trade differ from foreign trade?
Ans: Home trade refers to buying and selling of goods and services within the boundaries
of a country.
Home trade Foreign trade
Trading within the country is called home Trading between people living in different
trade countries is called foreign trade
It is also known as internal trade or It is also known as external trade or
domestic trade international trade
Payment for goods and services in home Payment for goods or services is required
trade is made in the currency of the home to be made in the currency of the seller‟s
country country or in the currency acceptable to the
seller.
It is broadly classified into wholesale Foreign trade may be sub-divided into
trade and retail trade import trade, export trade and entrepot
trade
4. Describe primary industries.

Ans: Industries engaged in extracting, producing and processing natural resources like
minerals, oil, agricultural products, plants and animals are called primary industries.
These industries use natural resources as their raw material and provide finished goods to
the consumers. We may further classify these industries into extractive industries and
genetic industries.
i. Extractive Industries: These industries are engaged in extraction of minerals, oil
and natural gas from the earth, fish from the sea, timber from the forest etc. Mining,
forestry, fishing are examples of extractive industries, the distinctive feature of these
industries is that they use natural resources and the materials once extracted or used
cannot be replaced.
ii. Genetic Industries: These industries are engaged in rearing and breeding birds and
animals and growing plants for sale. Agriculture, dairy farming, poultry farming,
pisiculture(breeding fish), horticulture, orchard farming, floriculture (growing
flowers) are examples of genetic industries.
5. What are the advantages of e-commerce?
Ans: e-commerce refers to the process of conducting business with the help of electronic
devices. The following are advantages of e-commerce.
i. Wider choice: With the help of a well-developed computer networking system,
business units can operate at the national as well as global level. Thus, the
customers have a wider choice of products and services. The businessmen also get
a wider market for their products and services.
ii. Improved customer services: Suppliers of goods and services can offer a wide
range of services to the customers, before as well as after sales such as
information about products, guidance for use, quality etc.
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iii. Quick response to customer needs: In e-commerce business transactions take
far less time as compared to the normal process of buying and selling.
iv. Cost saving and price reduction: There is substantial cost saving in business
transactions conducted through e-commerce. The number of employees required
to carry on the business is less. Thus, the cost of operation naturally comes down.
So the customers may get goods at a lower rate.
v. Market information: Access to market information available through the
internet enables business concerns to identify varied customer needs.
1. What is meant by small-scale business?
Ans: The business units which require less capital, employ few workers, produce and sell
limited items within a limited area, are called small-scale business. Small-scale business
units are generally owned and managed by a single individual or a few individuals.
Grocery stores, stationery stores, restaurants, poultry farms etc, are some of the examples
of small-scale business.
2. Write the meaning of large scale business.
Ans: The business units that require heavy capital investment, employ a large number of
workers, produce and sell large volume of goods and services are called large-scale
business. Their area of operation and volume of activities are larger as compared to
small-scale business. These business units are generally owned and managed by groups
of individuals or the government. Iron and steel, aluminum, fertilizer, petrochemicals,
and automobile manufacturing units are some of the examples of large-scale business.
3. What is electronic commerce?
Ans: In recent years, the process of business transactions has undergone change.
Electronic commerce or e-commerce has given a new definition to commerce. It refers to
the process of conducting business with the help of electronic devices using the computer
and inter-connected telecommunication network known as internet.
4. What is meant by tertiary industry? Give any three examples.
Ans: Industries providing services to consumers are called tertiary industries. These
activities may include personal services like medical treatment, nursing, teaching etc, or
commercial services like transport, banking, insurance etc.
5. Define and classify the foreign trade.
Ans: Foreign trade refers to buying and selling of goods or services between people
living in different countries. It is also known as external trade or international trade.
Payment for goods or services is required to be made in the currency of the seller‟s
country or in the currency acceptable to the seller.
Foreign trade may be sub-divided into three categories, viz.
i. Import trade
ii. Export trade
iii. Entrepot trade
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6. Show the broad classification of business with the help of a chart?
Ans: Broadly, business may be classified on the basis of size, ownership and functions as
follows:
Types of Business
On the basis of Size On the basis of Ownership On the basis of Functions
Small-scale Large-scale
business business Industry Commerce
Private sector enterprises Public sector enterprises

1. What is meant by business or business activities?

Ans: Activities undertaken regularly with the object of earning profit are called business.
2. What do you mean by private sector enterprises?
Ans: Business enterprises owned and managed by individuals or group of individuals
other than the government are called private sector enterprises.
3. Define commerce.
Ans: “The sum total of activities involving the removal of hindrances in the process of
exchange of goods and services and facilitates the availability for consumption or use”.
4. What do you mean by trade?
Ans: Trade means buying and selling of goods and services on a continuous or regular
basis.
5. Write the major classification of industry.
Ans: Industries may be broadly divided into three categories as follows:
i. Primary industries
ii. Secondary industries
iii. Tertiary industries
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1. The primary objective of business is to ----------
2. ------------ refers to all business activities, which are connected with raising, producing
and processing of goods and services.
3. Expansion of TISCO --------
4. Commerce consists of activities which include ------------ and auxiliaries to trade.
5. When goods are imported into India from one country to be exported to another country
it is known as ------------ trade.
6. When a wholesale trader in Gwalior purchases toys manufactured in Delhi, it is part of ---
------------ trade.
7. Trade bridges the gap between producers and ---------------.
8. If goods are sold by a manufacturer of Patna to the wholesaler of Allahabad the payment
is received in -------------- currency.
Ans: 1. Earn profit, 2. Industry, 3. Tata Iron and Steel Company, 4. Trade, 5. Entrepot, 6. Home,
7. Ultimate consumers, 8. Home country (Indian rupees).
Objective type questions:
1. A private company name should end with

a. Private company b. Public company c. Private limited d. None of the above
2. Construction industry is an example of
a. Primary industry b. Secondary industry c. Tertiary industry d. None of these
3. Which of the following activities does not facilitate the business of a trader?
a. Transport b. Jail c. Warehousing d. Banking
4. A business wherein more than two individuals are involved are known as
a. Sole-proprietorship b. Hindu undivided family c. Partnership firm d. Joint stock company
Ans: 1-c, 2-b, 3-b, 4-c
Which of the following statements are true and which are false? Write True or False
against each statement.
1. Government Companies are registered under the Indian Companies Act.
2. Life Insurance Corporation of India is an example of Government Company.
3. Morethan two individuals are always required to run a Partnership business.
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4. For small scale business the area of operation is always restricted to a residential area.
5. National Aluminum Company Limited is an example of Joint Stock Company.
6. Electronic commerce does not involve personal communication between the parties.
7. Computers are the only instruments which have made e-commerce possible.
8. Goods and services can be advertised and easily communicated through the internet.
9. E-commerce has enabled companies to expand business at national as well as global
level.
10. New products and services are now easily available to consumers due to their access to
internet.
Ans: 1-True, 2-False, 3-False, 4-False, 5-True, 6- False, 7- False, 8- True, 9- True, 10- True.
Match the following

1. Construction industry [ ] a. Transport services
2. Manufacturing industry [ ] b. Agriculture
3. Genetic industry [ ] c. Bridges
4. Tertiary industry [ ] d. Mining
5. Extractive industry [ ] e. Textile
Ans: 1-c, 2-e, 3-b, 4-a, 5-d
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Lesson-6
SOLE PROPRIETORSHIP
I.LONG ANSWER QUESTIONS (5Marks)
1. State the main characteristics of sole proprietorship.
Ans: Sole proprietorship form of business organizations has the following characteristics:
i. Single ownership: A single individual always owns all assets and properties of the
business. Consequently, he alone bears all the risk of the business.
ii. No sharing of profit and loss: The entire profit arising out of sole proprietorship
business goes to the sole proprietor. If there is any loss it is also to be borne by the
sole proprietor alone. Nobody else shares the profit and loss of the business with the
sole proprietor.
iii. One man‟s capital: The capital required by a sole proprietorship form of business
organization is totally arranged by the sole proprietor. He provides it either from his
personal resources or by borrowing from banks or relatives.
iv. One-man control: The controlling power in a sole proprietorship business always
remains with the owner. The owner or proprietor alone takes all the decisions to run
the business. Of course, he is free to consult anybody as per his liking.
v. Unlimited liability: The liability of the sole proprietor is unlimited. This implies that,
in case of loss the business assets along with the personal properties of the proprietor
shall be used to pay the business liabilities.
vi. Less legal formalities: The formation and operation of a sole proprietorship form of
business organization requires almost no legal formalities. It also does not require to
be registered.
2. Describe the advantages of sole proprietorship form of business organization.
Ans: The sole proprietorship form of business is simple and common in our country.
One-man business is the best form of business organization because of the following
advantages.
i. Ease to form and wind-up: A sole proprietorship form of business is very easy to
form and also very easy to wind-up the business. It is the sole discretion of the
proprietor to form or wind-up the business at any time.
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ii. Direct motivation: The profits earned belong to the sole proprietor alone and he
bears the risk of losses as well. Thus, there is a direct link between effort and
reward.
iii. Quick decision and prompt action: In a sole proprietorship business the sole
proprietor alone is responsible for all decisions. He is free to take any decision on
his own. Since no one else is involved in decision-making it becomes quick and
prompt action can be taken on the basis of this decision.
iv. Better control: In sole proprietorship business the proprietor has full control over
each and every activity of the business. He is the planner as well as the organizer,
who co-ordinates every activity in an efficient manner.
v. Maintenance of business secrets: Business secrecy is an important factor for every
business. It refers to keeping the future plans, technical competencies, business
strategies, etc. secret from outsiders or competitors.
vi. Close personal relation: The sole proprietor is always in a position to maintain
good personal contact with the customers and employees. Direct contact enables the
sole proprietor to know the individual likes, dislikes and tastes of the customers.
vii. Flexibility in operations: The sole proprietor is free to change the nature and scope
of business operations as and when required as per his decision. A sole proprietor
can expand or curtail his business according to the requirement.
viii. Encourages self-employment: Sole proprietorship form of business organization
leads to creation of employment opportunities for people. Not only is the owner
self-employed, sometimes he also creates job opportunities for others.
3. State the limitations of sole proprietorship business.
Ans: The following are the dis-advantages of sole proprietorship form of organization.
i. Limited capital: In sole proprietorship business, it is the owner who arranges the
required capital of the business. It is often difficult for a single individual to raise a
huge amount of capital.
ii. Unlimited liability: In case the sole proprietor fails to pay the business obligations
and debts arising out of business activities, his personal properties may have to be
used to meet those liabilities.
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iii. Lack of continuity: The existence of sole proprietorship business is linked to the life
of the proprietor. Illness, death or insolvency of the owner brings an end to the
business.
iv. Limited size: In sole proprietorship form of business organization there is a limit
beyond which it becomes difficult to expand its activities. It is not always possible for
a single person to supervise and manage the affairs of the business.
v. Lack of managerial expertise: A sole proprietor may not be an expert in every
aspect of management. He may be an expert in administration, planning but may be
poor in marketing.
1. Define „sole proprietorship‟.

Ans: The business organization in which a single person owns, manages and controls all
the activities of the business is known as sole proprietorship form of business
organization.
A sole proprietorship may be defined as „a business enterprise exclusively owned,
managed and controlled by a single person with all authority, responsibility and risk.‟
2. What is meant by one-man control in sole proprietorship form of business?
Ans: A single individual always owns sole proprietorship form of business organization.
The entire profit arising out of sole proprietorship business goes to the sole proprietor. If
there is any loss it is also to be borne by the sole proprietor alone. The capital required by
a sole proprietorship form of business organization is totally arranged by the sole
proprietor. The controlling power in a sole proprietorship business always remains with
owner. The owner or proprietor alone takes all the decisions either to run or close the
business.
3. In which conditions is sole proprietorship a suitable form of business organization?
(or) Describe the suitability of sole proprietorship form of business.
Ans: Sole proprietorship form of business organization is suitable:
 Where the market for the product is small and local. For example, selling grocery items,
books, stationery, vegetables etc.
 Where customers are given personal attention, according to their personal tastes and
preferences. For example, making special type of furniture, designing garments etc.
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 Where the nature of business is simple. For example, grocery, garments business,
telephone booth etc.
 Where capital requirement is small and risk involvement is very less. For example,
vegetables and fruits business, tea stalls etc.
 Where manual skill is required. For example, making jewellery, haircutting, tailoring,
cycle or motor cycle repair shop etc.
1. What is the meaning of sole-trading concern?
Ans: A business enterprise exclusively owned, managed and controlled by a single
person is called sole-proprietorship business.
2. Is sole-proprietorship business suitable for skilled people?
Ans: Apart from trading business, making jewellery, hair-cutting, tailoring, beauty
parlour can also be run by a sole proprietor.
3. Does a sole-proprietorship business exist forever?
Ans: The existence of sole-proprietorship business is linked to the life of the proprietor.
Illness, death, insolvency of the owner brings an end to the business.
1. Sole-trading business is also known as -------------
2. The owner of the business owns the properties and assets and bears all the ------- of the
business.
3. The owner arranges capital for the business from ---------------- resources or loans.
4. All decisions for running the business are taken by the --------------
5. The sole proprietor may not be able to raise adequate ------------------- for the expansion
of business.
6. The life of the business depends on the life of the ---------
7. Due to limited financial resources and limitation of the expertise of the owner, the
business may lack professional ------------
8. Quick decision and prompt action is possible in ----------------- business
9. The business does not require registration and almost no ----------- formalities.
10. The business is suitable for simple business where -------------- skill is required.
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11. Sole proprietorship caters best to the needs of customers where the market for the product
is ------------------ and --------------
Ans: 1. Sole proprietorship business, 2. Risk, 3.Personal, 4. Proprietor, 5. Capital, 6.
Proprietor/owner, 7. Management, 8. Sole-trading business, 9. Legal, 10. Manual, 11.
Limited, localized.
Objective type questions
1. The liability of the owner in the business is
a. Limited b. Unlimited c. Both d. None of the above
2. Which of the following is not the objective of a sole-trading business.
a. One man‟s capital b. one-man control c. unlimited liability d. sharing profits or
losses with others.
Ans: 1-b, 2-d.
State which of following statements relating to sole proprietorship are true or false?
1. Since the sole proprietor has to bear the risk of loss alone, there is no motivation to work
hard.
2. Information about the customer‟s likes and dislikes is easily available to the sole proprietor.
3. Secrecy can be maintained in a sole proprietorship form of business organization.
4. The business becomes rigid as changes in the nature of activities cannot be easily brought
about.
5. Such businesses generate employment opportunities for other people also, apart from the
owner.
6. The business is started by one person.
7. It is managed by employees of the business.
8. It is suitable for manufacturing of steel.
9. Sole proprietorship business includes only shopkeepers.
10. The risk of the business is shared with the employees of the business.
Ans: 1-False, 2-True, 3- True, 4- False, 5- True, 6- True, 7- False, 8- False, 9- False, 10- False.
38
Lesson-7
PARTNERSHIP
I.LONG ANSWER QUESITONS (5Marks)
1. Define partnership and state any four features of it.
Ans: A partnership firm is governed by the provisions of the Indian Partnership Act,
1932. Section-4 of the Indian Partnership Act, 1932 defines partnership as “a relation
between persons who have agreed to share the profits of a business carried on by all or
any of them acting for all”.
Features:
i. Atleast two members are required to start a partnership business. But the number of
members should not exceed 10 in case of banking business and 20 in case of other
business.
ii. There must be an agreement between all the partners to share profits and losses of
the business.
iii. The partners should always join hands to carry on any kind of lawful business.
iv. Since individuals join hands to become the partners, it is necessary that they must
be competent to enter into a partnership contract.
v. The liability of partners is also unlimited.
vi. Registration of partnership firm is not compulsory. It is optional
vii. Partnership firm has no separate legal existence from that of it owners.
viii. No partner can sell or transfer his interest to any one without the consent of other
partners.
ix. A partnership firm comes to an end in the event of death, lunacy or bankruptcy of
any partner.
2. Explain different types of partners.
Ans: There are different types of partners in a partnership firm. Let us learn more about
them.
i) Active Partner: The partners who actively participate in the day-to-day operations of the
business are known as active or working partners. They contribute capital and are also
entitled to share the profits of the business. They are also liable for the debts of the firm.
ii) Dormant Partners: Dormant partners are those partners who do not participate in the
day-to-day activities of the partnership firm. They are also known as dormant or sleeping
partners. They only contribute capital and share the profits or bear the losses, if any.
iii) Nominal Partners: Nominal partners only allow the firm to use their name as a partner.
They do not have any real interest in the business of the firm. They do not invest any
capital, or share profits and also do not take part in the conduct of the business of the
firm. However, they remain liable to third parties for the acts of the firm.
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iv) Minor as a Partner: A person under 18 years of age is not eligible to become a partner.
However, in special cases a minor can be admitted as partner with certain conditions. A
minor can only share the profits of the business.
v) Partner by Estoppel: If a person falsely represents himself as a partner of any firm or
behaves in a way that somebody can have an impression that such person is a partner and
on the basis of this impression transacts with that firm then that person is held liable to
the third party. The person who falsely represents himself as a partner is known as partner
by estoppel.
3. Write any five points of difference between partnership and sole proprietorship.
Ans:
Basis of difference Sole proprietorship Partnership firm
No agreement is required to It can be formed only on the
Formation start the business. basis of an agreement among
the partners
There is no specific Act that It is governed by Indian
Governing Act governs a sole proprietorship Partnership Act, 1932.
business
Only one member Minimum two and maximum
Number of Members 10 in banking and 20 in other
businesses
Capital is arranged by sole Capital is provided by partners
Capital contribution
proprietor alone in an agreed ratio.
Decision-making is very It takes time to decide upon
Decision-making quick because there is no need important matters because all
to consult any one else. the partners must be consulted
for taking decision.
The sole proprietor alone Profits and losses are shared by
Sharing of profits and losses takes all profits and bears all partners as per their agreement.
losses.
This is completely owned, Owned, controlled and
Ownership and management controlled and managed by managed by partners.
the sole proprietor.
4. Describe the limitations of partnership form of business.

Ans: A partnership firm suffers from the following limitations:
i. Unlimited liability: All the partners are jointly as well as separately liable for the
debt of the firm to an unlimited extent. Thus, they can share the liability among
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themselves or any one can be asked to pay all the debts even from his personal
properties.
ii. Uncertain life: The partnership firm has no legal entity separate from its partners. It
comes to an end with the death, insolvency, incapacity or the retirement of any
partner.
iii. Lack of harmony: In partnership firm every partner has an equal right to participate
in the management. Also every partner can place his or her opinion or viewpoint
before the management regarding any matter at any time. Because of this sometimes
there is a possibility of friction and quarrel among the partners.
iv. Limited capital: Since the total number of partners cannot exceed 20, the capital to
be raised is always limited. It may not be possible to start a very large business in
partnership form.
v. No transferability of shares: No partner is allowed to transfer his share of interest to
outsiders without the consent of other partners. This creates inconvenience for the
partner who wants to leave the firm or sell part of his share to others.
5. Explain any five advantages of partnership firm.
Ans: Partnership form of business organization has certain advantages, which are as
follows:
i. Easy to form: Like sole proprietorship, the partnership business can be formed easily
without any legal formalities. It is not necessary to get the firm registered. A simple
agreement, either oral or in writing, is sufficient to create a partnership firm.
ii. Availability of large resources: Since two or more partners join hand to start
partnership business it may be possible to pool more resources as compared to sole
proprietorship. The partners can contribute more capital, more effort and also more
time for the business.
iii. Better decisions: The partners are the owners of the business. Each of them has equal
right to participate in the management of the business. Since all partners participate in
decision-making, there is less scope for reckless and hasty decisions.
iv. Flexibility in operations: At any time the partners can decide to change the size or
nature of business or area of its operation. There is no need to follow any legal
procedure. Only the consent of all the partners is required.
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v. Sharing risks: In a partnership firm all the partners share the business risks.
vi. Benefits of specialization: Since all the partners are owners of the business they can
actively participate in every aspect of business as per their specialization and
knowledge.
II. SHORT ANSWER QUESTIONS (3Marks)
1. Define partnership?
Ans: It is basically a relation between two or more persons who join hands to form a
business organization with the objective of earning profit. The person who joins hands is
individually known as „partner‟ and collectively a „firm‟. The name under which the
business is carried on is called „firm name‟
A partnership firm is governed by the provisions of the Indian Partnership Act, 1932.
Section-4 of the Indian Partnership Act, 1932 defines partnership as “a relation between
persons who have agreed to share the profits of a business carried on by all or any of
them acting for all”.
2. Write the meaning of a partner by holding out? Explain with the help of an
example.
Ans: A person may represent himself or may knowingly permit himself to be represented
as a partner of the firm. Such a person directly or indirectly holding out himself as a
partner shall be liable as a partner for the obligation created on the misrepresentation. He
will, of course, not be entitled for any rights of partnership.
Suppose in Ram Hari & Co. firm there are two partners. One is Ram, the other is Hari. If
either Ram or Hari declares that Gopal is a partner of their firm and knowing this
declaration Gopal remains silent then Gopal will be liable to those parties who suffer
losses by transacting with Ram Hari & Co and Gopal will be known as partner by holding
out.
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3. Differentiate between active and dormant partners on the basis of participation in
business?
Ans: The following are the differences between active partner and dormant partner.
Active partner Dormant partner
He is actively participate in the day-to-day He is not actively participating in the day-
operations of the business to-day activities of the business.
He is also known as working partner He is also known as sleeping partner
He contribute capital He does not invest any capital
He is entitled to share profits of the He is not entitled to share profits of the
business business
He is liable for the debts of the firm He is not liable for the debts of the firm.
4. “Principal-Agent relationship is must for partnership”. Do you agree? Give reasons?

Ans: All the partners of the firm are the joint owners of the business. They all have an
equal right to actively participate in its management. Every partner has a right to act on
behalf of the firm. When a partner deals with other parties in business transactions, he/she
acts as an agent of the others and at the same time the others become the principal. So
there always exists a principal-agent relationship in every partnership firm.
5. “If you do not register your partnership firm you will be deprived of certain
benefits”. In the light of this statement, state the effects of non-registration of a
partnership firm.
Ans: It is not compulsory that you register your partnership firm. However, if you don‟t
get registered, you will be deprived of certain benefits, therefore it is desirable. The
effects of non-registration are:
 Your firm cannot take any action in a court of law against any other parties for
settlement of claims
 In case there is any dispute among partners, it is not possible to settle the disputes
through a court of law.
 Your firm cannot claim adjustments for amount payable to or receivable from any other
parties.
6. “Partnership form of business is suitable for every type of business organization”.
Do you agree? Give reasons.
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Ans: Partnership form of business has its own advantages and dis-advantages. But at
times we find that partnership form of business organization is most suitable for us to run
a small business. Let us look into such instances:
 A partnership firm is suitable in case of business where the capital requirement is
medium i.e. it is neither too large nor too small.
 Business like retail and wholesale trade or small manufacturing units can be
successfully started by partners.
 In a partnership firm persons having different ability, managerial talent, skill and
expertise join together. So it is most suitable for construction business, legal firms
etc., where each partner contributes the best as per his specialization.
II. Very short answer questions
1. How many persons are required to start a partnership firm?
Ans: Atleast 2 persons.
2. What is the maximum number of persons in case of banking partnership business?
Ans:The total number of persons should not exceed 10 in case of banking partnership
business.
3. What is Partnership Deed?
Ans: There must be some agreement between the partners before they actually start the
business. This agreement is termed as partnership deed.
4. What do you understand by the term minor partner?
Ans: A person under 18 years of age is not eligible to become a partner. However, in
special cases a minor can be admitted as partner with certain conditions.
Fill in the blanks with the appropriate word.
1. Partnership is basically a ------------ between persons.
2. The name under which the business of partnership is carried on is called ---------
3. The agreement which lays down terms and conditions of partnership is termed as --
----
4. --------------- of the Partnership Act,1932 defines partnership.
5. Partners agree to share ---------- of business.
6. The members in a partnership firm are individually called as -------
7. The liability of partners in a partnership firm is ----------
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8. It is ------------- to get the partnership firm registered.
9. Partnership is a --------------- effort.
10. In comparison to sole proprietorship, it may be possible for partnership firm to pool
------ resources.
11. The partnership firm is a ----------- form of business organization.
12. In partnership, business risk is --------------- by all the partners.
Ans: 1.Relation, 2. Firm name, 3. Partnership deed, 4. Section-4, 5. Profit or loss, 6.
Partners, 7. Unlimited, 8. Not necessary, 9. Group, 10. More, 11.Flexible, 12. Shared.
(B) ½ Mark answer questions.
State which of the following statements are true or false?
1. The number of partners should not exceed 20 in case of banking business.
2. There must be a written agreement between all the partners.
3. It is compulsory to register a partnership firm
4. No partner can transfer his interest to any other without the consent of the other
partners.
5. Partnership firm has no separate legal existence.
Ans: 1-False, 2-False, 3-False, 4-True, 5-True.
1. Active partner [ ] i. Is one who lends his name to the firm
2. Dormant partner [ ] ii. Is one who takes part in day to day business of the firm.
3. Nominal partner [ ] iii. Is one who represents as a partner
4. Partner by estoppels [ ] iv. Is one who is below 18 years.
5. Minor partner [ ] v. Is one who does not take part in day to day business of the firm
Ans: 1-ii, 2-v, 3-I, 4-iii, 5-iv.
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Lesson-8
JOINT STOCK COMPANY
I.LONG ANSWER QUESTIONS ( 5 Marks)
1. Describe the characteristics of Joint Stock Company.
Ans:
i. Legal formation: No single individual or a group of individuals can start a business.
A joint stock company comes into existence only when it has been registered after
completion of all formalities required by the Indian Companies Act, 1956.
ii. Artificial person: It is called artificial person as its birth, existence and death are
regulated by law and it does not possess physical attributes like that of a normal
person.
iii. Separate legal entity: Being an artificial person, a joint stock company has its own
separate existence independent of its members. It means that a joint stock company
can own property, enter into contracts and conduct any lawful business in its own
name.
iv. Common seal: It is called a common seal as it can be used by any officer at any level
of the organization working on behalf of the company. Any document, on which the
company‟s seal is put and is duly signed by any official of the company, become
binding on the company.
v. Perpetual existence: A joint stock company continues to exist as long as it fulfils the
requirements of law. It is not affected by the death, lunacy, insolvency or retirement
of any of its members.
vi. Limited liability: In a joint stock company, the liability of a member is limited to the
extent of the value of shares held by him. While repaying debts, the personal property
of the shareholder can not be affected.
vii. Democratic management: Joint stock companies have democratic management and
control. That is, even though the shareholders are owners of the company, all of them
cannot participate in the management of the company. Normally, the shareholders
elect representatives from among themselves known as „Directors‟ to manage the
affairs of the company.
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2. Explain the different types of Joint Stock Companies.
Ans: There are three type of companies on the basis of ownership viz., private limited,
public limited and government companies.
i. Private Limited Company: These companies can be formed by atleast two individuals
having minimum paid-up capital of not less than Rs.100000. They are required to use
“private limited” after their names. Ex: Combined Marketing Service Private Limited.
As per the Companies Act, 1956 a private limited company should fulfils the following
conditions
 Total number of members of these companies cannot exceed 50.
 The shares allotted to its members are not freely transferable.
 The companies are not allowed to raise money from the public.
ii. Public Limited Company: As per the Companies Act, 1956 a company is called a
public limited company if it fulfils the following conditions
 There is no restriction on maximum number of members.
 The shares allotted to its members are freely transferable.
 The companies are allowed to raise money from the public.
A minimum of seven members are required to form a public limited company. It must
have minimum paid-up capital of Rs.500000. These companies are required to write
either “public limited” or “limited” after their names. Ex: Steel Authority of India
Limited.
iii. Government Company: In these companies the government (either State or Central
government or both) holds a majority share capital i.e., not less than 51%. However,
companies having less than 51% share holding by the government can also be called
government companies provided control and management lies with the government. Ex:
Bharath Heavy Electricals Limited.
3. Distinguish between Private Limited Company and Public Limited Company.
Ans: The differences between public and private limited companies are shown in the
following table.
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Basis Private Limited Company Public Limited Company
Minimum number of Minimum number of members Minimum number of

members required are 2 members required are 7
Maximum number of Maximum members of these There is no restriction on

members companies cannot exceed 50. maximum number of
members.
Identification Use a suffix “private limited” Use a suffix “limited” after its
after its name. name.
Transferability of shares Restricted Freely transferable.
Minimum capital required Not less than Rs.100000 Not less than Rs.500000
Raising of funds from the Can not give open invitation to Can raise as much money as
public the public to subscribe the required from the public.
shares.
4. Enumerate the advantages of Joint Stock Company?

Ans: The main advantages of Joint Stock Company are as follows:
i. Availability of large financial resources.
ii. A joint stock company is able to collect a large amount of capital through small
contributions from a large number of people.
iii. It can also accept deposits from the public and issue debentures to raise funds.
iv. The liability of its members is limited to the extent of the value of shares held by
them.
v. Management of a company is vested in the hands of directors, who are elected
democratically by the members or shareholders.
vi. Due to the availability of large financial resources and technical expertise it is
possible for the companies to have large scale production.
vii. A joint stock company offers employment to a large number of people.
viii. In company form of business it is possible to invest a lot of money on research and
development for improved processes of production, new design, better quality
products etc.
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5. State the limitations of Joint Stock Company.
Ans: Inspite of many advantages of the company form of business organization, it also
suffers from some limitations as follows:
i. Difficult to form: The formation or registration of Joint Stock Company involves a
complicated procedure. A number of legal documents and formalities have to be
completed before a company can start its business.
ii. Excessive government control: Joint stock companies are regulated by government
through Companies Act and other economic legislations. Particularly, public limited
companies are required to adhere to various legal formalities as provided in the
Companies Act and other legislations.
iii. Delay in policy decisions: Generally policy decisions are taken at the Board
meetings of the company. Further the company has to fulfill certain procedural
formalities. These procedures are time consuming and therefore, may delay action on
the decisions.
iv. Concentration of economic power and wealth in few hands: A joint stock
company is a large scale business organization having huge resources. This gives a lot
of economic and other power to the persons who manage the company. Any misuse
of such power creates unhealthy conditions in the society.
6. Explain the advantages of multinational companies.
Ans: The multi-national companies enjoy several advantages by way of huge earnings
due to large-scale production and distribution activities across national borders. Besides,
the host countries in which the multi-national companies operate also derive a number of
advantages. These are-
i. Investment of foreign capital: Direct investment of capital by multi-national
companies helps under-developed countries to speed-up their economic development.
ii. Generation of employment: Expansion of industrial and trading activities by
multinational companies leads to creation of employment opportunities and raising
the standard of living in host countries.
iii. Use of advanced technology: With substantial resources multinational companies
undertake research and development activities which contribute to improved methods
49
and processes of production and thus, increase the quality of products. Gradually,
other countries also acquire these technologies.
iv. Growth of ancillary units: Suppliers of materials and services and ancillary
industries often grow in host countries as a result of the operation of multi-national
companies.
v. Increase in exports and inflow of foreign exchange: Goods produced in the host
countries are sometimes exported by multinational companies. Foreign exchange thus
earned contributes to the foreign exchange reserves of host countries.
vi. Healthy competition: Efficient production of quality goods by multi-national
companies prompt the domestic producers to improve their performance in order to
survive in the market.
1. Distinguish between Indian company and foreign company
Ans:
Indian company Foreign company
This is formed in India and registered under It is a company formed and registered
the Indian Companies Act, 1956. outside India
It may be formed as a public limited It is formed as a private limited company
company, private limited company or
government company
2. Describe the limitations of Multinational Company.
Ans: There are several limitations of multinational companies, which are as follows:
i. Least concern for priorities of host countries
ii. Adverse effect on domestic enterprises
iii. Dominate the markets in host countries and tend to acquire monopoly power
iv. Change in tradition
v. Consumption habits of people tend to change from their own cultural heritage
(A) One mark answer questions.
1. What is meant by Joint Stock Company?
Ans: A company form of business organization is known as a Joint Stock Company.
2. What is the meaning of shareholder?
50
Ans: The total capital of a joint stock company is contributed by its members. Thus,
every member has some shares in the business, and hence these members are called
„shareholders‟
3. State the meaning of multi-national company.
Ans: A company, which is registered in one country but carries on business operations in
a number of other countries by setting-up factories, branches or subsidiary units is called
„multi-national companies (MNCs)‟.
1. There should be atleast ---------------- members in a public limited company.
2. Transfer of share freely from one member to another is not possible in case of -------
company
3. Minimum amount of capital required to start a public limited company is Rs.---------
4. Mahanagar Telephone Nigam Limited is -------------- company.
5. A foreign company is formed ----------------- India.
6. The liability of members of a joint stock company is limited to the extent of the -----
7. A joint stock company form of business organization takes more ------------- to take
policy decisions.
8. A joint stock company form of business organization is managed by -------------
9. The cost of formation of a company is very -----------------
10. Companies Act and other economic legislations are passed to regulate the ------------
Ans: 1. Seven, 2. Private limited, 3. Rs.5,00,000. 4. Government, 5. Outside, 6. Value of
shares held by them, 7. Time, 8. Board of Directors, 9. High, 10. Joint Stock Companies.
(B) ½ Mark answer questions.
Given below are some statements about characteristics of joint stock company. Some are
right and some are wrong. Write „right‟ or „wrong‟ against each statement.
1. No legal formality is required to form a joint stock company.
2. A joint stock company dies with the death of its shareholders.
3. The shareholders of joint stock company have limited liability.
4. A joint stock company can own property on its own name.
5. A joint stock company is managed by the elected representatives of shareholders.
Ans: 1-Wrong, 2-Wrong, 3-Right, 4-Right, 5-Right.
51
Given below are some statements about the advantages of multi-national company. Some
are right and some are wrong. Write „right‟ or „wrong‟ against each statement.
1. Multi-national companies speed-up the economic development of the under developed
countries.
2. Multinational companies help to earn foreign exchange for the host countries.
3. Domestic producers improve their performance because of multi-national companies.
4. Generally multinational companies invest money in profitable industries.
5. Multinational companies sometimes dominate the markets of the host countries.
Ans: 1-Right, 2- Right, 3- Right, 4- Wrong, 5- Wrong
1. Companies Act [ ] a. Minimum number of members is at least 2
2. Public company [ ] b. Limited liability
3. Private company [ ] c. Board of Directors
4. Joint stock company [ ] d. Minimum number of members is 4
5. Democratic management of Companies [ ] e. 1956.
Ans: 1-e, 2-d, 3-a, 4-b, 5-c.
1. Partnership firm [ ] a. No restriction on maximum number of members
2. Private company [ ] b. Company management
3. Multi-national company [ ] c. Private limited
4. Board of Directors [ ] d. Coca-cola
5. Public company [ ] e. The number of partners cannot exceed 20.
Ans: 1-e, 2-c, 3-d, 4-b, 5-a.
52
Lesson-9
CO-OPERATIVE SOCIETY
I.LONG ANSWER QUESTIONS (5 Marks)
1. Discuss any five features of a co-operative society?
Ans: A co-operative society is a special type of business organization different from
other forms of organization. It has the following characteristics:
i. Open membership: The membership of a co-operative society is open to all those
who have a common interest. A minimum of 10 members are required to form a co-
operative society.
ii. Voluntary association: Members join the co-operative society voluntarily, that is, by
choice. A member can join the society as and when he likes, continues for as long as
he likes, and leave the society at will.
iii. State control: To protect the interest of members, co-operative societies are placed
under state control through registration. While getting registered, a society has to
submit details about the members and the business it is to undertake. It has to
maintain books of accounts, which are to be audited by government auditors.
iv. Sources of finance: In a co-operative society capital is contributed by all the
members. However, it can easily raise loans and secure grants from government after
its registration.
v. Democratic management: Co-operative societies are managed on democratic lines.
The members of the Board of Directors are the elected representatives of the society.
vi. Service motive: Co-operatives are not formed to maximize profit like other forms of
business organization. The main purpose of a co-operative society is to provide
service to its members.
vii. Separate legal entity: A co-operative society is registered under the Co-operative
Societies Act. After registration a society becomes a separate legal entity, with
limited liability of its members.
viii. Distribution of surplus: Every co-operative society in addition to providing
services to its members also generates some profit while conducting business. Profit
generated is distributed to its members not on the basis of shares held by the
members, but on the basis of members‟ participation in the business of the society.
53
ix. Self-help through mutual co-operation: Co-operative societies thrive on the
principle of mutual help. They are the organizations of financially weaker sections of
society. It is only by working jointly on the principle of „each for all and all for each‟,
the members can fight exploitation and secure a place in society.
2. What information and documents have to be submitted to the Registrar at the time
of registration of a co-operative society? (or) Explain the formation of co-operative
society.
Ans: A co-operative society can be formed as per the provisions of the Co-operative
Societies Act, 1912. At least 10 persons having the capacity to enter into a contract with
common economic objectives, like farming, weaving, consuming, etc. can form a Co-
operative Society. A joint application along with the bye-laws of the society containing
the details about the society and its members has to be submitted to the Registrar of Co-
operative Societies of the concerned state. After scrutiny of the application and the bye-
laws, the Registrar issues a Certificate of Registration.
Requirements for Registration:
i. Application with the signature of all members
ii. Bye-laws of the society containing:
a. Name, address and aims/objectives of the society;
b. Names, addresses and occupations of members;
c. Mode of admitting new members;
d. Share capital and its division.
3. Describe the advantages of Co-operative Society.
Ans: A Co-operative form of business organization has the following advantages:
i. Easy formation: Formation of a co-operative society is very easy compared to a
joint stock company. Any ten adults can voluntarily form an association and get it
registered with the Registrar of Co-operative Societies.
ii. Open membership: Persons having common interest can form a co-operative
society. Any competent person can become a member at any time he/she likes and
can leave the society at will.
54
iii. Democratic control: A co-operative society is controlled in a democratic manner.
The members cast their vote to elect their representatives to form a committee that
looks after the day-to-day administration.
iv. Limited liability: The liability of members of a co-operative society is limited to
the extent of capital contributed by them.
v. Elimination of middlemen‟s profit: Through co-operatives the members or
consumers control their own supplies and thus, middlemen‟s profit is eliminated.
vi. State assistance: Both central and state governments provide all kinds of help to
the societies. Such help may be provided in the form of capital contribution, loans
at low rates of interest, exemption in tax, subsidies in repayment of loans, etc.
vii. Stable life: A co-operative society has a fairly stable life and it continues to exist
for a long period of time. Its existence is not affected by the death, insolvency,
lunacy or resignation of any of its members.
4. State the disadvantages of Co-operative Society.
Ans: The co-operative form of business organization suffers from various limitations as
follows:
i. Limited capital: The amount of capital that a co-operative society can raise from
its member is very limited because the membership is generally confined to a
particular section of the society. Again due to low rate of return the members do not
invest more capital.
ii. Problems in management: Generally it is seen that co-operative societies do not
function efficiently due to lack of managerial talent. The members or their elected
representatives are not experienced enough to manage the society.
iii. Lack of motivation: Every co-operative society is formed to render service to its
members rather than to earn profit. This does not provide enough motivation to the
members to put in their best effort and manage the society efficiently.
iv. Lack of co-operation: The co-operative societies are formed with the idea of
mutual co-operation. But it is often seen that there is a lot of friction between the
members because of personality differences, ego clash, etc. the selfish attitude of
members may sometimes bring an end to the society.
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v. Dependence on government: The inadequacy of capital and various other
limitations make co-operative societies dependant on the government for support
and patronage in terms of grants, loans, subsidies, etc. Due to this, the government
sometimes directly interferes in the management of the society and also audits their
annual accounts.
5. Express your opinion on the suitability of co-operative society.
Ans: The main objective of co-operative form of business organization is to provide
service rather than to earn profit. The co-operative society is the only alternative to
protect the weaker sections of the society and to promote the economic interest of the
people. In certain situations when it is not possible to achieve the target by individual
effort, collective effort in the form of a co-operative society is preferred. Housing co-
operatives, marketing co-operatives etc., are formed to achieve the common economic
objectives of the members. Generally, co-operative society is suitable for small and
medium size business operation. However, large co-operative societies like IFFCO,
KRIBHCO etc. are also found in India.
1. What is the meaning of „Co-operative Society‟?
Ans: The term „co-operation‟ is derived from the Latin word co-operari, where the word
co means „with‟ and operari means „to work‟. Thus, co-operation means working
together. So those who want to work together with some common economic objective
can form a society which is termed as “co-operative society”. It is a voluntary association
of persons who work together to promote their economic interest. It works on the
principle of self-help as well as mutual help.
2. What are the activities undertaken by a housing co-operative society?
Ans: These societies are formed to provide residential houses to members. They purchase
land, develop it and construct houses or flats and allot the same to members. Some
societies also provide loans at low rate of interest to members to construct their own
houses. The Employees‟ Housing Societies and Metropolitan Housing Co-operative
Society are examples of housing co-operative society.
3. What is meant by „democratic management‟ of co-operative society?
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Ans: Co-operative societies are managed on democratic lines. The society is managed by
a group known as “Board of Directors”. The members of the board of directors are the
elected representatives of the society. Each member has a single vote, irrespective of the
number of shares held. For example, in a village credit society the small farmer having
one share has equal voting right as that of a landlord having 20 shares.
4. What is meant by marketing co-operative society and state its objectives?
Ans: These societies are formed by small producers and manufacturers who find it
difficult to sell their products individually. The society collects the products from the
individual members and takes the responsibility of selling those products in the market.
Gujarat Co-operative Milk Marketing Federation that sells AMUL milk products is an
example of marketing co-operative society.
5. Explain producer co-operative societies with examples.
Ans: These societies are formed to protect the interest of small producers by making
available items of their need for production like raw-materials, tools and equipments,
machinery, etc. Handloom societies like APPCO, Bayanika, Haryana Handloom, etc., are
examples of producers‟ co-operative society.
6. Briefly describe the farming co-operative societies.
Ans: These societies are formed by small farmers to work jointly and thereby enjoy the
benefits of large-scale farming. Lift-irrigation co-operative societies and pani-panchayats
are some of the examples of co-operative farming society.
(A) One mark answer questions.
1. What is the primary objective of co-operative society?
Ans: Provide economic support to the members.
2. What is the main objective of the members of co-operative society?
Ans: Rendering service to the members.
Fill in the blanks with suitable words.
1. Small producers who find it difficult to sell their products individually may form --------- co-
operative society.
2. The books of account of the society are audited by ------------- auditors.
3. Co-operative societies formed to provide service rather than maximizing -------
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4. Professional managers do not prefer to work in co-operative societies because they do not get
adequate ----------
5. Large co-operative societies like KRIBHCO, IFFCO serve the whole ---------
6. Through housing co-operative societies members may get --------- at low rates of interest to
construct their own houses.
7. The co-operative society suffers due to limited capacity of members to contribute ---------
8. A co-operative society works on the principle of self-help as well as ---------
9. Consumers‟ co-operative societies help to eliminate -------------- in the process of distribution
of goods.
10. Pani-panchayats and lift irrigation co-operative societies are examples of --------- co-
operative society.
11. It can exist for long due to a -------------- separate from its members.
12. There may be rigidity in co-operative societies due to excessive control and regulation by ----
------
13. The liability of the members of the co-operative society is ---------
14. A co-operative society is a --------------- association of individuals who come together to
achieve common ------------- objectives.
15. Their motive is to provide -------------- to the members.
16. They have a separate --------- from the members.
17. Profit is shared amongst members on the basis of member‟s ------------ in the business of the
society.
Ans: 1. Marketing, 2. Government, 3. Profit, 4. Remuneration, 5. Nation, 6. Loans, 7.
Capital, 8. Mutual help, 9. Middlemen, 10. Farmers‟, 11. Legal entity, 12. Government, 13.
Limited, 14. Voluntary, economic, 15. Service, 16. Legal entity, 17. Participation.
State whether the following statements about co-operative societies are true or false:
1. Any competent person can become a member of a society, at anytime.
2. The liability of the members is unlimited.
3. The government encourages and supports the formation of co-operative societies by
providing subsidies and exemptions.
4. It can exist for long due to a legal entity separate from its members.
5. The society is managed by one person only.
Ans: 1-True, 2-False, 3-True, 4-True, 5-False.
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Lesson-10
TRANSPORT
I.LONG ANSWER QUESTIONS (5 Marks)
1. Discuss the advantages and dis-advantages of road transport.
Ans: Roads are the means that connect one place with another on the surface of the land.
Bullock carts, cycles, motor cycles, cars, trucks, buses constitute different means of road
transport.
Advantages of Road Transport: It has the following advantages.
i. It is relatively cheaper mode of transport as compared to other modes.
ii. Perishable goods can be transported at a faster speed by road carriers over a short
distance.
iii. It is a flexible mode of transport.
iv. The loading and unloading is possible at any destination.
v. It provides door-to-door service.
vi. It helps people to travel and carry goods from one place to another.
Dis-advantages of Road Transport: Road transport has the following limitations.
i. Due to limited carrying capacity road transport is not economical for long distance
transportation of goods.
ii. Transportation of heavy goods or goods in bulk by road involves high cost.
iii. It is affected by adverse weather conditions. Floods, rain, landslide etc., sometimes
create obstructions to road transport.
2. Describe the advantages and dis-advantages of water transport.
Ans: Water transport refers to movement of goods and passengers on waterways by using
various means like boats, steamers, launches, ships etc. With the help of these means
goods and passengers are carried to different places, both within as well as outside the
country.
Advantages of Water Transport: It has the following advantages.
i. It is relatively economical mode of transport for bulky and heavy goods.
ii. It is a safe mode of transport with respect to occurrence of accidents.
iii. The cost of maintaining and constructing routes is very low as most of them are
naturally made.
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iv. It promotes international trade.
Dis-advantages of Water Transport: Water transport has the following limitations.
i. The depth and navigability of rivers and canals vary and thus, affect operations of
different transport vessels.
ii. It is a slow moving mode of transport and therefore not suitable for transport of
perishable goods.
iii. It is adversely affected by weather conditions.
iv. Sea transport requires large investment on ships and their maintenance.
3. Distinguish between inland and ocean transport.

Ans:
Inland transport Ocean transport
It refers to the movement of goods and It refers to movement of goods and passengers
passengers on waterways within the with the help of ships through sea or ocean
country. waterways.
Transport is on river and canal routes. Transports are used to carry goods and
passengers on the sea route.
With the help of boats, steamers, With the help of ships, tankers, submarines
launches, barges goods and passengers goods and passengers are carried to different
are carried to different places within places.
the country.
It is useful in transporting goods. It is useful in transporting both goods and
passengers.
It exists only in few states like Andhra It has its fixed route, which links almost all the
Pradesh, Assam, Tamilnadu, West countries of the world.
Bengal etc.
It plays in the development of national It plays an important role in the development
trade. of international trade.
4. What is meant by transport? Describe its importance in business (OR) Describe the
necessity of transport facilities in your own words.
Ans: Transport refers to the activity that facilitates physical movement of goods as well
as individuals from one place to another. In business, it is considered as an auxiliary to
trade, that means, it supports trade and industry in carrying raw materials to the place of
production and distributing finished products for consumption. Individuals or business
firms that engage themselves in such activities are called „transporters‟. Generally,
transporters carry raw material, finished products, passengers, etc. from one place to
another. So it removes the distance barrier. Now-a-days goods produced at one place are
60
readily available at distant places. People move freely throughout the world because of
transport. It is associated with every step of our life. Without transport, we, as well as
business units cannot move a single step.
Importance of Transport: Following are the points of importance of transport.
i. Transport makes available raw materials to manufacturers or producers.
ii. Transport makes available goods to customers.
iii. Transport enhances standard of living.
iv. Transport helps during emergencies and natural calamities.
v. Transport helps in creation of employment.
vi. Transport helps in labour mobility.
vii. Transport helps in bringing nations together.
viii. Transport helps in exchange of cultures, views and practices between the people of
different countries.
5. What is meant by modes of transport? State the different modes of transport.
Ans: Basically transport is possible through land, air or water, which are called the
different modes of transport. On land we use trucks, tractors, etc. to carry goods ; train,
bus, car etc. to carry passengers. In air, we find aeroplanes, helicopters to carry
passengers as well as goods. Similarly, in water we find ships, steamers, etc. to carry
goods and passengers. All these are known as various means of transport.
Modes of Transport: The modes of transport can be broadly divided into three
categories: land transport, water transport and air transport.
i. Land Transport: Land transport refers to activities of physical movement of goods
and passengers on land. This movement takes place on road, rail, rope or pipe. So,
land transport may further be divided into road, rail and rope and pipeline transport.
ii. Water Transport: Water transport refers to movement of goods and passengers on
waterways by using various means like boats, steamers, launches, ships etc. With the
help of these means goods and passengers are carried to different places, both within
as well as outside the country.
iii. Air Transport: This is the fastest mode of transport. It carries goods and passengers
through airways by using different aircrafts like passenger aircraft, cargo aircraft,
helicopters, etc. It may be classified as domestic and international air transport.
6. Describe the various modes of land transport.
Ans: Land transport refers to activities of physical movement of goods and passengers
land. This movement takes place on road, rail, rope or pipe. So, land transport may
further be divided into road, rail and rope and pipeline transport.
a. Road Transport: Roads are the means that connect one place to another on the
surface of the land. These are made of sand, chips, coaltar or cement. Different
vehicles plying on roads like bullock carts, cycles, motorcycles, cars, buses etc. All of
these constitute different means of road transport. The means of road transport may
be divided into man driven, animal driven and motor driven transport.
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b. Rail Transport: Transportation of goods and passengers on rail lines through trains
is called rail transport. Rail transport is available throughout the country except some
hilly or mountainous regions. In India two types of trains are found. One is passenger
train and other is goods train. These trains are driven by rail engines and they use
steam, diesel or electric power to move.
c. Pipeline Transport: In modern times, pipelines are used for various purposes. Water
supply to residential and commercial areas is carried on with the help of pipeline.
Petroleum and natural gas are also transported from one place to another through
pipelines.
d. Ropeway Transport: Ropeway refers to a mode of transport, which connects two
places on the hills, or across a valley or river. The famous “Uran Khatola Jagdamba”
in Gujarat that carries pilgrims to the temple is an example of ropeway transport.
7. Describe the advantages and dis-advantages of railway transport.
Ans: Transportation of goods and passengers on rail lines through trains is called rail
transport. Rail transport is available throughout the country except some hilly or
mountainous regions. In India two types of trains are found. One is passenger train and
other is goods train. These trains are driven by rail engines and they use steam, diesel or
electric power to move.
Advantages of Rail Transport: The rail transport has the following advantages.
i. It is a convenient mode of transport for travelling long distances.
ii. It is relatively faster than road transport.
iii. It is suitable for carrying heavy goods in large quantities over long distances.
iv. Its operation is less affected by adverse weather conditions like rain, fog etc.
Limitations of Railway Transport: Railway transport has the following limitations.
i. It is relatively expensive for carrying goods and passengers over short distances.
ii. It is not available in remote parts of the country.
iii. It provides service according to fixed time schedule and is not flexible for loading or
unloading of goods at any place.
iv. It involves heavy losses of life as well as goods in case of accident.
8. Describe the advantages and dis-advantages of air transport.
Ans: This is the fastest mode of transport. It carries goods and passengers through
airways by using different aircrafts like passenger aircraft, cargo aircraft, helicopters, etc.
In hilly and mountainous areas where other mode of transport is not accessible, air
transport is an important as well as convenient mode.
Air transport may be classified as domestic and international air transport. While
domestic air transport mainly facilitates movement within the country, international air
transport is used for carrying goods and passengers between different countries.
Advantages of Air Transport: It has the following advantages.
i. It is the fastest mode of transport.
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ii. It is very useful in transporting goods and passengers to the area, which are not
accessible by any other means.
iii. It is the most convenient mode of transport during natural calamities.
iv. It provides vital support to the national security and defence.
Dis-advantages of Air Transport: Air transport has the following limitations.
i. It is relatively more expensive mode of transport.
ii. It is not suitable for transporting heavy and bulky goods.
iii. It is affected by adverse weather conditions.
iv. It is not suitable for short distance travel.
v. In case of accidents, it results in heavy losses of goods, property and life.
1. Explain the various types of road transport.
Ans: Roads are the means that connect one place to another on the surface of the land.
The means of road transport may be divided into three types:
i. Man driven: Individuals carrying goods on their head or back, in bicycles or on
thelas, move from one place to other. People also ride a bicycle or use rickshaw to
travel short distances.
ii. Animal driven: Animal driven vehicles like carts (drawn by bullocks, camels,
horses, donkeys etc.) used in rural areas to carry crops, straw, fodder and sometimes
even people. Sometimes even animals are directly used to carry goods from one place
to another.
iii. Motor driven: The type of motor vehicles used to carry goods and passengers
include auto-rickshaws, scooters, vans, buses, tempos and trucks.
2. Classify the various modes of water transport.
Ans: Water transport refers to movement of goods and passengers on waterways by using
various means like boats, steamers, launches, ships etc. With the help of these means
goods and passengers are carried to different places, both within as well as outside the
country. These may be classified into inland water and ocean transport.
i. Inland water transport: Within the country, rivers and canals facilitate the
movement of boats, launches etc. Since the goods and passengers move inside the
country, this type of transport is called inland water transport. This system exists only
in few states like, Andhra Pradesh, Assam, Tamilnadu and West Bengal.
ii. Ocean transport: Ocean transport refers to movement of goods and passengers with
the help of ships through sea or ocean waterways.
3. Distinguish between liners and tramps (or) Classify the various types of overseas
shipping.
Ans: In ocean transport, different types of ships are used to carry passengers and goods.
These may be classified as under:
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i. Liners: A liner is a passenger or cargo vessel, which belongs to a regular shipping
company. These ships ply over a fixed route according to a prescribed schedule or
timetable.
ii. Tramps: A tramp is a cargo ship, which does not make regular trips but plies
whenever cargo is offered to it. It does not follow a fixed route or a prescribed
timetable like that of liners.
1. ---------- helps a lot in providing mobility to workers.
2. Transport removes ------------- barrier.
3. ---------- is a cargo ship which does not make regular trips.
4. Inland water transport is generally used in --------------- trade.
5. In water transport, -------------- investment is required in acquisition of ships.
6. Rail transport is --------- transport.
7. Sledge transport is --------------- transport.
8. --------------- transport is the fastest mode of transport.
9. --------------- transport is suitable to transport goods from one place to another at a faster
speed.
10. Generally inland water transport is used to promote --------------- trade.
11. Ships having fixed routes and plying regularly are called ------------------
12. ----------------- transport is mostly used for transporting goods and passengers during
natural calamities like earth quake, wars, floods etc.
13. ----------------- operation is less affected by adverse weather conditions like rain, floods,
fog etc.
14. Rivers, canals are parts of --------------- transport.
15. Ocean transport mainly facilitates ----------- trade.
Ans: 1. Transport, 2. Distance, 3. Tramp, 4. Home/domestic, 5. Heavy, 6. Land, 7. Road, 8.
Air, 9. Road, 10. Internal/domestic, 11. Liners, 12. Air, 13. Rail transport, 14. Inland water,
15. International.
State which of the following statements are true or false.
1. In business, transport is considered as an auxiliary to trade.
2. Transport does not help in raising standard of living of the people.
3. Exchange of culture between nations becomes possible because of transport.
4. Transport does not create any employment opportunity.
5. Mobility of labour is facilitated by transport.
6. Transportation means only sending goods and not the passengers.
7. Transport removes distance barrier.
8. Pipeline transport is not a mode of land transport.
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9. Road transport is not affected by adverse weather conditions.
10. Rail transport is a suitable mode of transport for carrying heavy and bulky goods.
11. Inland waterways consist of sea and ocean
12. Water transport is a very fast mode of transport.
13. Water transport facilitates international trade.
14. Overseas ships ply to the neighboring countries.
15. Water transport is not affected by adverse weather conditions.
16. Air transport is the fastest mode of transport.
17. Air transport is not affected by adverse weather condition.
18. Air transport is not suitable for short distance.
19. Helicopters are generally used for international flights.
20. Air transport does not provide any support to national security.
Ans: 1-True, 2-False, 3-True, 4-False, 5-True, 6 False, 7-True, 8-False, 9-False, 10-True, 11-
False, 12-False, 13-True, 14-True, 15-False, 16-True, 17-False, 18-True, 19-False, 20-False.
Match column A and B
Column A Column B
1. Thelas [ ] a. Facilitates movement in valleys
2. Ropeway [ ] b. Mode of transport for carrying heavy and bulky goods
3. Sledge [ ] c. Mode of transport for transporting gas
4. Railways [ ] d. Means of transport driven by human beings
5. Pipelines [ ] e. Dogs are used to pull
Ans: 1-d, 2-a, 3-e, 4-b, 5-c.
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Lesson-11
WAREHOUSING
I. Essay Questions (5 Marks)
1. Describe any six characteristics of an ideal warehousing?
Ans. a. Warehouse is to be at the convenient location. If they are located near railway
station, airport, ship yard etc. then it is easy for loading and unloading of goods.
b. Adequate space for storage of goods is needed inside the warehouse to arrange
goods in proper order.
c. Cold storage facility for perishable goods is required.
d. Sufficient parking place for loading, unloading of vehicles is needed.
e. Round the clock security to protect the goods from thieves must be provided.
f. Fire fighting equipment must be there to safeguard the goods from fire accidents.
2. Explain any three functions of warehouses.
Ans. Functions of warehouses:

1. Storage of goods: The basic function of warehouse is to store the goods. These
goods are stored from time of their production or purchase till their consumption
or sale.
2. Protection of goods: A warehouse provides protection for 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.
3. Risk bearing: Ware houses take over the risks incidental to storage of goods.
Once goods are handed over to the warehouse keeper for storage, the
responsibility of these goods passes on to the warehouse keeper. 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.
4. 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
warehouse keeper, the businessmen can obtain loans from banks and other
financial institutions keeping this warrant as sewing. In some cases, warehouses
66
also give advances of money to the depositors for a short period keeping their
goods as security.
5. Processing: Certain commodities are not consumed in the form they are produced
and 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.
6. 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.
7. Transportation: In some cases warehouses provide transport arrangement to the

bulk depositors. It collects goods from the place of production and also sends
goods to the place of delivery on request of the depositors.
3. What is meant by public warehouse? State the functions of public warehouse?
Ans. The warehouses which are run to store the goods of general public are known as public
warehouses. The functions of public warehouses are as follows:
1. Storage of goods
2. Protection of goods
3. Risk bearing
4. Financing
5. Processing
6. Grading and branding
7. Transportation
4. Explain the need for warehousing.
Ans. Warehousing is necessary due to the following reasons.
(i) Seasonal Production: Agricultural commodities are harvested during certain

seasons only. But their consumption takes place throughout the year. Therefore,
there is a need for proper storage or warehousing for these commodities, from
where they can be supplied as and when required.
(ii) Seasonal Demand: There are certain goods, which are demanded seasonally, like
woolen garments in winters or umbrellas in the rainy season. The production of these
goods takes place throughout the year to meet the seasonal demand. So there is a need
to store these goods in a warehouse to make them available at the time of need.
(iii) Large scale production: In case of manufactured goods, now-a-days

production takes place to meet the existing as well as Future demand of the
products. Manufacturers who produce goods in huge quantity enjoy the benefits
67
of large scale production, which is more economical. So the finished products,
which are produced on a large scale, need to be stored properly till they are sold.
(iv) Quick supply: Both industrial as well as agricultural goods are produced at
some specific places but consumed throughout the country. Therefore, it is
essential to stock these goods near the place of consumption, so that without
making any delay these goods are made available to the consumers at that the
time of their need.
(v) Continuous production: Continuous production of goods in factories

requires adequate supply of raw materials. So there is a need to keep sufficient
quantity of stock of raw material in the warehouse to ensure continuous
production.
(vi) Price Stabilization: To maintain a reasonable level of the price of the goods
in the market there is a need of to keep sufficient stock in the warehouses.
Scarcity of goods due to short supply leads to price rise whereas excessive supply
leads to fall in price of goods. In order to keep price stable, one should ensure
continuous and adequate supply of goods at all times. Warehouses help in
achieving this balanced supply of goods through their storage and timely release.
It leads to price stabilization.
5. What are various types of warehouses? Explain them briefly.
Ans. Warehouses are classified into 5 categories. They are
i. Private warehouses
ii. Public warehouses
iii. Government warehouses
iv. Bonded warehouses
v. Co-operative warehouses
We shall now discuss each of these.
i. Private Warehouses : The warehouses which are owned and managed by the
manufacturers or traders to store, exclusively, their own stock of goods are known as
private warehouses. Generally these warehouses are constructed by the farmers near
their fields, by wholesalers and retailers near their business centres and by manufacturers
near their factories.
ii. Public Warehouses: The warehouses which are run to store goods of the general public are
known as public warehouses. Any one can store his goods in these warehouses on payment of
rent. To start these warehouses a license from the government is required. The government also
regulates the functions and operations of these warehouses. Mostly these warehouses are used by
manufacturers, wholesalers, exporters, importers, government agencies, etc.
iii. Government Warehouses: These warehouses are owned, managed and controlled by central
or state governments or public corporations or local authorities. Both government and private
68
enterprises may use these warehouses to store their goods. Central Warehousing Corporation of
India, State Warehousing Corporation and Food Corporation of India are examples of agencies
maintaining government warehouses.
iv. Bonded Warehouses: These warehouses are owned, managed and controlled by government
as well as private agencies. Private bonded warehouses have to obtain license from the
government. Bonded warehouses are used to store imported goods for which import duty is yet
to be paid. These warehouses are generally owned by dock authorities and found near the ports.
v. Co-operative Warehouses: These warehouses are owned, managed and controlled by co-
operative societies. They provide warehousing facilities at the most economical rates to the
members of their society.
6. Distinguish between Public and Private warehouse.
Ans.
Public Warehouse Private Warehouse
1. General public can store their products. 1. These are owned and managed by the
manufacturers or traders to store exclusively
their own stock of goods.
2. It can be started at a convenient place, after 2. These warehouses are operated by the
getting license from Government. farmers at their farm land, by wholesalers and
retailers near their business centres and by
manufacturers near their factories.
3. These are regulated by the Government. 3. Generally these are not regulated by
Government.
4. Mostly these warehouses are used by 4. These are located and operated according to
manufacturers, wholesales, exporters, the nature of products stored. The design and
importers, Government agencies etc. Hence facilities provided therein are depending upon
these are located near to them only. the products stored.
7. Describe the Advantages of warehouses to the businessmen?
Ans. Warehousing offers the following advantages to the businessmen.
1. Protection and preservation of goods: Warehouse provides necessary facilities

to the businessmen for storing their goods when they are not required for sale. It
provides protection to the stocks, ensures their safety and prevents wastage. It
minimize losses from breakage, deterioration in quality, spoilage etc. warehouses
usually adopt latest technologies to avoid losses, as far as possible.
2. Regular flow of goods: Many commodities like rice, wheat etc. are produced
during a particular season but are consumed throughout the year. Warehousing
ensures regular supply of such seasonal commodities throughout the year.
3. Convenient location: Warehouses are generally located at convenient places
near road, rail or water ways to facilitate movement of goods. Convenient location
reduces the cost of transportation.
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4. Easy handling: Modern warehouses are generally filed with mechanical
appliances to handle the goods. Heavy and bulky goods can be loaded and
unloaded easily by using these modern appliances, which reduces the cost and
time of handling such goods.
5. Useful for small businessmen: Construction of own warehouse requires heavy
capital investment, which small businessmen cannot afford. In this situation, by
paying a nominal amount as rent, they can preserve their raw materials as well as
finished goods in public warehouses.
6. Reduces risk of loss: Goods in warehouses are well guarded and preserved. The
warehouses can economically employ security staff to avoid theft, use insecticides
for preservation. Thus, warehouses reduce the risk of loss. They install
firefighting equipment to minimize loss arising from fire accidents.
8. Warehouse is one of the “important auxiliaries to trade”. Explain this statement in
your own words.
Ans. Warehouse is one of the important auxiliaries to trade. It creates time utility by bridging
the time gap between production and consumption of goods. It provides protection and
security to goods stored and also reduces the wastage of goods. It minimizes the loss of
goods due to damages and loss due to quality deterioration etc. Warehouses usually adopt
latest technologies to avoid losses as far as possible. Warehouses are very much useful to
the small businessmen. Warehouse provides necessary facilities to the businessmen for
storing their goods when they are not required for sale.
II. Short Answer Questions (3 Marks)
1. What is warehousing?
Ans. Warehousing refers to the activities involving storage of goods on large scale in
a systematic and orderly manner and making them available conveniently when
needed. The place where the goods are stored or preserved is known as warehouse.
2. What are the various types of warehouses?
Ans. Warehouses are 5 types

1. Private warehouses
2. Public warehouses
3. Government warehouses
4. Bonded warehouses
5. Co-operative warehouses
3. What are Co-operative Warehouses?
Ans. The Warehouses owned, managed and controlled by co-operative societies are known as
co-operative warehouses. They provide warehousing facilities at the most economical
rates to their members.
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4. In what way the bonded warehouses are useful to the importers?
Ans. The importers, who have to pay import duties, use the bonded warehouses. Importers are
not permitted to take away the imported goods from the port till the customs duty has
been paid. In such cases, the importer can keep the goods in bonded warehouses which
are generally owned by dock authorities and found near ports.
5. Write a note on Government warehouses?
Ans. Government warehouses are owned, managed and controlled by Central or State or
Local Governments or Public Corporations. These warehouses may be used either by
the Govt. or Private Enterprises to store their goods.
6. Write briefly about grading and bonding functions of warehouses?
Ans. In certain cases, on request warehouses take-up the functions of grading and bonding 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.
III. Very Short Questions
1. What facility is very much useful to the small businessmen?
Ans. Warehousing is very much useful facility to the small businessmen.
2. Who provides security to a warehouse?
Ans. Warehouse keeper provides security to warehouse.
3. What facility is needed to store seasonal products?
Ans. Warehousing.
4. What is the important function of warehousing?
Ans. Storage of goods.
IV. Fill in the blanks (1 Mark)
1. …………………….. hurdle is removed by warehousing.

2. …………………….. is useful to large scale trading.
3. The place where bulk quantity of goods are stored is ……………………..
4. Warehousing is helpful for regular …………………….. at factories.
5. …………………….. is responsible for loss of goods of warehouse.
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Ans: 1- Time 2- Warehouse 3.-Warehouse 4-Production 5-Warehouse Keeper
V. Find the suitable answer from the alternative choices.

1. Food Corporation of India maintains …………………….. warehouses.
(a) Government (b) Prive (c) Bonded
2. Warehouses used by the traders to store exclusively their own goods are known as
…………………….. warehouses
(a) Bonded (b) Public (c) Private
3. License from Government is not required to start a ……………………..
warehouse
(a) Bonded (b) Private (c) Public
4. Bonded warehouses are generally found near ……………………..
(a) Industrial Area (b) Ports (c) Commercial Area
5. Goods for which import duty is not paid, are kept in ……………………..
warehouses.
(a) Private (b) Public (c) Bonded
Ans: 1-A 2-C 3-B 4-B 5-C
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Lesson-12
COMMUNICATION
I. Essay Questions ( 5 Marks)
1. Discuss the importance of communication in business.
A. 1.Business communication helps in providing information to the customers

regarding the products and services of the business organization.
2. Effective communication facilitates quick decision-making. In todays competitive

world, quick decisions are necessary. Proper communication saves time, reduces
wastage and cost and induces prompt action.
3. Proper communication helps business persons in managing the affairs of the

business more efficiently.
4. If the right type of information is made available at the right time to employees,
they are motivated to increase the productivity. Productivity can be increased if
their complaints, suggestions and grievances are taken care of properly.
5. Technology is changing continuously in every field. With the help of proper

communications a business person can improve his products, relationship with
employees, customers.
2. Explain the meaning and process of communication.
A. Communication is a process of sharing facts, ideas, opinions, thought, information
through, speech, writing or gestures and symbols between two or more individuals.
Process: The following are the elements in communication process
Sender: The person who sends the message.
Receiver: The person who receives the message.
Message: Subject matter of communication. It may contain facts, ideas, feelings or

thoughts.
Feedback: Receivers response or reaction or reply to the message, which is directed

towards the sender.
3. “Telephone is a very popular form of oral communication” Do you agree.
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A. Among all the communication media telephone is considered as the best means of
transmitting oral communication. It is widely used for internal and external business
communications. Long distance communication is facilitated by S.T.D. International
Communication can be made through I.S.D. facilities. Both government and private agencies
provide telecom services. Telephone is most important to send instant information.
In business firms as well as government & private offices P.A.B.X. boards are installed to
facilitate internal as well as external communication. Now-a-days mobile phones are very
popular in bringing the people closer. It gives an access to the receiver at any time, any where.
By using SMS, multimedia messaging services (MMS), information can be transmitted very
easily. This is why telephone plays an important role.
4. You are an exporter and you want to mail an exact copy of a quotation to an
importer in U.S.A. which means of communication would you use and why?
A I prefer fax to send exact information. Because fax (or) facsimile is an electronic device
through this handwritten or printed matter, pictures, graphs etc. can be transmitted very
quickly. By using telephone lines, this machine sends the exact copy of the document.
For sending any message, diagram or graphs has to be put in the fax machine and the fax
or telephone number of the other party has to be dialed.
II. Short Questions ( 3 Marks)
1. Define „Communication‟ in about 20 words.
A. Communication is referred as “a process of sharing facts, ideas, opinions,

thoughts and information through speech, writing, gesture or symbol between two
or more people.”
2. Give two elements in the communication process.
A. Communication Process:
i. Sender
ii. Receiver
iii. Message
iv. Feedback
3. Give short notes on Voice Mail in about two sentences?
A. It is a computer based system for receiving and responding through telephone

calls. It records and stores telephone messages through computer memory. The
caller can get the required information by dialing the voice mail number. The
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individuals can send messages through voicemail. They can get the information as and
when they require which is stored in computer memory.
4. State the different types of non-verbal communicator.
A. Non-verbal communication is made through visual, oral or gestural, picture, graphs,

symbols and diagrams etc. For example, the traffic policeman shows the stop sign, a
teacher showing a chart of different animals etc.
5. “Letters are the best means of communication” Do you agree with this
statement? Give reasons.
A. Letters are a written form of communication these can be sent or received by

individuals or organizations written messages in the form of letters can be delivered to
the receivers through special messages, post offices or private couriers. This method is
mostly used where face-to-face communication is difficult or other means are not easily
available. It also helps in keeping a record of the communication. It involves low cost, so
letters are the best means of communication.
6. Differentiate verbal and non-verbal communication.
A. Verbal Communication: Communication with the help of words is known as verbal

communication. It may be oral or written.
Non-Verbal Communication: Communication without using words is called non-

verbal communication. It can be visual, aural or gestural.
7. What is meant by Business communication?
A. Sharing of information regarding business activities and their results is known as

Business Communication
8. “Email is the fastest method of transmitting written messages” explain.
A. Electronic mail, popularly known as email is a modern means of communication. The

system makes use of electronic methods of transmitting and receiving information. Individuals
with the help of internet open an e-mail account. Letters, messages, pictures are sent and
received through this account the information is communicated audio visually and the process is
extremely fast. This method is gaining popularity with the increased use of internet among the
users.
III. Very short Questions
(A) Fill in the blanks (1 Mark)
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1. A person who sends the message is called as ----------
2. Receivers response to the message is termed as ----------
3. A person who receives the message is called as ----------
4. Subject matter of communication may contain ----------
5. The feedback of any message is always directed towards ----------
6. Communication with the help of words is called as ----------
7. Communication through spoken words is known as ----------
8. Communication through the use of various parts of human body is known as
----------
9. Communication with the help of pictures, symbols, diagrams etc. is known as
----------
10. Oral communication means ----------
11. Business communication helps in providing information to customers regarding
----------
12. Business communication helps in taking ---------- decisions.
13. Proper business communication motivates the employees because their ----------
are taken care of properly
14. Sharing of information regarding business activities and their results is known
as ----------
16. Proper communication should be sent ---------- and to ---------- people.
Ans: 1. Sender 2. Feedback 3. Receiver 4. Facts, ideas, feelings or thoughts. 5. Sender

6. Verbal communication 7. Oral communication 8. Gestural communication
9. Visual communication 10. Communication through spoken words. 11. Products &
Services 12. Quick 13. Favourable decisions.
14. Business communication 15. Intime, proper
(B) Match the following ( ½ Mark)
1. Telegram ( ) A. Receiving and sending mails
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through internet
2. Mobile phone ( ) B. Instant transmission of a printed
document.
3. Fax ( ) C. Short message services
4. Voice mail ( ) D. Payment according to number of
words used.
5. E-mail ( ) E. Computer based system of
receiving & responding to
incoming telephone calls.
A) 1-D 2-C 3-B 4-3 5-1
(C) Match the following ( ½ Mark)
A. B.
1. A person reading a letter ( ) A. Non-Verbal
2. A teacher looking to a student with anger. ( ) B. Oral
3. Saluting the national flag ( ) C. Literary
4. Talking to a shop keeper ( ) D. Respect
5. Nodding head silently ( ) E. Order
Ans: 1-A 2-B 3-B 4-A 5-B
(D) Choose the correct answer (1/2 Mark)
1. The device which is used for tele-conferencing
A) Centralling unit B) Electronic devices.
C) Computer D) Telephone.
2. Electronic Mail is called as
A) Electronic Message B) E-mail
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C) Electronic Order D) Electronic Communication.
3. What is required to send communication through Telex?
A. Technical facility B) Telex C) Radio D) Electronic system
4. Audio means
A) Listening only B) Watching only
C) Talking only D) Writing Only
5. The device needed for internet.
A) Television B) Computer C) Tape recorder D) Fax machine
Ans: 1-C 2-B 3-B 4-A 5-B
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Lesson-13
POSTAL SERVICES
I. ESSAY QUESTIONS (5 Marks)
1. Explain the different types of specialized mail services.
A. For convenience of people post office also offers various mail services having some extra
advantages. For example, sending mails faster, ensuring certainty of delivery of mails,
compensating the sender in case of loss or damage to the mail during transit etc. The
following are the specialized mail services.
1. Certificate of Deposits: If a sender wants to have a proof that she has actually posted
the letters, then a certificate can be obtained from the post office on payment of
prescribed fee.
2. Registered Post: The mails are handed over to the post office after affixing
additional postage as registration charge.
3. Insured Post: When mails are in transit they can get damages or lost, the post office
will be held liable for the loss or damage.
4. Post Restarte: The receivers can be called and can deliver the letters.
2. What are the mistakes while sending mails? What will happen when these are
committed?
A. Sometimes we may commit mistakes while sending the mails like.

1. We forget to write our address.
2. We write wrong or incomplete address of the receiver.
3. We offer inadequate postage on our letters.
4. If the receiver‟s address is not found or the address to which the letter to be redirected
is not there, then the following might happen.
 . Letters may not be reached to right person

 We may not get letters return
 Due to inadequate stamps, we should pay penalty.
3. Write briefly about banking services offered by post office.
A. Banks deal with money. A bank accepts deposits and grants loans and advances to the
public. There are various schemes offered by post office to encourage savings like banks .
1. Post office savings bank account: We can deposit or withdraw money anytime in this
account.
2. 5 Years post office recurring deposit: The deposit is to be made every month for a
period of 5 years.
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3. Post office monthly income scheme: A fixed sum of money is deposited for 6 years and
the depositors get the interest on it every month which is tax deductible.
4. 6 Years National Savings Certificate: A fixed sum will be paid on which 10% interest
and bonus will be paid at the end of 6 yrs which is also tax deductible.
5. Kisan Vikas Patras Scheme: Fixed Amount can be paid and can buy Kisan Vikas Patras
for a fixed period. After the expiry date the amount gets doubled.
4. What do you mean by insurance? Explain about Life Insurance scheme offered by
post office.
A. Insurance is a contract between two parties whereby one party agrees to pay a fixed sum
of money to the other party on happening of an event. The party who agrees to pay
money is called insurer and the other is called assured. As per the contract the insured
contributes a fixed amount called premium either in lump sum or in installments to the
insurer for a fixed period. If any such event happens during that period and the insured or
assured suffers a loss, then the insurer has to pay the agreed amount to him. Post offices
offer two types of LIC policies.
1) Postal Life Insurance (PLIC)
2) Rural Postal Life Insurance (RPLI)
5. What are the facilities offered to businessmen by post office?
A. Post office offers some special services to the business firms like the following:
1) Facilitating selling of goods through value payable post.

2) Carrying letters from the customer, without any pre-payment of postage through
business reply post.
3) Facilitating advertisement of the products through media post.
4) Providing reliable and time bound parcel service through Express post.
5) Offering various pre-mailing services to big mailers through business post.
6) Allowing transfer of huge amount of money through corporate money order.
7) Making special arrangement to collect mails through post bag & post box facility
6. State the features of private courier services
A. There are some private operators who provide mail services to the public, they are known
as private couriers. The main features of private couriers are as follows:
1. It provides a quick means of communication.

2. It provides facilities for national as well as international communication
3. All kind of articles are handled by it except gold & jewellery.
4. Besides using railways, roadways, & airways for carriage of articles some
agencies use telephone, telex & fax services for transmission of messages.
5. It undertakes full responsibility of safe & timely delivery of articles.
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6. It collects articles from the doorstep of senders & delivers them to the receivers.
7. Classify the post boxes according to colours also state its uses.
A. Post boxes will be arranged at fixed places by post offices. These post boxes will be in
different colours. The reason behind this is to sort the letters easily and transmits.
Normally there are four colours viz. Red, Green, Blue and Yellow.
1. Red colour boxes are meant for collection of mails, which are not local.
2. Green boxes are meant for collection of local mail.
3. Blue boxes are meant for collection of mails addressed to metro cities.
4. Yellow boxes are meant for collection of mails addressed to all capital cities.
8. Explain the importance of postal services.
A. Postal services are important for the public in general and business in particular.
1. It is a cheaper means of communication.
2. It encourages small savings which are allowed for tax concessions.
3. It sent remittance of money at lower rate.
4. It facilitates the growth and expansion of both internal as well as external trade.
5. While sending valuable things or documents post office provides insurance against the
loss or damage.
6. It facilitate distant learning through postal services, students get course materials.
II. SHORT QUESTIONS (3 Marks)
1. What do you mean by postal services?
A. The services of carrying letters and parcels, arranging remittance of money, accepting
deposits of money etc, are the various services offered by post office which the public
can avail, are known as postal services.
2. Explain about parcel post
A. The postal facility through which article can be sent in the form of parcel is known as
parcel post. Parcels of specified size & weight can be sent across the country as well as
outside. The country postal charges vary according to the weight of the parcel, separate
postage is to be paid for inland and foreign parcel post.
3. What kind of services will be offered by post office?
A. Indian postal services can be classified as mail services, remittance service, banking
insurance and other services.
4. What are the different types of postal stamps? What are they?
A. To carry mail from one place to another place the charges will be paid in the form of
postal stamps to the post offices. These stamps are of different types 1) Postal Stamps
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2) Franked Postage i.e., the Post Office provides another facility to affix stamps through a
machine 5) Payment without affixing any stamp, weekly journals etc. 4) Computerized
ships eg.: Registered post.
5. Write the different types of post office?
A. Indian postal network is the largest network in the world having more than 1.5 lakh post
offices all over the country. The network consists of different categories like General Post
Office, Head Post Office, Sub Post Offices, and Foreign Post Office.
6. Classify the Postal Services
A.
Mail Service Special Mail Service Remittance Service
Post card Certificates of postings Money order

Inland letter Registered post Postal order
Parcel post Insured Post
Book post Speed Post
Post Restart
Banking Service Insurance Service Other Services
Savings bank Postal life insurance Sale of forms
Recurring deposit Rural postal life insurance Bill payment
Postal time deposit scheme Pension payment
Postal monthly saving Sale of Stamps
scheme Philately Gramin Sanchar Sewak
National saving scheme Scheme
Kisan Vikas Patras
7. What do you mean by post restarte?
A. When it is necessary to send letter to a person, whose exact address is not known
you can send it to the post master of that area in which the receiver resides. These letters
are called post restarte. You have to specify the name of post master on the face of the
letters. With this indication the letter will be retained by the post master for a maximum
period of 14 days then it is returned back to the sender or to the return letter office.
8. Explain about Grameena Sanchar Sewak Scheme.
A. With a dream to provide telephone facility to every home, Gramin Sanchar Sewak
Scheme has been launched. It is a joint effort of department of post & Bharat Sanchar
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Nigam Limited. Under this scheme, the postman will carry a mobile phone with him and
people can make use of that phone by paying the specified charge to the postman.
9. Describe the features of 15 years public provident fund.
A. Individuals can open this account in their own name or in the name of their minor
child. In this account atleast one deposit is required every year with a minimum of 500/-
and can deposit a maximum of 100000/-. Loan facility is available after 3 years onwards
and the deposit gets rebate under income tax and the interest income is fully tax free.
10. What are the different types of post cards available in a post office?
A. Post card, inland letter, cover, parcel post, book post etc.
11. Differentiate between inland and international mail?
A. Transferring the letters within a country is called inland mail and transferring the mail
through air ways is called international mail. International mail can be sent to anywhere
in the world.
12. What is the use of PIN in mail services?
A. Each PIN number has 6 digits out of which first digit represents zone, the second & third
digits indicate sub zone and district, the last 3 digits indicate the post office of delivery
within a sorting district.
13. What is the difference between inland and aerogram?
A. Inland letters involves low cost. Aerogram involves high cost. But aerogram will reach
the destination very quickly.
14. Differentiate between money orders & postal order?
A. Money order is an order issued by one post office to another post office to pay a
certain sum of money only to the person named therein. The amount to be sent and the
form have to be handed over to the post office. The post man will deliver the amount to
the addressee.
Postal order is a convenient method of sending money like money order. Postal
orders are available at all post offices in different denominations like Rs. 1/- Rs. 2/-, Rs.
5/-, Rs. 7/- Rs. 10/- etc. we can buy postal orders on payment of prescribed charged and
send it to the payee after mentioning his name and specifying the name of the post office
where it is intended to be encashed. This method of remittance is mostly used for official
purposes.
15. What is the difference between printed card & reply card?
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A. A printed card is one on which a picture is printed on one side and printed message in
words on other side. The receiver detaches the post card with the message and sends the
reply to the sender is called reply post card.
16. Why do we use special mail service?
A. To avail benefits like sending mails faster, ensuring certainty of delivery of mails,
compensating the sender in case of loss or damage to the mail during transit etc. by
paying additional postage.
17. How can you pay telephone bills and electricity bills through post office?
A. Whenever we get telephone or electricity bills. We can take the bills to post office with
the adequate amount and pay in the allotted counter and can receive the receipt.
18. What is the difference between private couriers and postal service in terms of
responsibility?
A. If any problem in private couriers one should approach customer‟s forum, whereas in
case of postal services there are many measures regarding safety. So, postal department
itself assumes responsibility.
19. What are the different schemes available for IT deductions?
A. 1. Postal time deposit scheme.

2. 6 years National Savings Certificate
3. 15 Years Public Provident Fund
4. Kisan Vikas Patras.
20. How do you send a gift to your relative through private couriers?
A. Pack the gift carefully and prepare a parcel. Take the parcel to the nearby courier office
confirm whether the courier will take the parcel or not correctly. Write the address on the
parcel and also write the sender‟s address along with phone number. If you cannot pack
the parcel, ask the couriers to parcel the gift. Weigh the parcel and pay the required
amount and get the receipt.
21. Draw the Proforma of a Post Card
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III. VERY SHORT QUESTIONS (1 Mark)
1. What is meant by Aerogram?
A. Letter used for sending messages to foreign countries is known as aerogram.
2. What is meant by mail transmission?
A. Post offices collects the letters, written by us sorts them and delivers the letters to
different places. This process is known as mail transmission.
3. What do you mean by RMS?
A. Railway mail service.
4. What is redirected mail?
A. If the original addressee has shifted to another place and the receiver knows the new
address, the receiver can send to the new address mentioning the word “Redirected” on
the face of the letter.
5. What is Remittance Service?
A. The services related to money transfer is called as remittance service.
6. What is the expansion of PIN code?
A. Postal Index Number
7. Why do we use speed post?
A. We use speed post to provide time bound as well as guaranteed mail delivery.
8. What happens when a letter is not adequately stamped?
A. If a letter is not properly stamped, the postman will charge double the deficiency in
postage from the addressee while delivering them.
9. What kind of cards are used for competitions
A. Competition postal cards.
10. Which postal services are used to send wedding cards?
A. We use book post to send wedding cards.
11. Which type of postal service will you use to get a required book?
A. Value Payable Post (VPP).

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IV. Fill-up the blanks (1 Mark)
1. Aerogram is used to send written message to _____________________
2. Ordinary post cards & competition post cards differ with respect to _______________
3. Postal charges on ordinary inland parcels vary according to _________.
4. The postage on book post mail is ____________ than on sealed envelopes.
5. Inland letters should be used instead of post cards when the sender of a message wants to
convey any ____________ message.
6. The maximum amount of money one can deposit in a post office public provident fund
account during a year is Rs._______________
7. In a single money order form one can send a maximum amount of Rs. _____________
8. To ensure payment to the right person we can ____________ the postal order.
9. Loan facility is available to public provident fund accountholder after completion of

________ years.
10. After completion of _________ years and NSC can be encashed.
11. Post office offers pre-mailing services to the business enterprises through ________ post.
12. Advertisement of products & services can be done through post office by using the
facility of _________ post.
13. Business __________________ post does not require any postage to be affixed by the
sender.
14. In corporate money order, money can be sent upto Rs. _____________
15. Through __________________ mails can be received without disclosing receivers

identity to the sender or public.
Ans: 1) Foreign 2) Colour & Cost 3) Weight 4) Low
5) Secret 6) 100000 7) 5000 8) Cross
9) Three 10) 6 Yrs 11) Business Post
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12) Media 13) Reply 14) One crore
15) Post Bag, Post Box
V. Match the following (1/2 Mark)
A B
1) Green colour letter box a) Return letter office
2) Franking machine b) No postage is paid by the sender
3) Affix inadequate Postage c) Double the amount of deficiency

in postage payable by addressee
4) Business Reply Card d) Local Mails
5) Wrong address of receiver on letters e) Printing & Postage.
Ans: 1-D 2–E 3–C 4–B 5–A
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Lesson-14
BUSINESS CORRESPONDENCE
I. Essay Questions: ( 5 Marks)
1. Describe the inner and outer qualities of a good business letter.
A. A letter should serve the purpose for which it is written. It should create a positive
impression in the mind of receiver. We may classify the qualities of a good business letter
into two.
Inner Qualities Outer Qualities
 Simplicity Quality of paper

 Clarity Colour of the paper
 Accuracy Size of the paper
 Completeness Folding of letter
 Relevance Envelope
 Courtesy
 Neatness
2. Explain the various parts of a business letter with the help of a specimen.
A. The essential parts of a business letter are as follows.
1. Heading 2. Date 3. Reference 4. Inside Address 5. Subject 6. Salutation 7. Body of
the letter 8. Complimentary close 9. Signature 10. Enclosures 11. Copy circulation 12.
Post Script.
Business Enquiry Letter
Tel: M/s. Acron Electricals Email:
Fax: 22/c Main Road Website:
Daryaganj, Date: 4.3.2010
New Delhi - 2
Ref. No.: PR/F 2002/27,
M/S. Bharat Fans,
Bharat Complex Industrial Estate,
88
Hyderabad – 500 032
Sub: Enquiry about the prices of fans.
Sir,
We are running a retail business with electronic devices. We are very much interested to
sell the fans manufactured by your company through our retail outlet.
So, kindly send the quotation, rules, and regulations of your company.
Enclosures Yours faithfully,
1. Certificate regarding our xxx
business growth. Xxx
Post Script : Inform us regarding your other products.
3. List out the important points one should keep in mind while writing a complaint
letter in business.
A. The following points are to be considered while writing a complaint letter.
1. Date of purchase, place and the duplicate or receipt should be attached.
2. A copy of guarantee card has to be attached.
3. It is written immediately when the purchaser finds wrong, defective or damaged goods
or receives incorrect quantity of goods.
4. Mistakes as well as difficulty due to mistake should be mentioned clearly.
5. Suggestions on how the complaint should be resolved..
 Mention of compensation.
 Replacement of goods
 Discount on damaged goods
 Cancellation of order
 Mention the period in which the corrective action should be taken.
 Request to be careful not to repeat these mistakes in future.
4. What do you mean by order? Give a specimen of an order letter.
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A. The prospective buyer after receiving the reply to his enquiry letter may decide to place
an order with that business house which offers goods at minimum price and at favourable
terms & conditions. Letter written by a buyer to the seller giving the order to purchase the
goods is called order letter.
Speciment of Order Letter
Tel: M/s. Acron Electricals Email:
Fax: 22/c Main Road, Website:
Darya Ganj,
New Delhi – 2
Ref. No.: PR/F/2002/32 Dated: 4.3.2010
M/s. Bharat Fans,
Bharat Complex,
Hyderabad,
Industrial Estate,
Hyderabad – 500 032
Subject: Your letter of quotation No. SL/F/2002/ dt: 20.2.2010.
Dear Sir,
Many thanks for your prompt reply to our enquiry letter of February 20, 2010. As we find
your prices and terms quite reasonable, we wish to place a trial order as per the list enclosed.
As pointed out in our enquiry letter, quality of goods should meet our expectations.
Payment will be made within the time limit prescribed in your quotation letter.
Thanking you, Yours faithfully,

For M/s. Acron Electricals,
Sd/-
(A.B. Kumar)
Partner
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II. Short Questions: ( 3 Marks)
1. What is meant by business correspondence?
A. Business people write and receive letters in their day-to-day transactions. Similarly,
exchange of letters between two parties is known as business correspondence.
2. Explain the importance of writing a business letter.
A. 1. Helps in maintaining proper relationships with customers, partners in business

activities.
2. Business information can be provided and obtained economically and conveniently.
3. To create and maintain goodwill.
4. Serves as evidence
5. Helps in expansion of business.
3. What is meant by enquiry letter? What are the points one should remember while
writing an enquiry letter?
A. Sometimes prospective buyers want to know the details of the goods which they want to
buy like quality, quantity, price, mode of delivery and payment etc. The letter written to
sellers with one or more of the above purposes is known as enquiry letter. The following
points are to be kept in mind while writing letters of enquiry.
1. Letters of enquiry should clearly state the information required.
2. Write specifically about the design, size, quantity, quality about the product or
service in which the buyer is interested.
3. The period within which information is required.
4. What do you mean by a recovery letter?
A. The letter written by the seller for collection of money for the goods supplied to the buyer
is called recovery letter. The aim of recovery letter is to collect money without annoying
the customers. The letter should include information regarding the amount of arrears
argument for payment, and last date of payment.
5. How is personal correspondence is different from business correspondence?
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A. Communication between two organizations or two parties or between business man and
his customers regarding sale & purchase of goods and services is called business
correspondence. When we communicate our feelings, thoughts etc. to our friends,
relatives through letters is called personal correspondence.
6. What is a Quotation letter? How is it different from enquiry letter?
A. After receiving the letter of enquiry from a prospective buyer, the seller supplies the
relevant information by writing a letter that is called quotation letter. These letters are
written keeping in view the information asked for price list, mode of payment, discount to
be allowed etc. An enquiry letter contains all the information required by a customer
whereas a Quotation letter gives the information required by the customer.
7. What is a complaint letter? Under which situations is a complaint letter written?
A. A complaint letter is written when the purchaser does not find the goods upto his
satisfaction. It is normally written by the purchaser when he receives wrong, defective or
damaged goods asking compensation or replacement.
8. What happens when reference is not given in a business letter?
A. Reference indicates the letter number and the department from where the letter is being
sent and the year. In the absence of reference number it becomes difficult for future
correspondence.
9. What is the advantage of writing subject in a business letter?
A. Subject helps the receiver of letter to know quickly what the letter is about.
10. What happens if enclosures are not mentioned in a letter?
A. If enclosures are not mentioned they may not be recognized by the receiver.
III. Very Short questions (1 Mark)
1. Name some salutation and complimentary close sentences.
A. Salutation sentences: Dear Sir/Madam
Complimentary close: Yours faithfully/Yours obediently/Yours truly
2. When will “subject” appear in a business letter?
A. Subject comes after the inside address in a business letter.
3. What is the use of complimentary close sentences in a letter?
A. A complimentary close is a polite way of ending a letter.
4. Why do we write postscript?
A. A postscript is used when the writer wants to add something, which is not included in the
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body of the letter. It is expressed as P.S.
IV. Fill in the following blanks (1 Mark)
1. Business letters serve as a/an -------------- in case of dispute in business transactions.
2. It is ----------------- for the businessmen to remember all facts without correspondence.
3. Business letters build --------------- for a businessmen.
4. Business letters are written to ---------- information.
5. Business letter is the most ---------- mode of communication.
6. Apart from ordinary envelopes, we may also use ---------- or ---------- envelopes for
sending business letters.
7. To make letters courteous, words like ---------- and ---------- should be used.
8. Business letter should contain only ---------- information.
9. Accuracy demands no end in the usage of ----------
10. Business letters should be always neat and ---------- in appearance.
11. The complementary close must be in accordance with the ----------
12. Below signature and name of the writer, his ---------- is also written.
13. In the main part of the body of the letter ---------- is written.
14. Dear Sir is the form of ----------
15. The body of the letter is usually divided into ---------- parts.
16. On the receipt of defective goods, the buyer writes ---------- to the seller.
17. On finding the goods have been damaged in transit, the buyer writes complaint letter to
----------
18. The main aim of recovery letter is to ---------- from the buyer.
19. Complaint letter is written by ---------- to the ----------.
20. Recovery letter draws the attention of the buyer towards the ----------
Ans: 1) Evidence 2) Impossible 3) Goodwill 4) Business 5) Facilitating
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6) Window, Laminated 7) Respected, Faithfull 8) Required 9) Language
10) Attractive 11) Salutation 12) Designation 13) Content 14) Salutation
15) Three 16) Complaint letter, 17) Transporting Authority 18) Money
19) Buyer, Seller 20) Seller
V. Match the following ( ½ Mark)
A B
1. The receiver understand the ( ) a. Relevance
message in the same way as
intended by the sender.
2. There should be no errors in the ( ) b. Courtesy
usage of language in business letter
3. Relevance information should be ( ) c. Accuracy
provided in business letter.
4. Words of anger should not be ( ) d. Clarity
used in any business letter
Ans: 1-D 2-C 3-A 4-B
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Lesson-15
BANKING
I. Essay Questions (5 Marks)
1. Explain the primary functions of a Commercial Bank?
Ans. The primary functions of a bank are:
(1) Accepting Deposits: The most important function of a Commercial Bank is

accepting deposits from the public. Depending upon the nature of deposits, funds
deposited with the bank etc. the depositors earn interest.
(2) Grant of Loans and Advances: The second important function of a Commercial
Bank is to grant loans and advances. Such loans and advances are given to the
members of public and to the business community at a higher rate of interest than the
rate of interest allowed by the bank on its deposits. Loans and Advances are the credit
facility provided by bank to its customer. These types of facilities are cash credit,
overdraft, and discounting of bills.
2. Write a note on secondary functions of a Commercial Bank?
Ans. In addition to primary functions of accepting deposits and lending loans, banks perform a
number of functions which are called secondary functions. These are as follows:
1) Issuing letters of credit and travelers cheques etc.

2) Undertaking safe custody of valuables, important documents and securities by
providing lockers.
3) Providing customers with facilities for foreign exchange dealings.
4) Transferring money from one account to another account.
5) Providing educational loans to students at reasonable rate of interest for higher
studies.
3. What is a Co-operative Bank? Explain the types of Co-operative Banks?
Ans. People who come together to jointly serve their common interest often form a co-
operative society under co-operative societies act. When a co-operative society engages
itself in banking business then it is called a co-operative bank. The society has to obtain a
license from Reserve Bank of India before starting banking business. There are three
types of co-operative banks operating in our country. They are
1) Primary co-operative banks 2) District central co-operative banks
3) State co-operative banks.
1) Primary Credit societies: These are formed at the village or town level with
Borrower and non-borrower members residing in one locality. The operations of each
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society are restricted to that small area. The members know each other and are able to
watch over the activities of all the members to prevent frauds.
2) Central Co-operative Banks: These banks operate at the district level having some of
primary credit societies as their members.
3) State Co-operative Banks: These are the apex (highest level) co-operative banks in
all the states of the country. They mobilize funds and help its proper channelization
among various sectors. The money reaches the individual borrowers from the state co-
operative banks through the central co-operative banks and primacy co-operative credit
societies.
4. Distinguish between Banks and Money Lenders?
Ans.
Basis Banks Money Lenders
(i) Entity Banks are organized Money lenders are the

Institutions individuals. They are in
unorganized form
(ii) Activities Collection of deposits and Money lenders lent loans only.
lending loans are the main They don‟t accept deposits
activities of banks from public.
(iii) Clients Banks meet the needs of Moneylenders meet the needs
people in general and the of agriculturists and poor
business community in people
particular.
(iv) Security Banks accept tangible and Money lenders generally

personal security against accept gold, jewellery or land
loans. as security for giving loan.
(v) Process of recovery of The process of recovery is The process of recovery is

loans flexible. rigid and strict.
(vi) Interest Rate The interest charged by banks Rate of interest is decided by
on loan is governed by RBI. the moneylender and is
normally very high.
5. Explain the recent development in the field of Banking by giving examples of the
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latest facilities being offered to customers?
Ans. The Advancement in information and communication technology, banking sector is

offering various electronic facilities to customers. These facilities include:
(i) Automated Teller Machine (ATM): Banks have now installed their own ATM
through out the country at convenient locations. By using this customers can
withdraw money from their own account at any time.
(ii) Debit Card: Banks are now providing debit cards to their customers having saving or
current account in the bank. The customers can use this card for purchasing goods
and services at different places in lieu of cash.
(iii) Credit Card: Credit cards are issued by bank to the persons who may or may not
have any account in the bank. Credit cards can also be used like debit cards to make
payments for purchases, so that the person need not carry any cash.
(iv) Net Banking: Bank‟s have now started transactions over internet. The customers
having an account in the bank, can log into banks website and access his bank
account through which he can make payments for bills and transfer money.
II. Short Answer Questions (3 Marks)
1. Define the term „Bank‟?
Ans. Bank is a lawful organization which accepts deposits that can be withdrawn on demand
or otherwise from public. It also lends money to individuals and business houses that
needs it.
2. What is meant by Banking?
Ans. The activities carried on by banks are known as Banking. For example, bank accepts
deposits from public and lends loans are the activities of investment by bank.
3. Give two examples each of (a) Private Sector Commercial & Banks and (b) Foreign
Banks in India?
Ans. Examples of Private Sector Commercial Banks are:
(1) Bank of Rajasthan Ltd (2) Vysya Bank Ltd.
Examples of Foreign Banks in India are:
(1) Hong Kong and Shanghai Banking Corporation (HSBC)
(2) Standard Chartered Bank.
4. What is meant by Cash Credit?
Ans. Cash Credit is an arrangement whereby bank allows the borrower to draw amount upto a
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specified limit. The amount is credited to the account of customer. The customer can
withdraw this amount as and when he requires. Interest is charged on the amount actually
withdrawn only.
5. What is meant by Central Bank?
Ans. A bank which is entrusted with the functions of guiding and regulating the banking
system of a country is known as its Central Bank. The Reserve Bank of India is the
Central Bank of our country.
6. What are the functions of a „Development Bank‟?
Ans. Business organizations often require medium and long term capital for purchase of
machinery and equipment for using latest technology, such financial assistance is
provided by development banks. These banks also undertake development measures like
subscribing to the shares and debentures issued by the companies.
7. What are the functions performed by Exim Bank?
Ans. Export and Import Bank of India (EXIM Bank) provides the required support and
assistance to the exporters and importers. Apart from granting loans, it also provides
information about the international market.
8. What are the functions performed by NABARD?
Ans. National Bank for Agriculture and Rural Development (NAABARD) is the Central and
apex institution for financing agricultural and rural section. It provides credit through
regional rural banks in the fields of agriculture and small scale industries in rural areas.
9. What is E-Banking?
Ans. With advancement in information and communication technology, banking services are
also made available through computer. In most of the banks human or manual teller
counter is being replaced by Automated Teller Machine (ATM). Banking activity carried
on through computers and other electronic means of communication is called e-banking.
10. What is meant by „Overdraft‟?
Ans. Overdraft is a credit facility granted by bank. A customer who has a current account with
the bank is allowed to withdraw more than the amount of credit balance in his account.
This facility is known as overdraft facility. The excess amount withdrawn is known as
overdraft.
III. Very Short Questions (1 Mark)

1. What is the Central Bank in our country?
Ans. Reserve Bank of India is the Central Bank in our country.
2. Name the bank which is incorporated out side India and having its branches
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in India?
Ans. Foreign Bank
3. Who issues currency notes?
Ans. Central Bank (Reserve Bank of India)
4. What is the bank which undertakes to subscribe the shares and debentures of a
company in case of under subscription?
Ans. Development Bank
1. Name the Bank which provides assistance and guidance for import and
export of products abroad?
Ans. Exim Bank
2. What is that banking facility which enables us to deposit or withdraw cash

over 24 hours a day?
Ans. Automated Teller Machine (ATM).
1. A bank accepts deposits from public and …………………….. money to those who
need it.
2. Bank acts as …………………….. between public having surplus money and those
borrowing money.
3. Banking facilitates business activities and is considered as an important auxiliary to
……………………..
4. Bank facilitate payment through …………………….. instead of currency.
5. A…………………….. advances money out of his own private wealth and generally
doesn‟t accepts deposits from public.
6. …………………….. acts as banker to banks.
7. …………………….. is Central Bank in India.
8. Banks encourage …………………….. among public.
9. Banks provide …………………….. for safe custody of valuables of customers.
10. …………………….. issues currency notes in India.
Ans: 1) Lending 2) Mediator 3) Trade 4) Cheque 5) Moneylender
6) Central bank 7) Reserve Bank of India 8) Savings 9) Safe Deposit

Lockers 10) Reserve Bank of India
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V. Match the following
1. Banks facilitates payment

through account without
being cheated. ( ) A. ATM
2. Twenty four hour deposits and
withdrawals of money is facilitated ( ) B. Mobile Banking
3. Used for making banking transactions

through internet ( ) C. Credit Card
4. Facility to know the balance in

Bank account through mobile phone ( ) D. Debit Card
5. Facility to purchase goods with

the credit obtain from Bank and
making payment afterwards ( ) E. Net banking
Ans: 1-D 2-A 3-E 4-B 5-C
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LESSON – 16
BANK DEPOSIT ACCOUNT
I. Answer the following essay questions (5 Marks)
1. Describe the procedure of opening a savings bank account in a bank?
A. To open a savings bank account in a commercial bank, the following steps must be
satisfied.
 Filling-up the application form

 Introduce the applicant by a person having already an account in the bank.
 The applicant has to put his specimen signatures at the blank space provided on
the application form and on a separate card which is posted with photograph.
 After the above steps have been taken and the officer concerned is satisfied that
the application form is in order, money is to be deposited at the cash counter after
filling in printed pay-in-slip.
2. State the procedure for depositing cash in the saving bank account?
A. At the time of depositing cash into bank, the customer must fill the form, that is pay-in-slip.
It is a printed form, which you get in the bank. Each pay- in-slip has two parts divided by
perforation, the right hand part known as „foil‟ and the left hand part known as „counter-
foil‟. The pay-in-slip has to be filled giving the date of deposit, customer name and address,
account number, amount of deposit, details of depositing amount (denomination) and other
information. After that, the pay-in-slip and respected amount shall be submitted in the cash
counter. The cashier will return the counter foil after signed and stamping.
3. What is A.T.M? How does it help the customers of the bank for deposit and
withdrawal of the money?
A. Banks issue Automated Teller Machine (ATM) card to its customers for easy transactions
from their account. This card is used for deposit and withdrawal of money from saving and
current deposit account through ATM. It is a magnetic card, which can be operated by
using a particular secrete number. This number is also known as Personal Identification
Number (PIN). It is the most convenient system of withdrawal money.
If the customers insert the ATM card into machine, it will ask for the PIN by typing or
by screen touch. If the customer enters the correct PIN, the customer‟s account will display
on the screen. Then the customer will draw the money by filling the information which is
asked by the ATM. For depositing the money the customer will use some additional
special amenities. For deposit the money, the customer must kept the depositing amount in
a cover and fill the blanks which are printed on cover, after if he presses the deposit key,
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the machine receives the cover. Most popularly the ATM card is used for withdrawal the
money through the clock and calendar.
II. Answer the following short questions (3 Marks)

1. What is the procedure for depositing a cheque in savings bank account?
A. For deposit the cheque into bank, the customer fills the pay-in-slip. Date of deposit,
account number, customer name and address, cheque number, name and address of drawee
bank, amount in words and figures. After sign the pay-in-slip and attach the cheque to the
foil and submit into the specified counter.
2. What particulars do you have to fill in the form of application while opening a savings
bank account?
A. At the time of opening a savings bank account, the applicant must fill the application with
the following particulars.
1.Name of the person (Applicant)

2.Details of occupation
3.Residential address
4.Specimen signature of the applicant
5.Name, address, account number and signature of the person introducing the
applicant.
3. What is pay-in-slip? State its utility?
A. Pay-in-slip is a printed form supplied by the bank. It has two parts. The right part is known
as „foil‟, and the left part is known as „counter-foil‟. Pay-in-slip is useful to deposit the cash
and cheques into bank. It is filled by customer at the time of depositing cash or cheque by
customer with the relevant information.
4. Can you withdraw an amount in excess of the balance in your savings bank account?
Give reason in support of your answer?
A. For the convenience of the account holders sometimes banks allow withdrawal of amounts
in excess of the balance of deposit. This facility is known as overdraft facility. It is allowed
to some specific customers and upto a certain limit subject to previous agreement with the
bank concerned. Sometimes banks grant this facility on property or personal security.
5. Write the advantages of ATM?
A. 1. Customer has a facility to draw money round the clock (24 hours)
2. Any ATM card holder has a facility to draw money from any ATM
3. Bank provides secrete number to each card holder.
4. It is easy to know the balance.
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6. What are the different methods of withdrawing money from the savings bank
account?
A. The bank customer can withdraw money from his bank by any one of the following
manner.
1. By withdrawal form
2. By cheque.
3. By ATM card
7. Explain the current deposit Account?
A. Big businessman, companies and institutions such as schools, colleges and hospitals have to
make payment through their bank account. Since there are restrictions on number of
withdrawals from saving bank account, that type of account is not suitable for them. To
overcome this problem banks open a current account for them. Banks are not allowed the
interest on this account; rather the accountholders pays certain amount each year as
operational charge.
8. Explain the home safe account (money box scheme)?
A. Small savers find it convenient to deposit money under this scheme. For regular savings,
the bank provides a safe box (gullal) to the depositor. The safe or box cannot be opened by
the depositor, who can put money in it regularly, which is collected by the bank‟s
representative at intervals and the amount is credited to the depositor‟s account. The
deposits carry a nominal rate of interest.
III. Answer the following very short questions (1 Mark)
1. What is the use of withdrawal form in operation of savings bank account?
A. It helps the customer to draw money from bank.
2. How the customer draw money from his savings bank account.
A. Customer can draw money from bank by using withdrawal form, cheque, ATM or manual
teller counter.
3. While opening a savings bank account, why is it necessary to arrange introduction of

the applicant by a person known to the bank?
A. Introduction is required to prevent the possibility of opening of account by an undesirable

person.
4. What are the special advantages of current deposit accounts?
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A. It allows number of withdrawals everyday.
It allows overdraft facility to customers.
5. What is the cheque?
A. It is a printed form supplied by bank. It is an order given by customer to the banker to make
payments.
IV. Fill the following blanks (1 Mark)
1. Savings bank account can be opened with a ______ amount of deposit.
2. A fixed deposit account carries interest at a rate, which is ________ than that on savings
bank account.
3. Overdraft facility is allowed to holders of _______ deposit accounts.
4. Money can be withdrawn from current account by using ________
5. The rate of interest allowed on the balance of recurring deposit account is _____ than the
rate allowed on fixed deposit account.
6. Counter foil of the pay-in-slip is returned to the ________ by the bank.
7. The right-hand part of the pay-in-slip is called the __________
8. A cheque needs to be attached to the ____ of the pay-in-slip before deposit.
9. Before payment of a cheque, the signature of the account holder is verified with the
________
10. The teller system helps quick ______ of cash by account holders.
11. Deposit of cash into savings bank account can be made at the _______ counter.
V. Match the following (½ Mark)
1. Fixed deposit [ ] A. Counter foil
2. Current deposit [ ] B. Withdrawal form
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3. Left part of pay-in-slip [ ] C. Higher rate of interest
4. To draw money [ ] D. Suitable for saving people
5. Money box scheme [ ] E. Overdraft facility.
ANSWERS
IV. 1. Minimum 2. Higher
3. Current 4. Cheque
5. Lower 6. Account-holder/ depositor
7. Foil 8. Foil
9. Specimen signature 10. Withdrawal
11. Cash receipts.
V. 1. C 2. E 3. A 4. B 5. D
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LESSON - 17
NEGOTIABLE INSTRUMENTS
1. What are differences between promissory note and bills of exchange?
Promissory Note Bills of exchange
1. It contains an unconditional promise 1. It contains an unconditional order
2. There are two parties. The maker and 2. There are three parties. The drawer, the
payee drawee and the payee.
3. It made by the debtor. 3. It is made by the creditor
4. Acceptance is not required 4. Acceptance by the drawee is a must
5. The liability of a maker (Debtor) is 5. The liability of the maker is secondary

primary and absolute. and conditional upon non-payment by
the drawee.
2. Define promissory note and explain it‟s features.
A. Section-4 of the Negotiable Instruments Act, 1881 defines a promissory note as “an
instrument in writing containing an unconditional undertaking, signed by the maker, to
pay a certain sum of money only to or to the order of a certain person or to the bearer of
the instrument”
Features: The following are the features of promissory note.
a. A promissory note must be in writing, duly signed by its maker and properly stamped
as per Indian Stamp Act.
b. It must contain an undertaking or promise to pay.
c. The parties (i.e. creditor and debtor) to a promissory note must be certain.
d. A promissory note may be payable on demand or after a certain date.
e. The sum payable mentioned must be certain.
3. Define cheque and also explain how it differs from bills of exchange?
A. The Negotiable Instruments Act, 1881 defines a cheque as “a bill of exchange drawn on
specified banker and not expressed to be payable otherwise than on demand”. Actually a
cheque is an order by the account holder of the bank. The following are the differences
between cheque and bill of exchange.
Cheque Bills of exchange
1. It is drawn only on a banker 1. It can be drawn on any body including
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2. The amount is always payable a banker
3. It can be crossed to end its 2. The amount is payable on demand or

negotiability after a specified period.
4. Acceptance is not required. 3. It can not be crossed
4. Acceptance is a must
4. “There are different types of hundis used in our country”. Do you agree? State any
two important varieties of hundis?
A. A hundi is a negotiable instrument by usage. It is often in the form of a bill of exchange

drawn in any local language in accordance with the custom of the place. There are a variety
of hundis used in our country, important hundis are Shah-Jog Hundi, and Darshani Hundi
i. Shah-Jog Hundi: This is drawn by one merchant on another, asking the latter to pay
the amount to a Shah. Shah is a respectable and responsible person, a man of worth
and known in the bazaar. A Shah-Jog hundi passes from one hand to another till it
reaches a Shah, who after reasonable enquiries, presents it to the drawee for
acceptance of the payment.
ii. Darshani Hundi: This is a hundi payable at sight. It must be presented for payment
within a reasonable time after its receipt by the holder. Thus, it is similar to a demand
bill.
5. State the features of negotiable instruments?
A. Negotiable instruments are documents meant for making payments, the ownership of
which can be transferred from one person to another many times before the final payment
is made.
According to section 13 of the Negotiable Instrument Act, 1881 a negotiable instrument

means “promissory note, bill of exchange, or cheque, payable either to order or to bearer.”
Features of negotiable instruments:
1. Negotiable instruments are freely transferable from one person to another

2. Negotiable confers absolute and good title on the transferee.
3. A negotiable instrument must be in writing.
4. The instrument must involve payment of a certain sum of money only
5. The time of payment must be certain.
6. Negotiable instrument must be an unconditional
7. The payee must be a certain person
8. It must be signed by the maker.
9. Delivery of the instrument is essential
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10. Stamping of bill of exchange and promissory note is mandatory.
6. What are the various types of cheques? Distinguish between open cheque and crossed
cheque?
A. Cheque is an order given by a customer to the bank. Cheques are of four types. They
are
1. Open cheque
2. Crossed cheque
3. Bearer cheque
4. Order cheque
Differences: The following are differences between open cheque and crossed cheque.
Open cheque Crossed Cheque
1. Open cheque is subject to risk of theft 1. crossed cheques avoided the risk of
theft
2. It is possible to get cash over the
counter at the bank 2. Payment of crossed cheque is not made
over the counter at the Bank
3. The customer need not any account at
bank to cash the cheque 3. The customer must have an account at
any bank to cash the crossed cheque
4. There is a chance to transfer others by
signing on the back of a cheque 4. No chance of transfer to others.
1. Write two points of distinction between a promissory note and a cheque?
Promissory Note Cheque
1. It is drawn only on a banker 1. It drawn on anybody
2. It must be stamped 2. No need to stamping
3. It contains the promise 3. It contains the order
2. State any four essential features of bill of exchange?
A. 1. A bill must be in writing, duly signed by the drawer, accepted by drawer and properly
stamped as per Indian Stamping Act.
2. It must contain an order to pay.
3. The order must be unconditional
4. The order must be to pay money
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5. The parties to a bill must be certain.
3. State any three essential features of cheque?
A. 1. It must be in writing and duly signed by the drawer.
2. It contains an unconditional order.
3. It is issued on a specified banker only
4. The payee is always certain
5. It is always payable on demand.
4. What is the bearer cheque?
A. A cheque which is payable to any person who presents it for payment at the bank counter is
called Bearer cheque. A bearer cheque can be transferred by mere delivery and requires no
endorsement.
1. Name any two types of commonly used negotiable instruments?
A. 1. Promissory Note 2. Cheque 3. Bill of exchange.
2. „The drawer can only draw a time Bill‟. Do you agree with this statement? If yes, give
reasons?
A. Yes. The drawer is the person who makes the order for making payment.
3. „A cheque need not bear a date‟. Do you agree? If yes, give reasons?
A. No. Every cheque must have the date. Otherwise bank will not accept that cheque.
4. „A bill of exchange must contain an unconditional promise to pay‟. Do you agree with
this statement? Justify your answer.
A. Yes. Bill of exchange is an unconditional order or instrument.
5. State the three parties involved in a bill of exchange?
A. 1. Drawer 2. Drawee 3. Payee
6. What is the cheque?
A. It is an order given by a customer to the banker to pay the specified amount on demand.
7. Which is the negotiable instruments Act?
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A. Negotiable instrument Act 1881.
8. Who is the drawer?
A. The person who makes the order for making payment.
9. The person who accepts the bill to pay money on due date is know as?
A. Drawee
10. Maker and payee are the parties in an negotiable instrument. What is that
instrument?
A. Promissory Note.
IV. Fill in the blanks with suitable words (1 Mark)
1. The person to whom the amount mentioned in the promissory note is payable is known as
_______
2. Transfer of a negotiable instrument to another person by signing on it, is known as ____
3. In a promissory note, the person who makes the promise to pay is called _____
4. The person who endorses the promissory note in favour of another is known as _______
5. A promissory note must be signed as per ________ Act.
6. The parties to a bill must be _______
7. The promissory note must be stamped as per ______Act
8. Parties in promissory note are _________
9. Endorse means, the person who _________ person.
10. Negotiable instruments Act ________
V. Choose the correct Answer for the following questions (½ Mark)
1. Which are the negotiable instruments [ ]
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(A) Promissory note, Cheque (B) Property receipts
(C) Cash memos (D) other receipts
2. In case of bill of exchange, payee means [ ]
(A) Cash Receiver (B) Creditor
(C) A person who have the right to collect the money on due date
(D) Debtor
3. The person, who issues cheque must have [ ]
(A) High properties (B) High cash balance
(C) Cash deposits in bank (D) Cash balance in bank account
4. Cheque is the [ ]
(A) Printed paper (B) Legal paper
(C) Indian Act (D) Negotiable instrument
5. Open cheque means [ ]
(A) The person who have the instrument will collect the money from bank
(B) The cheque which has crossed
(C) The cheque amount deposited into account
(D) The cheque which was not signed.
VI. Match the following (½ Mark)
A B
1. Stated cheque [ ] A. The cheque which was cashed at bank
counter by the holder.
2. Ante-dated cheque [ ] B. The cheque which avoid the risk of theft
3. Crossed cheque [ ] C. The cheque which issued on 15 March,
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with the date of 10th March.
4. Post dated Cheque [ ] D. The cheque which was not cashed with in
the period of three months from the date of
issue.
5. Open cheque [ ] E. The cheque, which was issued on April, 20
with the date of 25th April.
6. Drawer [ ] F. It is a promise to pay money on demand or
on specified date.
7. Payee [ ] G. Must be signed by the maker.
8. Bearer cheque [ ] H. The person who have the right to collect the
money on due date of the instrument.
9. Cheque [ ] I. The cheque which is transferable without
endorsement.
10. Promissory note [ ] J. The person who make a bill on debtor.
ANSWERS:
IV. 1. Payee 6. Certain
2. Endorsement 7. Indian stamping Act
3. Drawer / maker 8. Two, maker and payee
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4. Endorser 9. Endorses the instrument to other
5. Negotiable Instruments Act 10. 1881
V 1) A 2) C 3) D 4) D 5) A
VI 1) D 2) C 3) B 4) E 5) A
6) J 7) H 8) I 9) G 10) F
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Lesson – 18
INSURANCE
I. Answer the following essay questions – (5 Marks)
1. Explain the various principles of insurance.
A. There are certain principles that may apply to the contracts of insurance between insurer
and insured, which are as follows.
1. Utmost good faith: Insurance contracts are the contract of mutual trust and confidence.
Both parties to the contract, that is the insurer and the insured must disclose all relevant
information to each other.
2. Insurable interest: It means financial or pecuniary interest in the subject matter of

insurance. A person has insurable interest in the property or life insured if he stands to
gain from its existence or loose financially from its damage or destruction. In case of life
insurance, a person taking the policy must have insurable interest at the time of taking the
policy.
3. Indemnity: The word indemnity means to restore someone to the same position that he
was in before the event concerned took place. This principle is applicable to the fire and
marine insurance. It is not applicable to life insurance, because the loss of life cannot be
restored.
4. Contribution: The same subject mater may be insured with more than one insurer. In
such a case, the insurance claim to be paid to the insured must be shared or contributed by
all insurers.
5. Subrogation: In the contract of insurance, subrogation means that after the insurer has
compensated the insured, the insurer gets all the rights of the insured with regard to the
subject matter of the insurance. For example, goods worth Rs.20,000/- are partially
destroyed by fire and the insurance company has paid compensation to the insured, then
the insurance company can take even these partially destroyed goods and sell them in the
market.
6. Mitigation: In case of a mishap the insured must take all possible steps to reduce or
mitigate the loss or damage to the subject matter of insurance. This principle ensures that
the insured does not become negligent about the safety of the subject matter after taking
an insurance policy.
7. Causa-Proxima (nearest cause): According to this principle the insured can claim
compensation for a loss only if it caused by the risk insured against. The risk insured
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should be nearest cause for the loss. Then only the insurance company is liable to pay the
compensation.
2. Explain the fire insurance? State how the insured will get claim in the case of fire
accident?
A. A contract of fire insurance is a contract whereby the insurer, on payment of

premium by the insured, undertakes to compensate the insured for the loss or damage
suffered by reason of certain defined subject matter being damaged or destroyed by fire. It
is a contract of indemnity, that is, the insured cannot claim anything more than the value
of property lost or damaged by fire or the amount of policy, whichever is lower. The claim
for loss by fire is payable subject to two conditions, viz;
(a) There must have been actual fire;
(b) Fire must have been accidental, not intentional; the cause of fire being immaterial.
The basic principle applied with regard to claim is the principle of indemnity. The
insured is entitled to be compensated for the amount of actual loss suffered subject to a
maximum amount for which he had taken the policy. He cannot make a profit through
insurance.
For example, if a person takes a fire insurance policy of Rs.20,000/ on certain

goods. Out of these, goods worth Rs.15,000/- are destroyed by fire. The insured can only
claim an amount to the extent of loss i.e., Rs.15,000/- (and not Rs.20.000/-) for the
damage from the insurance company.
3.„Marine insurance promoting the marine transport‟? Write your opinion on this
statement? (OR) Briefly explain hull insurance.
A. Marine insurance is an agreement (contract) by which the insurance company (also

known as under writer) agrees to indemnify the owner of a ship or cargo against risks, which
are incidental to marine adventures. It also includes insurance of the risk of loss of freight
due on the cargo. Marine insurance that covers the risk of loss of cargo by storm known as
cargo insurance. The owner of the ship may insure it against loss on account of perils of the
sea. When the ship is the subject matter of insurance, it is known as hull insurance. Further,
where freight is payable by the owner of cargo on safe delivery at the port of destination, the
shipping company may insure the risk of loss of freight if the cargo is damaged or lost. Such
a marine insurance is known as freight insurance. All marine insurance contracts are
contracts of indemnity. By introducing various types of marine insurance policies, the marine
transport is developing. It helps for promotion of international trade.
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1. Explain the nature of business loss or risk?
A. All business activities are subject to uncertain events or happenings and may suffer loss or
damage. Timely precaution can be taken to avoid some of the losses. But certain losses
and damages have either to be borne by the businessman himself, or if possible, shared
with others.
2. What are the various types of risks? Explain.
A. The possibility of loss or damage can be divided into two broad categories: uncertainties
and risks. Uncertainties are the events, which cannot be foreseen, But risks can be
anticipated in the light of past experience. The chances of fire in the factory of godown
depend upon precautions taken to prevent its occurrence, or having necessary
preparedness to keep the resulting loss at a minimum level.
3. Define the term insurance?
A. Insurance means by which risks or loss or damage can be shifted to another party (the
insurers) on payment of a charge known as premium. The party whose risk is shifted to the
insurer is known as the insured. Obviously, insurer is generally an organization (insurance
company), which is willing to share the loss or damage and it is also qualified to do so.
Insurance is a contract between the insurer and insured whereby the insurer
undertakes to pay the insured a fixed amount, in exchange for a fixed sum (premium), on
the happening of a certain event (like at a certain age or on death), or compensate the
actual loss when it takes place, due to the risk insured.
4. What is the voyage policy?
A. Voyage policy is intended for a particular voyage, without any consideration for time. It is
used mostly for cargo insurance.
5. What are the features of insurance?
A. The following are the features of insurance.
a. It increases the confidence in the mind of policyholders

b. It has the correct objective
c. It compensate the loss
d. It provides a facility to the business people to concentrate against their business
6. What are the advantages of life insurance?
A. The following are the advantages of life insurance.
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a. Payment of premium is fixed
b. It increases the saving habit in public mind
c. Businessmen can provide for life insurance of all their employees by way of group
insurance.
d. It provides financial security to the family of the policyholders.
7. Explain the word subrogation?
A. Subrogation means that after the insurer has compensated the insured, the insurer gets all
the rights of the insured with regard to the subject matter of the insurance. For example,
goods worth Rs.20,000/- are partially destroyed by fire and the insurance company has
compensation to the insured, then the insurance company can take even these partially
destroyed goods and sell them in the market.
8. What does endowment life policy?
A. An endowment policy runs for a limited period or upto a certain age of the insured. The
sum assured becomes due for payment at the end of the specified period or on the death of
the insured, if it occurs earlier.
9. What are the differences between personal, business insurance?
A. The following are the differences between personal insurance and business insurance.
Personal Insurance Business Insurance
1. Personal insurance related to human 1. Business insurance related to human

lives only lives, properties, goods and
commodities, buildings, journeys and
others.
2. The amount of sum assured in the 2. The amount of sum assured in business
personal insurance is less insurance is high
10. Write about fidelity insurance policy?
A. As a protection against the risks of loss on account of embezzlement or

defalcation of cash or misappropriation of goods by employees, businessmen may get
policies issued covering the risks of loss on account of fraud and dishonesty on the part of
employees handling cash or in charge of stores. This is called fidelity insurance policy.
The employees may also be required to sign a fidelity guarantee bond.
11. The word „compensations‟ is not related to life insurance? Explain.
A. Compensation means contributing a token amount of loss by the insurance company.

Replacement of loss is not possible in the case of life insurance. But, it is possible in the
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case of non- life insurance. Replacement of loss or contribution of loss is known as
compensation. It is possible in the case of indemnity policies.
12. What is the importance of Insurance? Explain.
A. Insurance is a simple means of sharing the burden of loss or damage among many people.
It plays a significant role in business in view of the large-scale production and distribution
of goods in national and international markets. It is an aid to both commercial and
industrial enterprises. It enables the accumulated premium received to be invested in
securities which in turn are utilized for national development. Insurance is also a source of
employment for many people.
13. How the insurance providing employment to the public?
A. Many of people are working directly or indirectly in insurance concerns. Some of the
people are working as an employee and some of the people are working as an agent in life
insurance and non-life insurance companies. Advertising companies, stationery and
printing concerns and their employees are also depending on insurance concerns. Thus,
insurance companies are providing employment facility to so many people directly and
indirectly.
1. Classify the various types of insurance?
A. Insurance may be broadly classified into four types, viz.,
a. Life insurance
b. Fire insurance
c. Marine insurance
d. Other types of insurance like, burglary insurance, motor vehicle insurance.
2. Give the list of life insurance policies?
A. Life insurance policies are of two types, viz.,
a. Whole-life policy
b. Endowment policy
3. Write the various types of marine insurance policies?
A. Marine insurance policies are four types.
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a. Time policy
b. Voyage policy
c. Mixed policy
d. Floating policy
4. At the time of purchase of new vehicle what can you do for safety?
A. Insure the motor vehicle.
5. What policy covered the theft of cash or any in banks and business firms?
A. Burglary insurance policy
IV. Fill in the blanks (1 Mark)
1. Insurance is a means of spreading the ______ of a few among many.
2. The members of the business community feel _____ because of insurance.
3. Insurance companies invest their funds in corporate and government _______
4. Insurance is an aid to ______ as well as commerce
5. The principle of utmost good faith is based on ______ between insurer and insured.
6. In life insurance contract the insurer must have insurable interest at the time of _______
7. The purpose behind the principle of _______ is that, the insured does not allow to make
profit from the insurance contract.
8. If there are two or more insurers and the insurance claim is paid by one of them, other
insurers have to contribute _______to the insurer who has paid the claim.
A B
1. Marine insurance [ ] A. Vehicle accident
2. Life insurance [ ] B. Burglary policy
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3. Insurance against life accident [ ] C. Marine accidents
4. Insurance against the theft of cash [ ] D. Fire insurance
5. Insurance against motor vehicle [ ] E. Death coverage.
VI. Choose the correct answer from the following (½ Mark)
1. Marine insurance related to ________ [ ]
(A) Train (B) Aircraft (C) Ship (D) Bus
2. Voyage policy related to ________ [ ]
(A) Sea (B) Sky (C) Road (D) Train
3. Burglary insurance policy related to _______ [ ]
(A) Accident (B) Theft (C) Fraud (D) Fire
4. Main objective of insurance is_____ [ ]
(A) Compensation (B) Profit (C) Interest (D) Bonus
5. Insurance is ______ [ ]
(A) Cinema sector (B) Business sector
(C) Industrial sector (D) Service sector
ANSWERS:
IV. 1. Loss 5. Mutual trust and confidence
2. Security 6. Contract
3. Securities 7. Indemnity
4. Trade 8. Proportionately
V. 1. C 2. E 3. D 4. B 5. A
VI. 1. C 2. A 3. B 4. A 5. D
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Lesson – 19
PURCHASE AND SALE
1. What are the differences between deferred installment purchase system and hire
purchase system?
A. The following are the differences between hire purchase system and installment purchase
system
Installment purchase system Hire- purchase system
1. It is essentially a contract for sale 1. It is essentially a contract for hiring of

goods
2. The ownership rights passes to the

buyer once the initial payment is made 2. The ownership rights remain with the
seller and the customer exercises his
option for purchasing the goods.
3. In case of default in payment the seller
can sue the buyer for balance
installments. He cannot take back 3. The buyer can return the goods at any
possession of the goods. Similarly, the stage. The seller can also take back the
buyer cannot return the goods and goods in case of non-payment.
adjust the amount of payment due.
2. Explain „deferred‟ installment plan‟ as a mode of payment with an example.
A. Deferred installment plan mostly known as „buy now – pay later‟ plan. Under this method
the buyer pays a nominal amount to the seller at the time of purchase and takes possession
of the goods. The balance is paid by him in installments over a period of time. The
installment is a fixed amount payable monthly or quarterly to the seller and the total
payment is equal to the unpaid amount and the interest charged on it. The interest charged
can offer interest free installments. If the buyer fails to pay any installment the seller can
sue him for the unpaid amount.
For example, Vinod went to the local shop to buy a colour television. The price
of the TV set was Rs.20,000/-. Under the deferred installment plan he was required to pay
10 percent of the total price initially and then pay the rest through 10 interest free monthly
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installments. Thus, he had to pay Rs.2000/- and take the TV for use. He has to pay the rest
at Rs.1800/- per month for ten months. If Vinod fails to pay installments, then the seller can
sue him in court to recover the unpaid amount. This method of sale is usually found in the
case of goods which are less durable and have more chances of wear and tear.
3. What are the steps involved in the process of sale of goods, sow through the chart?
A. The following are the various steps involved in the process of sale of goods. Those are
shown in the following chart.
Enquiry
Quotation
Order
Acceptance of order Letter of regret
Invoicing
Dispatch of goods
Advice letter
Taking delivery
Making payment
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4. Explain the procedure of sale through tenders?
A. This method of sale is normally found in the case of purchases made by big organizations
or government agencies where the quantity of goods required and the amount involved are
very large. A tender is an undertaking to supply materials / goods indicating the terms and
conditions of sale therein. This method of sale involves responses to tenders invited by
intending purchasers with a view to selecting the supplier who offers the most competitive
and favourable terms. The advertisement or notice inviting tenders are usually published in
one or more newspapers and contain detail regarding the goods. Particulars and forms for
submitting tenders are sometimes made available to the interested parties on applying in
response to the advertisement. Tenders are usually required to deposit an earnest money
along with the tender. This ensures the seriousness of the interested parties. The general
practice is to receive tenders in sealed covers so that the terms and conditions offered by the
parties remain secret and are not tampered with. The sealed covers are opened in the
presence of proper authorities and the most favourable tender is accepted. Thereafter, a
formal contract for sale is entered into with the tenderer on the basis of the terms offered.
1. What is meant by „purchase‟?
A. Purchase is a process through which one person gets some goods or properties transferred
in his name from another, on payment of money. It also includes availing of services by one
from another for money.
2. What is meant by sale?
A. Sale is a process through which some goods or properties are transferred from one person to
another for cash or on credit. It includes rendering of services by one for money.
3. What is meant by auction sale?
A. An auction sale refers to the sale of certain goods openly on a specific date and time so
that people may bid for the goods. The goods are sold to the highest bidder. In auction sale,
the goods are displayed and there is a reserve price below which goods are not to be sold.
This reserve price is fixed by the seller.
4. What are the various modes adopted to make payment for purchase of a product?
A. Generally, the modes of payment are as follows:
a. Immediate payment
b. Deferred installment plan
c. Deferred payment at the end of credit period.
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5. Describe the different modes for purchase of a product?
A. The following are the different modes that may be adopted while purchasing goods.
a. Purchase by inspection
b. Purchase by sample / pattern
c. Purchase by description or brand
6. What are the various methods that may be adopted to sell a product?
A. The following are various methods of sale of products.
a. Hire purchase system

b. Deferred installment system
c. Sale on a approval
d. Sale through tender
e. Auction sale
f. Cash sales
1. Write any two methods of sales?
A. a. Hire purchase system
b. Deferred installment system
2. Write any two modes of payment?
A. a. Immediate payment
b. Deferred installment payment
3. What is the meaning of quotation?
A. On receipt of enquiry from the prospective buyer, the seller provides the required
information known as quotation.
4. State how errors in sending goods and preparing invoice may be rectified?
A. a. Credit Note b. Debit Note
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IV. Fill in the blanks with suitable answer (1 Mark)
1. Sale and ______ always go together
2. Businessman earns ________ through buying and selling of goods and services.
3. In every sale and purchase, the _________ pays money to the seller.
4. Offering goods at a price which customers can afford to pay is a part of ______ function
5. All activities directed towards the flow of goods and services from the producer to the
consumer are part of __________
V. Choose the correct answer from the following (½ Mark)
1. Allowing discount up to 70% of the cost is one of the following types of sale. What it is
(A) Tender sales (B) Auction sales [ ]
(C) Cash sales (D) None of these
2. Godrej, lifeboy, fevicol are examples for one of the [ ]
purchase modes. What it is
(A) Purchase by inspection (B) Purchase by sample / pattern
(C) Purchase by description or brand (D) None of these
A B
1. Quotation [ ] A. Buy now pay later plan
2. Invoice [ ] B. Satisfactory terms and conditions of
sale
3. Deferred instalment plan [ ] C. Detail transaction with the buyer
4. Deferred instalment payment[ ] D. Non-execution of order
5. Letter of regret [ ] E. Amount to be received by the seller
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ANSWERS:
IV 1. Purchase
2. Profit
3. Buyer
4. Marketing
5. Selling
V. 1. C 2. C
VI. 1. B 2. C 3. A 4. E 5. D
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Lesson – 20
CHANNELS OF DISTRIBUTION
1. Give any five characteristics of wholesalers?
A. Wholesalers are one of the important middlemen in the channel of distribution who deals
with the goods in bulk quantity. They buy goods from producers in bulk quantity and sell
them to the retailers in small quantity.
Characteristics of wholesalers:
(i) Wholesalers buy goods directly from producers or manufacturers

(ii) Wholesalers buy goods in large quantities and sells in relatively smaller
quantities.
(iii) They sell different varieties of a particular line of product.
(iv) They may employ a number of agents or workers for distribution of products.
(v) Wholesalers need large amount of capital to be invested in his business
(vi) They generally provides credit facility to retailers
(vii) He also provides financial assistance to the producers or manufacturers.
(viii) In a city or town they are normally seen to be located in one particular area of the
market.
2. State any five differences between wholesalers and retailers?
Wholesaler Retailer
1. Buys goods in large quantities 1. Buys goods in small quantities
2. Buys goods directly from producers. 2. Generally buys goods from the whole-
salers
3. Deals with wide range of products.

3. Deals with limited variety of goods.
4. Requires less capital to start and run
4. Requires more capital to start and run the business
the business
5. Sell goods for consumption
5. Sell goods for resale purpose
6. Direct contact with consumer
6. No direct contact with consumers
7. In order to attract the attention of
7. No special attention is given to decora- customers retailers give more attention
tion of shop to decorate the shop
3. What are the channels of distribution? Show through the chart?

127
A. Channels of distribution is the route or path along which goods move from producers to
ultimate consumers. The route taken by goods as they move from producers to consumer is
known as channels of distribution. Channels of distribution are shown in the following
chart.
Agent Retailer
Producer Consumer
Wholesaler
Types of channels: Channels are simply classified in to two types. They are
a. Direct channels
b. Indirect channels
a. Direct channels: Producer – Consumer
b. Indirect channels:
i. Producer – Agent – Wholesaler- Retailer – Consumer
ii. Producer – retailer – consumer
iii. Producer – wholesaler – consumer
iv. Producer – wholesaler- retailer – consumer
4. Write the types of retail trade through chart?
A. Types of retail trade are shown in the following chart.
Retail Trade
Small scale retail trade Large scale retail trade
Itinerants Fixed shops Departmental Multiple Super Bazar
Store shop
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II. Answer the following short questions ( 3 Marks)
1. Write any three functions of wholesalers?
A. The following are the functions of wholesaler
a. Purchase and collection of goods

b. Storage of goods
c. Distribution of goods to retailers
d. Providing financing facility
e. Risk bearing.
2. Write any three functions of retailer?
A The following are the functions of retailer
a. Buying and collection of goods

b. Storage of goods
c. Credit facility
d. Personal services
e. Risk bearing
f. Display of goods
g. Supply of information
3. What companies distributing goods directly to the consumers. Give any three
examples?
A. The following companies are directly selling goods to the consumers.
a. Bata company b. H.P.C.L. c. Libarty shoe company
4. State any three functions of retailers?
A. The following are the features of retailer.
a. Retailers have a direct contact with consumers

b. Retailers sell goods not for resale, but for ultimate use by consumers.
c. Retailers buy and sell goods in small quantities
d. Retailers require less capital to start and run the business
e. Retailers deals with different varieties of products and they give wide choice to the
consumers.
5. Give any four examples for Itinerant retailing business people?
A. The following business people are the examples for Itinerant retailers.
a. Bangles sellers.
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b. Fruits sellers in trains
c. Vegetable sellers on a cart
d. Ice-cream sellers on cycle
e. Earthen pots or carpet sellers by using carts.
6. Give the examples for fixed shop retailing?
A. The following are the examples for fixed shop retailing.
a. General store or variety store

b. Single line stores
c. Specialty store
7. „There are few shops, which are selling similar type of goods in your area‟. How you
prefer to buy the goods in particular shop?
A. Generally the customer purchases goods from the shop, which provides the following
facilities
a. Supply of goods at fair prices

b. Rendering services after sale
c. The shop which providing goods as per the consumer needs
d. The shop which sale the goods on credit
e. The shop which conduct the door-delivery services.
1. What is meant by channels of distribution?
A. Channels of distribution is the route taken by goods as they move from producers to
consumers.
2. Write the losses of retailers?
A. Generally retailer bearing the following losses.
a. Loss of goods by fire accident.

b. Loss of goods by theft
3. What is the meaning of weekly trade fair?
130
A. It is the place, where the different merchants arranged shops on every particular day. It is
common in cities and towns.
4. What are the products suitable for wholesale business?
A. Generally the following products are suitable for wholesale business.
a. Iron and steel

b. Electrical equipment
c. Textiles
d. Paper
5. If you want a pen, where you buy?
A. From the retailer
6. Who are the retail businessmen?
A. Retailers are the traders who buy goods from wholesalers or sometimes directly from
producers and sell them to the consumers.
IV. Fill in the following with suitable words (1 Mark)
1. Route or path along which goods move from the producer to ultimate consumer is known as
_______
2. A retailer acts as a _______ between the wholesaler and the ultimate consumers
3. Where goods are sold through middlemen, it is known as _______ channel of distribution
4. Where goods are sold directly to consumers without using services of middlemen, it is
known as ________ channel.
5. In the direct channel, producers sell goods to customers through door-to-door salesmen and
through their own________
V. Choose the correct answer for the following questions (½ Mark)
1. Which of the following goods is suitable for Itinerant retailing trade? [ ]
(A) Sugar (B) Iron and Steel (C) Sale of bangle (D) Fertilizers
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2. If you want to purchase a biscuit packet. Where you buy? [ ]
(A) Single line shop (B) General store (C) Special store (D) Variety store
3. Which of the following goods or services are suitable for indirect channels of distribution?
[ ]
(A) Banking services (B) Telephone services
(C) Food grains (D) Transport services
A B
1. Super Bazar [ ] A. Deals in goods of one brand only
2. Itinerant retailers [ ] B. Sells different varieties of the same product line
3. Specialty store [ ] C. Large variety of goods of general use
4. Variety store [ ] D. Large-scale retail trade
5. Single line store [ ] E. Sells articles on carts.
Answers:
IV. 1. Channel of distribution
2. Middleman
3. Indirect
4. Direct
5. Retail stores.
V. 1. C 2. B 3. C
VI 1. D 2. E 3. A 4. C 5. B
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Lesson -21
LARGE-SCALE RETAIL TRADE
1. Explain the advantages of Super Bazar
A. The following are the advantages of Super Bazar.
1. Variety of goods: Super Bazar deals with a wide range of goods.
2. Quality of goods: It provides standard quality goods to the customers.
3. Low price: Due to economies of large-scale purchases and avoiding middle men in the
process of purchases and sale of goods, the super bazar sells goods at low price.
4. Low operating cost: No salaries and wages paid to salesmen and assistants. So
maintenance cost is less.
5. Benefits to members: The members of the super bazar get the goods at concessional
price. In case of surplus or profits they also get dividend according to their shareholding.
6. Freedom of selection: A customer can find goods of different brands at one place. This
makes comparison and selection easy.
7. State control: In India most of the Super Bazars are controlled by central or state
governments. It helps to maintain price.
2. Write the advantages and disadvantages of Departmental Stores.
A. Advantages of Departmental stores:
1. Convenience in shopping
2. Wide choice of product
3. Economies of large-scale purchase and sale
4. Mutual advertisement
5. Efficient management
Disadvantages of Departmental stores:
1. It needs heavy investment

2. Distance from residential areas
3. High cost of operation
4. High price
5. Lack of personal attention
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3. Write the advantages and disadvantages of multiple shops.
A. Following are the advantages of multiple shops.
1. Easy identification
2. Elimination of middlemen
3. Large-scale economy
4. Low price
5. No bad debts
6. Public confidence
7. Convenient location
The following are the disadvantages of multiple shops
1. Limited choice
2. No credit facility
3. No bargaining
4. Less initiative
4. Write the differences between departmental stores and super bazars.
A. The following are the differences between departmental stores and super bazaars.
Basis of Departmental Stores Super Bazars

difference
Ownership and These stores are owned and controlled Generally these stores are owned and
control by private people controlled by co-operative societies.
Facilities These stores provide facilities to theNo such facilities provided by super
customers like restaurant, toilet, bazars
telephone and others.
Price of goods Price of goods is generally higher than Generally price of goods are
market price. cheaper than departmental stores
price
Credit facility Some times goods are sold on credit Sales are made on cash basis only.
basis.
I. Answer the following short questions (3 marks)
1. What is the meaning of multiple shops?
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A. The shop or shops which are opened by large-scale manufacturers or producers to sell the
same branded goods or items at different locations over the state or country. These are also
known as chain stores.
Ex: Bata shop, HMT watch shop.
2. Explain the super bazar with examples?
A. Super bazar is a large-scale consumer‟s co-operative store, which sell a wide variety of
goods, like food items, vegetables, fruits, groceries and consumer goods.
3. Write any three features of large-scale retail trade?
A. The following are the features of large-scale retail trade.
a. It provides services to a large number of customers
b. It requires huge capital investment to start and run the business
c. Generally it sells goods on cash to customers.
4. What are the types of large-scale retail trade concerns in India?
A. In India we find the following types of large-scale retailing business
1. Departmental stores.
2. Multiple shops
3. Super Bazars.
5. Write about Departmental Store.
A. A departmental store is a large-scale retail shop, where a large variety of goods are sold in a
single building which is divided into various departments. Each department deals with
particular type of goods like books and stationery, garments, electronic items, fancy items.
Ex: Shoppers stop, Spencer in Chennai.
6. What is the meaning of large-scale retail trade? Explain
A. Large-scale retail trade means sale of wide variety of goods or same type of various goods to
large number of customers under the same roof of building.
III. Answer the following short questions (1 Mark)
1. What are the examples for departmental stores?
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A. Shoppers stop (New Delhi), Spencer (Chennai)
2. What is Super Bazar?
A. Super bazar is a large scale consumer‟s co-operative store.
3. What are the examples for the goods available in multiple shops?
A. Watches, clothes, shoes.
4. Write any two limitations of departmental stores.
A. Large investment, distance from residential area.
5. Which business concern provides restaurant toilet, telephone, ATM facilities to the
customers?
A. Departmental Stores.
1. Process of sale of goods _______ quantity is known as retail trade.

2. _________ is a type in which either single type of goods or a variety of goods is made
available to a large number of consumers in a big shop under a single roof
3. In the case of large scale retail trade shops are opened _________ locations, and sell
goods _________ to the customers.
4. Generally large scale retail trade concerns opened as _________ and sell products
directly to the customers.
5. Large scale trade shops purchases goods in large quantity from _______, and sell to the
customers.
6. In the case of large scale retail trade, concerns sold goods ________ directly to the
customers.
7. Large scale retail trading concerns sold goods in _______ quantity to the customers.
8. Super bazar sold goods on _______ to the customers.
9. Generally large scale retail trade concerns needs ________ capital
V. Every question has four answers. Choose the correct answer (½ Mark)
1. For the purpose of establishment of departmental store, it needs spacious ground and
_______ [ ]
(a) High investment (b) Bank loan
(c) Loan (d) Government Aid
2. Advantage of departmental store [ ]
(a) Availability of all the goods.
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(b) Various goods sold in various departments which are located under the same roof of
building.
(c) It sold sundry goods.
(d) It provides all the goods and services
3. Some of the departmental stores provide the following facility to the customers.
(a) Free delivery of goods (b) Sale of goods at low price [ ]
(c) Free package (d) Door delivery
4. Departmental store is a _______ [ ]
(a) Retail shop (b) Shop which sold stationery and others
(c) Large scale retail trade (d) Shop, which sold goods on credit
5. Departmental store purchases goods [ ]
(a) In large quantity
(b) From retail market
(c) On credit
(d) On cash
1. Departmental store [ ] A. Shoppers Stop
2. Multiple shop [ ] B. Kids‟ cake store
3. Super Bazar [ ] C. Sold variety of goods under the
same roof of building
4. Delhi [ ] D. Producers directly open and
Controlling
5. Bangalore [ ] E. Large scale retail trade
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ANSWERS
IV 1) Small 2) Large scale retail trade 3) Important, directly
4) Showrooms 5) Manufacturers 6) Under the same roof of building
7) Large 8) Cash 9) High
V 1) A 2) B 3) D 4) C 5) A
VI 1) C 2) D 3) E 4) A 5) B
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Lesson: 22
PERSONAL SELLING
1. Define the term personal selling and explain the importance of personal selling in the
view of manufacturers and consumers.
A. „Personal selling‟ refers to the presentation of goods and services before the customers and
convincing them to buy the products or services.
Importance of personal selling in the view of consumers:
1. It explains the consumers about new products which are introduced in market and
educate the consumers.
2. It explains the consumers about advantages of new products.
3. It guides the consumers in selection of goods or services as per their needs and tastes.
4. It gives an opportunity to consumers about using the product and to get the solutions for
the complaints.
Importance of personal selling in the view of manufactures:
1. It creates the demand for new and existing products and services.
2. It creates new customers
3. It leads to product improvement.
4. It helps to know the needs and demands of the customers.
2. What is personal selling? Explain its essential elements.
A. Personal selling means, presentation of goods and services before the customers and
Essential elements of personal selling:
1. Face-to-face interaction: Personal selling enables a salesman has face-to-face

interaction with the prospective buyers.
2. Presentation: In the process of personal selling the salesman presents the goods and
services before the prospective buyers for the purpose of selection.
3. Flexibility: The approach of personal selling is always flexible.
4. Promotion of sales: The ultimate objective of personal selling is to promote sales by
convincing more and more customers to use the product.
5. Supply of information: Personal selling provides various information to the customers
regarding availability of the product, special features, uses and utility of the product. So
it is an educative process.
6. Mutual benefits: Both seller and buyer enjoys benefits from personal selling.
3. Describe the different qualities of sales person engaged in personal selling.
(OR)
What are the features of a salesman who engaged in personal selling?
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A. Every salesman who engaged in personal selling must have some qualities or features.
They are:
1. Physical Quality: A salesman should have good appearance and an impressive

personality. He should also have sound health.
2. Mental Quality: A good salesman should posses certain mental qualities like
imagination, initiative, self-confidence, sharp memory, alertness and the like.
3. Integrity of character: A good salesman should posses the qualities of honesty and
integrity. He shall gain the confidence of the customers.
4. Knowledge about the product and the company: A salesman should have full
knowledge about the product and company he is representing. He should be able to explain
the features, qualities, how to use, uses of the product and others.
5. Good behaviour: A salesman should be co-operative and courteous.
6. Ability to persuade: A good salesman should be good in conversation. He should be

able to convince the customers.
4. “Physical and mental qualities are sufficient for a good salesman who engaged in
personal selling.” Do you accept this or not? Explain
A. Physical and mental qualities are not alone sufficient for a good salesman. A good
salesman is one who is good at social and professional matters.
1. Social features: A good salesman must have the social features like integrity of
character and good behaviour. The social features of salesman are
i. He must have integrity of character.

ii. He must have a good behaviour
iii. He must have the ability to convince the customers through his communication.
2. Professional features: A good salesman shall also have the professional features like
knowledge of the product and the company and ability to persuade. Professional features of
a salesman are
i. Knowledge of the product and the company: A salesman should have the knowledge
about his company and selling product. He should be able to explain each and every aspect
of the product like how to use it, what precautions to be taken and quality of product.
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ii. Ability to convince the customer: The salesman should be able to convince the
customers through his good conversation. He must have the ability in creation of desire in
the mind of customers
5. “A salesman need not posses any quality if the product is good.” Do you agree with
the statement? Give reasons.
A. I do not accept the statement that a salesman need not posses any quality if the product is
good. Without effort of a salesman no product demands in market. The following are the
features of a good salesman.
1. Physical quality
2. Mental quality
3. Integrity of character
4. Knowledge of product and the company
5. Good behaviour
6. Ability to convince the customer.
Salesman is compulsory for sale of products even if it is good. If the salesman is
good, he will sell the goods and he will improve the market. The salesman who has the
above good features will get success in market.
II. Answer the following Short Questions (3 marks)
1. What is the meaning of personal selling?
A. Personal selling means, the presentation of goods and services before the customers and
2. Write the essential elements of personal selling.
A. The following are the elements of personal selling
1. Face-to-face interaction
2. Presentation (persuasion)
3. Flexibility
4. Promotion of sales
5. Supply of information
6. Mutual benefits.
3. What is the importance of personal selling in the view of producers or

manufacturers?
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A. The importance of personal selling in the view of manufacturers is as follows
1. It creates demand for products both new and existing products.
2. It creates new customers and it helps in expanding the market for the product.
3. It leads to product improvement.
4. It helps to know the needs and demands of the customers.
4. What is the importance of personal selling in the view of customers?
A. The importance of personal selling in the view of the customers is as follows.
1. It explains the consumers about new products introduced in market, and it educates the
consumers.
2. It explains the consumers about advantages of new products.
3. Personal selling also guides the consumers in selection of goods and services as per their
needs and tastes.
4. Personal selling gives an opportunity to the customers about using the product and to get
the solutions for complaints.
5. State the physical and mental qualities of sales persons engaged in personal selling?
A. Physical and mental qualities of salesmen are:
1. Physical quality: A salesman should have a good appearance and an impressive

personality. He should also have a sound health.
2. Mental quality: A good salesman should posses certain mental qualities like
imagination, initiative, self-confidence, sharp memory, alertness, estimation of customers
needs and demands.
III. Answer the following short questions (1 Mark)
1. Write any two elements of a salesman in personal selling?
A. i) Face-to-face interaction ii) Supply of information
2. Write any two features of a salesman in personal selling?
A. i) Physical features ii) Mental features
3. What are the mental abilities of a good salesman?
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A. i) Planning ii) Self-confidence
4. What is the physical quality?
A. Physical quality means good appearance and an impressive personality with sound health.
1.Personal sales convince the ________ to buy the products.

2.Main objective of personal selling is __________
3._______ Conversation is one of the important elements in personal selling.
4.Personal selling provides full information about the products, and _______ the
customers.
1. Physical feature [ ] A. Courtesy
2. Mental feature [ ] B. Good appearance
3. Good behaviour [ ] C. Initiative, self confidence
4. Integrity feature [ ] D. Uses of product, features
5. About product [ ] E. Faithful and loyal.
VI. Choose the correct answer ((½ Mark)
1. Art of conversation is a feature of [ ]
(a) Physical feature (b) Good behaviour
(c) Ability to convince (d) Integrity feature
2. Which feature explains good appearance and sound health [ ]
(a) Good behaviour (b) Physical feature
(c) Integrity feature (d) Mental feature
3. The feature which explains against the advantages of product [ ]

and utility of the product.
(a) Ability of convince (b) Knowledge about products
(c) Good behaviour (d) mental feature
Answers: IV. (1) Consumers (2) Improvement of sales
(3) Face-to-face (4) Educate.
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V. (1) B (2) C (3) A (4) E (5) D
VI. (1) C (2) B (3) B
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Lesson 23
ADVERTISING
II. Answer the following essay questions (5 Marks)
1. Write the advantages and disadvantages of business advertising?
A. Advantages:
The following are advantages of advertisements:
1. Advertising has an important role in modern competitive business world.
2. Advertising strengthens the business and commerce.
3. Advertising provides much information about the products to the consumers.
4. Advertising gives information about price, quality availability, usage, durability, features
of various products. Advertising also educates the customers.
5. Advertising reduces risk of buyers and sellers.
Disadvantages: The following are the disadvantages of advertising
1. Advertising disturbs the consumers.

2. Sometimes it misleads the consumers.
3. Advertising is costly aspect. It is also burden to consumers.
4. Advertising increases the competition among various brands of goods.
5. The cost of advertising includes in cost of product. So the customers are paying more to
the products.
2. What are the methods followed by manufacturers or business people for marketing of
new products?
A. At the time of introducing new products in market, generally the following methods of
advertising are followed by business people or manufacturers.
1. Advertising through television.
2. Advertising through internet
3. Advertising through radio
4. Advertising through hoardings on busy roads.
5. Advertising by distribution of products in functions and celebrations.
6. Advertising the products through songs, wall posters, wall paints, pamphlets and others.
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7. Advertising the products by allowing discount on price of goods.
3. What are the advantages and disadvantages of advertising through newspapers?
A. The following are the advantages of advertising through newspapers.
1. Newspapers normally have a wide circulation and a single advertisement in the newspaper
can quickly reach to a large number of people.
2. The cost of advertisement is low because of wide publication.
3. Generally newspapers are published daily. Thus the same advertisement repeated can
remind the reader everyday.
4. Newspapers are published from different regions and in different languages. So the
advertisement reaches all the people.
Disadvantages: The following are the disadvantages of advertisements.
1. The life of the newspaper is very short, that is only 24 hours

2. People read the news in newspaper. They may not pay attention on advertisements.
3. Illiterates can not read the newspaper
4. Cost of advertisement is very high.
4. Write the advantages and disadvantages of advertisements in periodicals?
A. Periodicals means weekly, fortnights, monthly, bi-monthly, quarterly, half-yearly or yearly

newspapers or magazines. India Today, Front Line, Yojana, Femina, Swathi, Annadata are
the best examples for periodicals.
Advantages: The following are advantages of advertisements through periodicals.
1. Periodicals have a much longer life than newspapers.

2. Periodicals have a selected readership and so advertisers can know about their target
customers and accordingly selective advertisements are given.
3. Selective people may pay more attention about advertisements.
Disadvantages: The following are the disadvantages of advertisements through periodicals.
1. The cost of advertisements in periodicals is costly.

2. The numbers of readers are less than the newspapers.
3. The advertisement materials are given much in advance to the publishers. Periodicals are
not flexible.
5. What is the media of advertisement? Explain various types of media for
advertisements?
A. Various types of tools of advertisements are also known as media of advertisements.

Generally media of advertisements are classified into three types.
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1. Print media
2. Electronic media.
3. Other media.
1. Print media: Print media is a very commonly used medium of advertising by

businessman. It includes advertising through news papers, magazines, journals, handbills and
printed covers and bags.
2. Electronic media: This is a very popular form of advertising in the modern day
marketing. It includes radio, television, internet and video clippings.
3. Other media: The consumer has to spend nothing and he can see such advertisements
while moving outside. Some of such advertising are hoarding, posters, vehicular displays,
gift items.
I. Answer the following short questions (3 Marks)
1. What is the meaning of advertisement?
A. Advertising is „any paid form of non-personal presentation and promotion of ideas, goods
and services by an identified sponsor‟. Advertising is non-personal as it is not directed to
any single individual.
2. What are the types of advertisements?
A. Following are the types of advertisements.
a. Personal advertisements
b. Legal advertisements
c. Sports advertisements
d. Trade advertisements
e. Administrative advertisements
f. Government and private advertisements.
3. What are the features of advertisements?
A. The following are the features of advertisements.
1. Non-personal presentation of message.
2. Paid form of communications
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3. Promotion of product, service or idea
4. Sponsor is always identified.
5. Communicated through some media.
4. What are the objectives of advertising?
A. The following are the objectives of advertising?
1. To educate customers
2. To create demand for new products.
3. To retain existing customers
4. To increase sales
5. To assist salesman and buyer
5. What is the internet? Explain any two of its advantages.
A. Internet is the latest method of communication. To use the internet, computer is

compulsory. With the help of computer and with internet connection we can get
information from all over the world.
Advantages:
1. Information from all over the world is made available at the door steps.
2. User can see the advertisement at his own time and as per his requirement.
6. Show the types of media through table?
A. Generally advertisements are communicated by using some media, like newspapers,

journals, radio, television etc. The following diagram shows some commonly used media
of advertising.
Media of advertising
Print media Electronic media other media
News papers Periodicals Radio Internet Hoardings Posters

Television vehicular displays
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7. Which medium of advertising will be preferred by the blind?
A. Blind people are unable to see and read the newspapers, journals, radio and T.V. are suitable
for blind people to listen the news.
8. What is radio advertising? Enumerate its advantages and limitations?
A. Radio is one of the medium in mass media. There is a chance to listen the programs through
radio. Illiterates and blind people also listen the radio programes. But no chance to repeat the
programes. If any program or advertisement pass on no chance to listen again. This
advertising life period is very less.
9. No need to spend money to get the information through some medium of advertising.
What are they?
A. Wall posters, Radio advertisements, Hoardings, Vehicle displays are economy mediums to
advertise and no need to spend money to get the information through these mediums. So
these will reach more people.
III. Choose the correct answer for the following questions (½ marks)
1. Which is the suitable tool of advertisement for the ultimate customer? [ ]
(a) Radio(b) Newspapers (c) Wall posters (d) Television
2. Which tool of media give the global information immediately [ ]
(a) Internet (b) Television (c) Computer (d) Newspapers
3. Which is the electronic media from the following? [ ]
(a) Newspaper (b) Periodicals (c) Magazines (d) Radio
1. _______ is the audio visual tool of advertisement.

2. ______ will connect from any corner of the country.
3. Cost of advertisement in periodicals is ________
4. Comparatively readers of periodicals are _______ than the newspaper readers.
V. Indicate the right or wrong in the following statements. (1 Mark)
1. The sponsor contacts the customers personally through advertisements.
2. The cost of advertisement is born by the sponsor
3. Advertising helps in educating customers about different products and their use.
4. Advertising is not helping the business world.
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5. Television is suitable tool of advertising in the case of blind people.
1. Advertisement of Birla white cement on a bus [ ] A. Electronic media
2. Advertisement of bank in “India Today” [ ] B. Other media
3. Advertisement of maggi noodles in TV [ ] C. Print media
ANSWERS:
III. (1) a (2) a (3) d
IV (1) Television (2) Internet (3) costly (4) less
V (1) wrong (2) right (3) right (4) wrong (5) wrong
VI. (1) B (2) C (3) A
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LESSON – 24
SALES PROMOTION
1. State the importance of sales promotion from the point of view of manufactures.
A. The business world today is a world of competition. A businessman cannot survive if his
products do not sell in the market. Thus all marketing activities are undertaken to increase
sales. Producers may spend a lot on advertising and personal selling. Still the product may
not sell. So incentives need to be offered to attract the customers. Thus sales promotion is
important to increase the sale of any product. The importance of sales promotion from the
point of view of manufacturers is explained as follows.
1. It helps to increase the sales in a competitive market
2. It increases the profits
3. It helps to introduce new products in market
4. It helps to dispose the existing stock
5. It helps to know the change of fashion or taste of the customers.
6. It helps to stabilizes sales volume by giving various incentives.
7. It helps to study the market.
2. State the importance of sales promotion from the point of view of customers.
A. Importance of sales promotion in the view of customers is explained as follows.
1. The consumer gets the product at a cheaper rate.
2. It gives financial benefit to the customers by way of providing prizes and sending them
to visit different places.
3. The consumer gets all information about the quality, features and uses of different
products.
4. Certain schemes like money back offer create confidence in the mind of customers.
5. It helps to raise the standard of living of people by exchange of their old items for new
items.
6. It helps to increase the image in society.
7. It helps to know the information about the market.
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3. A toothpaste company is giving 250 grams toothpaste free with a pack of 500 grams.
Name this technique of sales promotion. What is the specific objective of this scheme?
Explain two more schemes of sales promotion other than this?
A. The main objective of sales promotion is to increase the quantum of sales and increase the
profit. The offer of 250 grams paste free with 500 grams tooth paste is known as premium
or bonus offer. Mug free with Nescafe. Cup free with Horlics, tooth brush free with 100
grams toothpaste are also examples for this offer. By this offer consumer get the benefit. At
the same time by large turnover the manufacturer also get the benefits. This bonus offer is
of two types. They are:
First method: In the process of sales promotion another article will be offered along with
the products. Like, if you buy 100 grams coconut oil you will get Rs.5 worth comb free. In
this offer the customer gets comb free, but it is not a loss to the manufacturer, because the
cost of comb was adjusted by large turnover.
Second method: In the process of sales promotion the same article will be offered free.
Like, buy one get one free. In this process the seller will increase the price of goods. But
customers get that at fewer prices. But it is not a burden to the seller. It will adjust by large
turnover.
II. Answer the following questions (3 Marks)
1. What is the meaning of sales promotion?
A. Every manufacturer or a businessman wants to increase the sale of goods that he deals in,
to earn more and more profits. For that he follows different methods, such methods are
called sales promotion.
2. List the tools used in sales promotion?
A. The following are the tools which are used in sales promotion.
1. Free samples 6. Premium or bonus offer
2. Exchange schemes 7. Price-off offer
3. Coupons 8. Fairs and exhibitions
4. Trading stamps 9. Scratch and win
5. Money back offer
3. Explain free samples as technique of sales promotion.
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A. The customers may have received free samples of shampoos, washing powders, coffee
powder and others at the time of purchasing various items from market. Sometimes shop-
keeper may distribute free samples even without purchasing any item in shop. The purpose
of distribution of free samples is to attract the new customers. Much of business people
follow this technique to increase their sales turnover. Medicines, books, tooth powder,
washing powder are best examples for free samples.
4. Explain the advantages of coupons in sales promotion?
A. Sometimes, coupons are issued by manufacturers either in packets of product or through an

advertisement printed in the news papers or magazines or through e-mail. The holder of the
coupon gets the product at discount price. Generally the customers attracted for discount at
the time of purchasing products. It leads to the higher turnover.
5. What is the importance of sales promotion in business?
A. Sales promotion adopts short term non-recurring methods to boost-up sales in different
ways. These offers are not available to the customers through out the year. During end of
the festival seasons, year ending and some other occasions these schemes are generally
found in the market. Sometimes shopkeeper allows various schemes to clear the dead stock.
6. What are the objectives of sales promotion?
A. Sale of goods is very important in every business concern. The main objective of sales
promotion is to increase sales. However, there are some other objectives of sales
promotion. The objectives are as follows:
 To introduce new products.

 To increase the turnover and profit levels
 To attract new customers and retain the existing customers.
 To maintain sales of seasonal products and for clearing the stock of goods.
 To meet the challenge of competition.
7. What is the role of advertisements in promotion of sales?
A. Advertisement differs from sales promotion in terms of approach and techniques. The
objective of advertising is the promotion of sales. Introduction of new products in market
and helps the businessman to earn more profits. Advertisements attracts the customers, by
this sales will be increased. Generally the businessman explains the quality, durability,
availability of the product with the help of advertisements.
8. What is the meaning of money back offer? How it is advantage to the customers?
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A. Money back scheme is one of the best tools in sales promotion. Under this scheme
customers are given assurance that full value of the product will be returned to them if they
are not satisfied after using the product. This creates confidence among the customers with
regard to the quality of the product. This technique is particularly useful while introducing
new products in the market.
III. Fill in the following blanks (1 Mark)
1. “If the customer not satisfied after using the product the seller promises to return the
money”. Name of this scheme is __________
2. The offer of old product for a new product at a price less than the original price of the
product. This offer is known as _______________
3. Sales promotion helps the businessman to retain the existing customers and to create
______
4. The main objective of sales promotion is __________
5. For introducing _________ in market, the businessman distributes the same as free
samples.
IV. Match the following (½ Mark)
1. Free samples [ ] A. To induce customers to buy a product more
frequently.
2. Exchange schemes [ ] B. To create the confidence against the product
among the customers
3. Price-off offer [ ] C. To introducing new products in market
4. Trading stamps [ ] D. To promote the sales in off-season or un-season.
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V. Indicate the right or wrong in the following statements (½ Mark)
1. Exchange offer creates confidence among the customers.
2. Sales promotions help to clear the stock of goods.
3. Sales promotion turns the customers towards new branded products.
4. The customer purchases products at higher price by sales promotion.
5. The customer has the knowledge about the quality of product by sales promotions.
ANSWERS:
III. 1. Money back offer 2. Exchange scheme
3. New customers 4. Promotion of sales.
5. New products
IV (1) C (2) B (3) D (4) A
V (1) Right (2) Right (3) Wrong (4) Wrong (5) Right
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LESSON – 25
RIGHTS AND RESPONSIBILITIES OF CONSUMERS
1. Who is the consumer? Explain any three of his rights.
A. Consumer is a person who buys goods or services to be used or consumed by himself or

herself or by some one else on behalf of the buyer. Today, consumers are facing various
problems on account of competition in the market, misleading advertisements, availability
of inferior quality of goods and services and others. Hence, protection of consumer‟s
interest has become a matter of serious. Let us now discuss the various rights of consumers
that are recognized by the Government of India to protect consumer himself.
Rights of consumer:
1. Right to safety: Consumers have a right to be protected against marketing of goods

which are injurious to health and life. As a consumer if you are conscious of this right,
you can take precautions to prevent the injury or if injury is caused inspite of
precaution, you have a right to complain against the dealer and even claim
compensation.
2. Right to be informed: Consumer also has the right to be informed about the quantity,
quality, purity, standard or grade and price of the goods available so that they can make
proper choice before buying any product or service.
3. Right to choose: Every consumer has the right to choose the goods needed from a wide
variety of similar goods.
4. Right to be heard: Consumer has a right to be consulted by government and public
bodies when decisions and policies are made affecting consumer interest. Also
consumers have a right to be heard by manufacturers, dealers and advertisers about
their opinion on production and marketing decisions. Consumer also has the right to be
heard in legal proceedings in court of law dealing with consumer complaints.
5. Right to seek redressal: If and when any consumer has a complaint or grievance due
to unfair trade practices like changing higher price, selling of poor quality or unsafe
products, lack of regularity in supply of services, the consumer has right to seek
remedies. He has a right to get the good one in place of defective goods. The consumer
also has a right to get compensation from the manufacturers or dealers, if they have
suffered a loss or inconvenience due to the fault.
6. Right to consumer education: To prevent market malpractices and exploitation of
consumers, consumer awareness and education are essentially required. For this
purpose, consumer associations, educational institutions and government policy makers
are expected to enable consumers to be informed and educated about the relevant laws.
The ways in which dishonest traders and producers may try to manipulate market
practices to deceive consumers, how consumers can protect their own interest, the
procedure to be adopted by consumers while making complaints.
2. Explain the responsibilities of a customer?
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A. The customer has so many responsibilities as well as rights. The following are the
responsibilities of customer.
1. Responsibility of self-help: It is always desirable that a consumer should not depend

on the seller for information and choice as far as possible. A consumer can always take
care of himself.
2. Proof of transaction: The second responsibility of the consumer is that the proof of
purchase and documents, guarantee cards, warranty cards, vouchers which are received
from the seller shall be preserved.
3. Proper claim: Another responsibility that consumers are expected to bear in mind is
that while making complaints and claiming compensation for loss or injury, should not
be unreasonably large.
4. Proper use of product or service: Some consumers, especially during guarantee
period, make rough use of the product, thinking that it will be replaced during the
guarantee period. This is not fair on their part. They should always use the product
properly.
1. Define the term consumer.
A. Consumer is a person who buys goods or services to be used or consumed by him self or by
some one else on behalf of the buyer.
In otherwords, a consumer may also be defined as “any body who choose goods and
services, spends money to obtain them and uses them to satisfy his own needs”.
2. Describe the concept of consumerism.
A. Consumerism refers to a movement by consumers to ensure fair and honest practices on the
part of manufacturers, traders, dealers and service providers in relation to consumers. It is
collectively a consumer‟s movement for safe-guarding themselves. This movement will be
successful if consumers are aware of their rights and responsibilities while using goods and
services.
3. What consumers expect as a part of their right to consumer education?
A. To prevent market malpractices and exploitation of consumers, consumer awareness and

education are essentially required. For this purpose, consumer associations, educational
institutions and government policy makers are expected to enable consumers to be
informed and educated about-
1. The relevant laws which are aimed at preventing unfair trade practice.
2. The ways in which dishonest traders and producers may try to manipulate market
practices to deceive consumers.
3. How consumers can protect their own interest?
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4. The procedure to be adopted by consumers while making complaints.
4. What are the tools using to encourage the consumers?
A. Generally pamphlets, journals, posters, meetings, group discussions, TV and radio

programmes, play lets are used to encourage the consumers.
4. Distinguish between a consumer of goods and consumer of services.
A. Consumer is a person who buys goods or services to be used or consumed by himself or by

someone else on behalf of the buyer. These consumers are known as consumer of goods.
The person who buys and using the services like transport, electricity, film shows and cell
net work services are known as consumer of services. The consumer of goods didn‟t use
goods immediately but the consumer of services use the service immediately and observe
the quality of services.
5. Explain right to be informed.
A. Consumers have the right to be informed about the quantity, quality, purity, standard, grade
and price of the goods available so that they can make proper choice before buying any
product or service. Also, wherever necessary, the consumer must be informed about the
safety precautions to be taken while using the product to avoid loss or injury.
Ex: Whenever gas cylinder supplied, the supplier must inform the user to stop the flow of
gas with the help of the regulator when it is not in use.
6. What are the documents a consumer should preserve after buying durable goods?
A. The responsibility of every consumer is that the proof of purchase and purchase of durable
goods should be invariably obtained and preserved. In the case of durable consumer goods
like TV, refrigerator, motors carry warranty or guarantee cards issued by the dealers. If the
purchases are done on bank payment, they must keep the proof also. These proofs help the
customer to get the services for repairs and replacement of parts at free of cost during a
certain period after purchase.
7. Explain the right to be heard.
A. As per this right, consumers have a right to be consulted by government and public bodies
when decisions and policies are made affecting consumer interest. Also, consumers have a
right to be heard by manufacturers, dealers and advertisers about their opinion on
production and marketing decisions. Finally, consumers have the right to be heard in legal
proceedings in court of law dealing with consumer complaints.
III. Choose the correct answer for the following (½ Mark)
1. Consumer means [ ]
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(A) Seller of goods and services (B) Distributor of goods and services
(C) Commission agent (D) Consumer of goods and services
2. Consumerism means [ ]
(A) Consumers movement for safe-guarding themselves.
(B) Purchase of goods by consumers.
(C) Consumers gaining profits.
(D) Supply of goods and services to consumers.
3. Government made Acts for [ ]
(A) Producers (B) Traders (C) Companies (D) Consumers
4. Who has the right to be informed [ ]
(A) Manufacturers (B) Consumers
(C) Government (D) Business people
5. Who provides safety to consumers? [ ]
(A) Police (B) Business people (C) Law courts (D) Market
IV State which of the following statements are true and which are false (1 Mark)
1.Consumer has no right to protect himself

2.Different forums were established by government for protecting consumers
3.The right to be heared can effectively be exercised if the consumers are unorganized.
4.Consumer has the right to select the goods as per his needs.
5.Responsibility of protecting consumers is a burden to the Government. So the
government didn‟t protect the consumers.
Column – A Column – B
1. Right to be heared [ ] A. Seek legal remedy in court of law
2. Right to safety [ ] B. Consultation with consumers regarding
policy decision.
3. Right to consumer education [ ] C. Select the best quality item
4. Right to seek redressal [ ] D. Protection against marketing hazardous goods
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5. Right to choose [ ] E. Information about relevant laws of consumer
protection.
ANSWERS:
III. (1) D (2) A (3) D (4) B (5) C
IV (1) False (2) True (3) False (4) True (5) False
V (1) B (2) D (3) E (4) A (5) C
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Lesson 26
WISE BUYING
1. Explain the Hallmark.
A. To protect the customers against victimization by impure gold quality, Bureau of Indian
Standard (BIS) has started giving a special symbol on gold jewellery known as „Hallmark‟.
The hallmark is the symbol of purity of gold jewellery. At the time of buying gold no
customer can recognize the purity of gold jewellery by looking at it. Normal eye cannot
recognize the purity of gold content. Gold jewellery is very costly and every customer will
invest large amount to buy the gold jewellery. So, to protect the customers and their
interest, the BIS has established Assaying and Hallmarking centres all over India to
evaluate and test the quality of gold content in the jewellery in India. Finally, hallmark is a
symbol of purity in gold jewellery.
Besides the above standardization marks, we have few other marks or symbols on
various products. The following are some of these marks.
i) Vegetarian mark and non-vegetarian mark: Vegetarian and non-vegetarian

marks are used to indicate the presence of vegetarian and non-vegetarian ingredients
in processed and packed food items. Red and Green coloured circles are the
symbols recorded on packed items. Red colour is the symbol of non-vegetarian and
Green is the symbol of vegetarian food.
ii) Bar code: A set of black vertical lines printed on the labels of some product is called bar
code. This barcode facilitate in preparing bills at cash counter and to identify the product
particulars.
2. Explain about ISI mark and FPO mark?
A. International Organization for Standardization (ISI): It is a standardization mark issued

by the Bureau of Indian standards (BIS) to certify that the products confirm to the minimum
quality standards. It covers electric goods, cement, minerals, water, paper, paints, biscuits,
instant baby foods, gas cylinders, soap and detergent powders, production and processing,
printing hospitals, insurance.
Food Product Order (FPO): This order sets standards for protection of quality of
products made from fruits and vegetables. Any manufacturer, who wants to produce and
sell processed fruits and vegetables also requires license from Government of India like
jam, jelly, pickles, fruit juices, soft drinks.
3. Explain about Ag mark, Wool mark, Eco-mark.

A. Ag Mark: It is a logo prescribed by the Department of Agricultural Marketing for use on
agricultural, horticultural, forestry and livestock products. The use of this logo ensures the
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standard of natural and prescribed products. This logo commonly appears an oil, fats,
cereals, pulses, spices, honey.
Wool mark: It is a certification mark that appears on woollen garments which use pure
quality wool. This quality standard for woollen products is prescribed by the international
wool secretariat.
Eco mark: Bureau of Indian Standards (BIS) has prescribed standards for eco-friendly
products to keep the environment „pollution free‟ products that confirm to the standards set
by BIS for environmental protection are permitted eco-labeling of their products. An
earthen pot is used as a logo for eco-friendly products. This mark indicates that the product
is environment friendly with regard to productions, use and disposal. The various products
in which we may find this eco mark are paper, packaging materials, textiles, detergents.
4. What precautions should be taken by customers while purchasing medicine, packed

food products, and cooking gas?
A. Medicine: The following precautions should be taken by wise buyer at the time of
purchasing medicine
1. Buy only from chemist shop
2. Compare the name of the medicine written on the label with the prescription of the
physician.
3. Check the manufacturing and expiry date, printed on the label of medicine
4. Check the seal and content of the medicine
5. Always obtain a cash memo.
Packed Food items: The customer should take the following precautions at the time
of purchasing the packed food items
1. Buy from the fresh batch of product.

2. Check the standardization marks like Agmark, FPO, vegetarian and non-
vegetarian mark on the label.
3. Check the manufacturing and expiry date of the product.
4. Check the seal of the products.
5. Don‟t pay more than the price that was printed on the label.
6. Avoid products on which stickers are pasted over the printed price.
7. Go through the information given on the label before using or opening the
product.
8. Lodge complaint immediately if you find any discrepancies in quality as well as
quantity.
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Cooking Gas: Every customer must take the following precautions at the time of
buying the cooking gas cylinder.
1. Check the value of the cylinder.

2. Check the valve of the cylinder for any leakage of gas.
3. Ensure that the cylinder contains the exact quantity of gas as mentioned on the
body of the cylinder.
5. What precautions should be taken by customer at the time of purchasing the electrical
or electronic goods and telephone services?
A. Electrical or Electronic goods: At the time of purchase of the electronic goods the
customer should take the following precautions.
1. Buy only from established shops or authorised dealers.

2. Check the standardization marks like ISI or ISO on the body of the product.
3. Check the manufacturers name and address.
4. Ask for demonstration.
5. Look for duly filled in guarantee or warrantee card.
6. Read thoroughly the users manual before using the product.
7. Avail after sales services regularly.
8. Insure the product against the loss due to fire, theft and accident.
9. Keep the cash memo, guarantee or warrantee card and user manuals at a safe
place.
10. Don‟t try to open the product in case of any trouble, unless you are an expert.
11. Contact the nearest service station or dealer in case of any difficulties.
Telephone Services: At the time of availing telephone services the customer should
take the following precautions.
1. Keep all the payment receipts with a file

2. Lodge the complaint immediately, if you are not satisfied with the service
3. Keep a record of your complaint number
4. Make payment before the last date to avoid penalty.
6. What precautions should be taken by customer before buying the products?
A. Before buying any product, it is necessary to consider whether buying the product is
necessary or not. The buyer must collect the information about the different types of
products available in the market. The buyers also collect the further information about the
product relating to
 Different manufacturers
 Different models made available by each manufacturer
 Various features of each model
 Popularity of specific models
 Design and colour of the products available
 Price of each model.
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On the basis of the above information, the buyer will be able to decide which specific
model he wants to buy. After decided to buy, the buyer will think about where to buy?,
when to buy? and how to buy?. Before buying, the buyer also collects the information
about discount facility, offers, replacing facility, servicing facilities. The buyers think
about the payment of the product. Some sellers‟ offers credit facility and sometimes the
seller accepts credit cards.
Sometimes during the festive seasons or during under sales promotion schemes the
seller usually deliver the goods purchased at the doorsteps of the buyer. The buyer can also
take advantage of it before buying.
7. What are the considerations should be followed by the buyer at the time of
purchasing?
A. While buying the product the buyer should follow the following steps.
 The buyer must inspect the product thoroughly to check whether there is any defect
or not.
 Sometimes the defect in the product may not be noticeable with bare eyes. The buyer
must ask the seller to give a demonstration of the product. It helps to know how to
use and performance of the product.
 The buyer must check the standardization marks which are printed on products like
ISI, ISO.
 The buyer must obtain the cash memo from the seller about the purchased product.
The cash memo is the proof of purchase and it helps to insure the product and for
claim the product in case of loss of product.
 The buyer must receive the guarantee or warrantee card with the seller‟s signature
and stamp.
 The buyer must check the product at the time of delivery.
8. What are the considerations taken by the buyer after purchasing the product?
A. There are few things, which if the buyer taken care of, he will trouble free after buying a
product. They are as follows:
 After the product is purchased, all documents related to the product, like the cash
memo, credit card slip (if paid through credit card), the user manual of the product,
the service book, the guarantee as well as warrantee cards must be preserved safely.
 Before using the product, the buyer must thoroughly read the user manual. It helps to
use the product properly.
 After buying any durable product it is advisable to get it insured against loss, theft
and fire.
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 Sometimes seller or other service providers offer maintenance of the product sold
under Annual Maintenance Contract (AMC t). Under this contract, the buyer if he
wants can avail of maintenance service of his product for a year by giving a one-
time fee. The buyer may consider availing this offer.
 In case of any defect found in the product or problem in operation of product, the
buyer must immediately intimate it to the seller.
 If the buyer purchased product under hire purchase or installment payment scheme,
he must ensure that the installment is paid before the due date, to avoid penalty. It is
also essential to keep a proof of the payment made.
 If the product purchased on bank loan, the buyer must pay installments as per due
dates. Otherwise the buyer will be charged penalty or compound interest.
9. What factors effecting the buying decision? Explain.
A. The following are affecting factors of buying decision.
1 Capacity to buy: Every individual buys according to his capacity. Buying capacity of
individual depends upon his earnings, eligibility for availing loans and advances, debt
repayment capacity and other monitory obligations.
2 Business Advertisements: Advertisement is basically a non-personal communications of

message by the businessmen to promote sale of product. It provides information about the
product. News papers, magazines, hoardings, radio, television, posters and hand bills are
the medium of advertisements. This information affects the buying decision.
3 Sales promotion schemes: Manufacturers, wholesalers and retailers announce special

schemes by giving discount, free coupons and other to increase their sale. All these affect
the decision of a buyer.
4. Social status: The status of the buyer in the society influences his buying decision to a
great extent. The uses of different brands are influenced by the social status of an
individual.
5. Intellectual status: The knowledge of an individual also affects his buying decision.
They have taken precautions at the time of buying products.
6. Urgency: At times, due to urgency, the buyer compromises on the available product.
1. Who is a buyer? Explain.
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A. A buyer may be defined as a person, a private business firm or government office that
choose goods and services and spends money to obtain them either for own use or for
resale.
2. Why do we buy goods? State the reasons?
A. We buy goods for the following reasons.
 to meet our requirements

 to raise our standard of living
 to use quality products
 to respond to changes in taste and fashion.
 to meet our social needs.
 to maintain durable goods in running conditions.
 to run a business.
3. How can we pay the money on purchase of goods?
A. Generally we are paying money on purchase of goods in the following ways.
Cash payment
 Payment through bank cheque.

 Payment through credit card.
 Payment through bank DD‟s
 Payment by sending money order.
 Payment through internet.
 Payment by accepting bills payable and credit purchases.
4. Why do we buy services?
A. The main aim of any buying of goods or services is to satisfying needs and wants of a
buyer. We are purchasing services from doctors, lawyer, engineers, Chartered Accountant
and other skilled employees and persons to satisfy the needs. Thus, the final aspect is
buying services is for our satisfaction.
5. How does urgency of buying affect buying decisions? Give two examples?
A. Due to urgency, the buyer compromises on the available product. In the case of urgency the
buyer didn‟t take care abut quality, price, durability, quantity, colour, design, shape, size
and other features.
Ex: Purchase of medicines, Purchase of goods.
6. What is meant by wise buying?

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A. Wise buying refers to buying the right type of goods or services at the right time at the right
place and at the right price. Sometimes the buyer realize that our decision regarding buying
any product from any specific shop or at any specific time was not correct. Wise buying set
right all these defects.
7. Which information will be collected by customer before buying any product? Explain with
examples?
A. Before buying any product, the buyer will collect the information about the quality,
durability, advantage, price, design, colour, demand of the product, feelings of the product
consumers and details of the producer, like financial status, goodwill, lawful hurdles,
availability, transport facility provided by company and others.
8. What is the purpose of symbols which are printed on label of products? (OR) Why are
these symbols or marks printed on the label of the products?
A. The symbols which are printed on label of the product has much information about the
product, like date of production, batch number, durability period, price, conditions to use,
directions to use, name of the producer company and their address, and other details.
9. Why do we buy the goods? Explain any three reasons?
A. Every human being purchases goods every day due to the following reasons.
1. To meet the requirements: In our daily life we buy several products on a regular basis
like food products, medicines, some fashionable products to satisfy our needs.
2. To use quality products: The qualitative product satisfies the buyers‟ needs and need
not be purchased very after. So it saves the money.
3. To run a business: Buying goods and services are invariables necessary for businessmen
for running their business. Sale of goods or services is necessary. Payments, collections and
meeting expenses are also necessary. So to earn profit after all these they are doing business
10. What is the cash memo? Explain.
A. Cash memo is the documentary evidence of purchase of product. At the time of payment
for the product, the seller will give the cash memo. It contains the date of purchase, name
and details of purchased product, like quantity, unit price, total purchasing value and rules
and regulations of the purchase.
11. What are the various standardization marks?
A. Following are the various standardization marks or symbols used on different products.
1) ISI mark 5) Eco mark 9) Euro II (Bharat II)
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2) Ag mark 6) Hologram
3) FPO 7) Hallmark
4) Wool mark 8) ISO mark
III. Fill in the blanks with suitable words (1 Mark)
1) We often buy _____ items to satisfy our social needs.

2) People often buy goods to respond to changes in _______ and _________
3) Traders are _________ but not consumers.
4) Manufacturers have to buy _______ to make finished goods.
5) When the owner of a car employs a driver, it is called buying of _________
6) Educated people are more selective while buying food articles because of their ___
7) Buying capacity of a person depends on his_______
8) Mostly we choose to buy products which are available _______
9) Many people prefer to buy a product where it is being sold at a ______
10) A person‟s buying capacity depends not only on incense and depends a great deal on his
_______ expenses.
11) If a product is packed in a box, the items in box have to be checked with the information on
the ________
12) _______ of the product should be asked for to check whether it has any defect.
13) Replacement of defective products or their parts is assured by the manufacturer in writing
on the ________ card.
14) Maintenance of certain products is provided free of cost under ________
15) The cash memo acts as a _________ of purchase.
16) ISI standardization mark indicates________ of various products.
17) ISI mark creates confidence in ________ mind.
18) Hall _________ is the quality symbol of_________
19) The small red circle indicates that the food items contains ___________ ingredients in the
packed food.
20) FPO stands for _________
IV. Which of the following statements are right and which are wrong (1 Mark)
1) All buyers are not consumers

2) All consumers are buyers
3) Traders always buy goods for immediate sale
4) Change of fashion does not compel every one to buy garments of new design
5) The buying products creates satisfaction
6) The buyer did not consider the price at an urgency to buy.
7) The social status of a person is one of the affects of buying decision.
8) The buying decision of a person is not affected by advertisements at all
9) The buying capacity of a person depends on easy availability of loan.
10) Wise buying leads to losses.
V Match the terms in column A with the phrases in column B (½ Mark)
Column A Column B
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1) Agmark [ ] A. Jam / Jelly
2) Hall mark [ ] B. Price of a product.
3) Eco-mark [ ] C. Environmental protection.
4) FPO [ ] D. Edible oil
5) Bar code [ ] E. Pure gold
6) Wool mark [ ] F. Air pollution control
7) Euro mark [ ] G. Qualitative garments.
8) Cash memo [ ] H. Indicates the types and price of the products.
9) ISI stands for [ ] I. Bureau of Indian Standard
10) FPO stand for [ ] J. Indian standard inventory.
11) Bar code [ ] K. Food product order
12) Introduction of L. International organization for
Hall mark [ ] stadaradisation.
13) BIS [ ] M Social status
14) ISO [ ] N. Indicates Gold purity
15) Purchase [ ] O. Proof of purchase.
ANSWERS:
III. 1. Gift 2. Fashion, tastes 3. Buyers 4. Raw materials
5. Service 6. Knowledge 7. Income 8. Easily
9. Discount 10. Fixed 11. Printed on label 12. Demonstration
13. Guarantee 14. Warranty 15. Proof 16. Minimum quality
17. Customers 18. Mark, gold 19. Non-veg 20. Food product order.
IV. 1. Right 2. Right 3. Wrong 4. Right
5. Right 6. Right 7. Right 8. Wrong
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9. Wrong 10. Wrong.
V. 1. D 2. E 3. C 4. A 5. B
6. G 7. F 8. O 9. J 10. K
11. H 12. N 13. I 14. L 15. M
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Lesson 27
CONSUMER PROTECTION
1. Describe the various problems faced by consumers in their daily life? Explain.
A. Consumers are facing so many problems in their life from unfair trade activities of traders,
dealers, producers and manufacturers as well as service providers. Some of the unfair trade
practices are explained as under.
1. Adulteration: It is adding something inferior to the product being sold. This is a practice
we come across in the case of cereals, species, tea leaves, edible oil, petrol and others. All
these are caused injurious to the consumer‟s health.
2. Sale of spurious products: That is, selling something of no value instead of the real
product. This is often found in the case of medicines and drugs or health care products.
Ampoules of injections contained only water or glucose water or distilled water is the best
example.
3. Use of false weights and measures: Some of the traders adopt false weights and
measures while selling the goods. Goods which are sold by weight (K.G) like vegetable,
cereals, sugar. Textile fabrics, suit pieces are measured in meters. In the above and other
cases, there is a chance to adopt false weights and measures.
4. Sale of duplicates: Goods that indicates a mark which shown it is of superior quality than
its actual. For example, washing powder, detergent cake, tube lights, jams, edible oils, even
medicines carry well known brand names although these are made by others.
5. Hoarding and black marketing: It is one of the problems that consumer often face.
Some times dealers or traders create scarcity by transforming goods to black market. Stocks
are intentionally held back by dealers it is known as hoarding. Black marketing is the
practice of selling hoarded goods.
6. Tie-in-sales: Buyers of durable consumer goods are sometimes required to buy some
other goods as pre-condition to sale or may be required to pay after-sales service charges
for one year in advance.
You may hear about tying up of new gas connections with the sale of gas stoves.
7. Offering gifts having no additional value: Offering gifts having no additional value or
coupons to collect a gift on the next purchase of some product are practiced aimed at
alluring consumers to buy a product.
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8. False advertisements: Some advertisements falsely represent a product or service to be
of superior quality, grade or standard or falsely assert the need for or usefulness of a
product or service.
9. Sale of sub-standard goods: Sale of goods which do not confirm to prescribed quality
standards particularly for safety. Pressure cookers, stoves are the examples.
2. Name the parties involved in consumer protection? Explain their role in protecting
the interest of the consumers?
A. Actually, for effective consumer protection, it is essential that all the three parties must be
involved. They are consumers, businessmen, and the government. The role of these three
parties explained as follows:
1. Consumers: Self-help is the best help. So consumers should, as for as possible, take care
of their own interest and protect themselves from market malpractices. For this purpose, it
is necessary that they should try to know about their rights and exercise them. They should
not depend on the businessman. Consumers have a right to education and also right to be
heard. They should attend training programmes to know about them.
2. Businessmen: It is expected that producers, distributors, dealers, wholesalers as well as

retailers should pay due regard to consumer rights in their own interest. They should ensure
supply of quality goods and services at reasonable prices. To prevent unfair trade practices,
association of traders, chambers of commerce and industry and manufacturers associations
should entertain consumer complaints against their member and take proper action against
those guilty of malpractice.
3. Government: Consumer protection is the responsibility to be undertaken in the general

interest of society. Enforcement of various laws and amending existing laws to protect
consumer interests are required to be taken up in the light of viewpoints of consumer
associations. Representations of consumer groups should also be associated with the policy
making bodies set up by Government at the centre and the states.
3. Enumerate the various acts passed by the Government for protection of consumer‟s
interest?
A. A number of laws have been passed by the Government of India over the years to protect
the interest of consumers. The purpose of these laws is as follows.
1. Agricultural products (Grading and Marketing) Act, 1937: This act provides for
grading and certifying quality, standard of agricultural commodities which are allowed to
be stamped with AGMARK seal of the agricultural marketing department of the
Government.
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2. Industries (Development and Regulations) Act, 1951: This act provides for control
over production and distribution of manufactured goods. According to this act, the central
government may order investigation of any industry, if it is of the opinion that there has
been substantial fall in the volume of production, or a marked decline in the quality of a
product, or any unreasonable rise in price. After due investigation, the Government may
issue directions to set things right. If the directions are not acted upon, the government may
take over the concerned undertakings.
3. Prevention of Food Adulteration Act, 1954: This act provides for severe punishment
for adulteration of food articles. In case of sale of adulterated food which is injurious to
health and like to cause death, life imprisonment with a minimum fine of Rs.3000 may be
payable.
4. Essential Commodities Act, 1955: The government has power to declare any
commodity as essential in the public interest. Thereby the government can control the
production, supply and distribution and trading of such commodities.
5. The Standards of Weights and Measures Act, 1956: This act provides for the use of
standard weights and standard measures of length throughout the country. Meter has been
specified as the primary unit for measuring length, and „kilogram‟ as the primary unit for
measuring weight.
6. Monopolies and Restrictive Trade Practices Act, 1969: Under the provisions of this
act, as amended in 1983 and 1984, consumers and consumer groups can exercise their
rights of redressal by filing complaints relating to restrictive and unfair trade practices.
7. Prevention of Black-marketing and Maintenance of Essential Supplies Act, 1980:

The primary objective of this act is to provide for detention of persons with a view to
prevention of black-marketing and maintenance of supplies of commodities essential to the
community.
8. Bureau of Indian Standards Act, 1986: This act has two major activities, formulation
of quality standards of goods and their certification through the BIS. It leads to maintain the
quality and features as per norms.
9. Consumer Protection Act, 1986: This act provides consumer protection more
comprehensively than any other law. Consumer can seek legal remedy for a wide range of
unfair practice not only with respect to goods but also for deficiency in services like
banking, insurance, transport, and supply of electricity or other energy, housing,
entertainment, amusement and others.
4. Mention the Jurisdiction of different consumer courts?
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A. Any individual consumer or association of consumers can lodge a complaint in writing to
the district, state or national level forum depending on the value of goods and claim for
compensation if any.
1. The „district forum‟ has the jurisdiction to deal with all complaints where the value of
goods or services or the compensation claimed does not exceed R.20 lacks.
2. The „state commissions‟ are empowered to deal with cases where the value or amount
involved exceed Rs.20 lakhs but below Rs.1 crore. The state commission also deals with
appeals against orders of the district forum.
3. The „national commission‟ has the jurisdiction to take up all claims and grievances
exceeding the value of Rs.1 crore. It has also appellate jurisdiction, that is, power to deal
with appeals against orders passed by state commission.
4. An aggrieved party can appeal to the Supreme Court against the orders of the national
commission.
5. Describe the role of non- government organizations in protecting the interest of

consumers?
A. Non-governmental organizations are those associations of people which aim at promoting

the welfare of the public without any profit motive. They are voluntary bodies having a
constitution and rules of their own and are free from government interference. They depend
on donations and partly on government assistance. Non governmental organizations dealing
with consumer problems are known as consumer associations or consumer organizations.
The role of non-government organizations has become increasingly more significant over
the last two decades. At present, there are more than 800 such organizations in India now.
These organizations are registered under the Societies Registration Act or the Companies
Act or as Charitable Trusts.
Non-governmental organizations have undertaken various activities as part of the

consumer movement. They perform several functions. They are as follows:
1. Create awareness about consumer rights and educate the general public about consumer
problems and remedies through seminars, workshops and training programmes.
2. Provide legal aid to consumers by way of assistance in seeking legal remedy.
3. Undertake advocacy of consumer‟s point of view as representative members of
consumer protection councils and other official boards.
4. Publish periodicals and journals to disseminate information to consumers.
6. State the procedure to be followed for redressal of consumer grievances?
A. Consumer complaints can be filed by an individual consumer or association of consumers.

The complaint may be filed before the district forum for the district where the cause of
174
action has arisen or where the opposite party resides or before the state commission notified
by the state government or the union territory or it can be filed before the national
commission at New Delhi.
There is no fee charged for filing a complaint. The complaint may be filed by the
complaint or his authorized agent in person or it may be sent by post. Five copies of the
complaint are generally required to be filed along with the following information.
1. Name, description and address of the complainant.

2. Name, description and address of the opposite party or parties, as the case may be.
3. Facts relating to the complaint and when and where it arose.
4. Documents, if any, in support of the allegations contained in the complaint (like cash
memo, receipt or others)
5. The nature of relief which the complainant is seeking.
6. The complaint should be signed by the complainant or his authorized agent.
7. A complaint is required to be filed within a period of two years from the date on which
the cause of action arose.
8. Complaints are expected to be decided, as for as possible, within three months from the
date of notice received by the opposite parties.
7. How the consumers are protected by court? Explain?
A. Consumer Protection Act, 1986 provides for consumer protection more comprehensively
than any other law. These may be regarded as consumer courts. Consumers can seek legal
remedy for a wide range of unfair practices not only with respect to goods but also for
deficiency in services like banking, insurance, financing, transport, telephone, supply of
electricity or other energy, housing, boarding & lodging, entertainments, amusement and
others. This act also includes provision for the establishment of consumer protection
councils at the centre and the state. For the settlement of consumer disputes, the act
provides a semi-judicial system. It consists of district forum, state commission and national
commission for redressel of consumer disputes.
8. Which consumer courts are established at various levels for consumer protection
Explain through chart?
A. Various consumer courts are established for consumer protection in India. They are
It is the final court for all. An aggrieved consumer

Supreme Court
can appeal in this court
National commission Accepts

Acceptsthe issues
the which
issues exceeds
which Rs.1
exceeds crore.
Rs.20 lacks but
below Rs.1 crore
District forums Accepts the issues up to the value of Rs.20 lacks
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State commission
1. What is meant by consumer protection?
A. Consumer protection refers to the steps necessary to be taken or measures required to be

accepted to protect consumers from business malpractices
2. Why should consumers be protected?
A. The necessity of adopting measures to protect the interest of consumers arises mainly due
to their helpless position and the unfair business practices.
1. The steps necessary to be taken or measures required to be accepted to protect consumers

from business a malpractice is known as?
A. Consumer protection.
2. When the Essential Commodities Act was implemented?
A. 1955
3. Which act explains about grading and marketing?
A. Agricultural Products Act, 1937
4. An aggrieved customer can appeal in next court against the orders of the state commission
is_____
A. National Commission
5. What are the parties in consumer protection?
A. Consumers, businessmen, and the government.
1. My neighbour always goes to the nearest shop to buy electrical goods because he is of his
basic right to __________
2. Some consumers prefer to pay high price for goods as they believe that it indicates _______
3. When you buy a product with a new brand name on the basis of an advertisement claiming
best quality and then find it defective, it is a case of _________ advertisement.
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4. The district forum can deal with complaints which involve value of goods and
compensation amounting to not more than _________
5. When a complaint is submitted before the district forum that requires testing of the product,
the case is to be decided within a period of ________
6. The national commission has the jurisdiction of dealing with complaints involving value of
goods above _________
7. An appeal against the order of state commissions can be filed before the _________
8. State commission can deal with cases involving value of goods or compensation not
exceeding_________
9. Consumer Protection Act was implemented in the year _______
10. Young boys eat lot of processed food available in packets as they do not know that such
food is bad for health and because they are not aware of their right to ________
V. Choose the correct answer for following questions (½ Mark)
1. The district forum can deal the issues up to the value of Rs. [ ]
(A) 5 Lakhs (B) 20 Lakhs (C) 1 Lakh (D) 5 Crores
2. National Commission can deal with complaints involving the value of goods above Rs.
[ ]
(A) 20 Lakhs (B) 50 Lakhs (C) 1 Crore (D) 10 Crores
3. The Agricultural Act was implemented in the year [ ]
(A) 1937 (B) 1954 (C) 1955 (D) 1986
4. The Prevention of Food Adulteration Act was implemented in the year [ ]
(A) 1937 (B) 1969 (C) 1956 (D) 1954
5. The Essential Commodities Act was implemented in the year [ ]
(A) 1955 (B) 1956 (C) 1968 (D) 1986
6. The Consumer Protection Act was implemented in the year [ ]
(A) 1969 (B) 1937 (C) 1986 (D)1956
VI Match the following (½ Mark)
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1) Essential Commodities Act [ ] A. 1969
2) Prevention of Food Adulteration Act [ ] B. 1955
3) The Standards of Weight and Measures Act [ ] C. 1986
4) Monopolies and Restrictive Trade Practice Act [ ] D. 1954
5) Bureau of Indian Standards Act [ ] E. 1956
ANSWERS:
IV. 1) Choose 2) The goods are of superior quality 3) Misleading
4) 20 Lakhs 5) 5 Months 6) Rs.1 Crore 7) National commission
8) Rs.1 Crore 9) 1986 10) Information
V 1) B 2) C 3) A 4) D 5) A 6) C
VI 1) B 2) D 3) E 4) A 5) C
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Lesson 28
SAVINGS AND INVESTMENT
I Answer the following essay questions (5 Marks)
1. Show the various sources of income through a picture?
A. Income normally arises from various sources. People earn money from different sources.
Some may earn from single source and other may have multiple sources. The sources of
income are shown in the following picture.
Other
Property source
Business
Agriculture
Employment
Vocation Profession
2. What is meant by savings? Do you think it is required for us? If yes, Why?
A. „Savings‟ refer to the amount of money, which is kept aside from the current income for
future use. We may be able to keep aside this money either by reducing our expenditure or
by increasing our income or by doing both
Need for savings: Savings are essential not only for individuals, family or businessmen but
it also very much required for a nation. Growth is practically impossible without savings.
Individuals save the money due to several reasons. They are as follows:
1. Savings help us to meet future requirements: We need money in future for various
purposes like spending money on higher education, on marriages, and other celebrations,
owning some immovable assets like house, land, farms and others with savings at hand
we can meet all these expenses.
2. Savings help us to meet expenses during emergencies: There are events which are
uncertain and may occur in future. All these events my require some amount of money
to be spend, which we can have from our savings
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Ex: We may require money during emergencies like sudden illness, accidents.
3. Savings help us to raise our standard of living: Savings accumulated over a period of
time become a substantial amount, which enables us to buy something, which is better,
comfortable or even luxurious.
Ex: We can buy a vehicle of our own, a home, furniture. All these improve our standard
of living
4. Savings help us to generate further income: We can use our savings through buying
shares debentures, bonds, property or keeping money in fixed deposits at banks. All of
these can give us an assured return in terms of dividend, interest or rent. This is an
additional income for us.
5. Savings help the nation in its economic development: When we keep our savings in a
bank, life insurance corporation or post office, we can get interest or bonus as return.
But at the same time they can grant loans to the government and government projects for
the economical development of the country.
3. Define the term expenditure? Explain various avenues of expenditure?
A. The term expenditure refers „to spending of money on any item, which does not give any
additional monetary income in return to the person who spends that amount‟
Avenues of expenditure: Generally, most of us spend a major portion of our income on

buying various items. The different areas in which we spent our earnings are called avenues
of expenditure. They are:
1. Expenditure on goods and commodities: We may spend money on various types of

goods and commodities needed for use in our daily life. These may perishable goods
like vegetables, milk, fish and others or may be consumer durables like television,
radio, furniture.
2. Expenditure on services: We also spend money for availing different types of services.
It may be for availing banking services, postal services, transport services and
communication services.
3. Expenditure on celebrations: In our daily life we find several occasions for
celebrations. It may be a birthday, an anniversary, a festival, a marriage, ceremony and
others. On such occasions we spend lot of money.
4. Expenditure on entertainment: In our busy life we often feel like taking a break for
some sort of enjoyment through entertainment programmes. This may include going to
watch a movie or drama or dance or cricket match or even going for a picnic or tour.
5. Expenditure on charity and donations: Sometimes people spend money by donating
to individuals or institutions engaged in social services or charitable work, these are
called expenditure on charity and donations.
6. Expenditure on health and education: In a family people usually spend some money
on health and education of their children. When individuals go for higher education it
requires more money. Thus, money spent on health and education may be termed as
expenditure.
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7. Other Expenditure: The modern age has paved newer avenues of expenditure for
people, for example, people go to gymnasium to keep themselves physically fit, go to
beauticians to take care of their body and beauty, surf the internet to gather information.
1. How can we earn income through agriculture and property?
A. Agricultural Income: When we cultivate land we produce crops, paddy, vegetables and
others. All or part of it can be sold which gives us a return. This earning is called
agricultural income.
Property Income: Normally owning land or house is considered as owning property. This
property can be given on rent or lease to someone for use and we get a return on it. This
earning is called property income.
2. Give any six sources from which people earn their income?
A. Generally people earn money from the following sources. They are business, employment,
professions, vocation, agriculture, property and other sources.
3. How do professionals earn income?
A. Professionals means, the person who provides services of special nature with intellectual
skills. Lawyers, Doctors, Chartered Accountants, Engineers are examples for professionals.
They charge some fee for their services is the source of income for professionals.
4. Define the term expenditure?
A. The term expenditure refers to „spending money on any item, which does not give any
additional monetary income in return to the person who spends that amount‟.
5. Why government bonds are called risk free investments?
A. Government Bonds: Sometimes government and semi-government organizations accept

deposits from individuals for a fixed period and promise to pay a fixed amount after the
stipulated period. These are in the form of bonds, which are also risk free and provide
assured return.
6. Name the schemes offered by banks and post offices to invest money?
A. The banks and post offices offer various schemes to attract the deposits from public. They
are monthly income scheme, National Saving Scheme, Public Provident Fund, National
Saving Certificates, Kisan Vikas Patras, and Indira Vikas Patras
7. How does saving help us to generate further income and to raise our standard of living?
181
A. Savings helps us to raise our standard of living: Savings accumulated over a period of
time become a substantial amount, which enables us to buy something, which is better
comfortable or even luxurious. For example you can buy a vehicle of your own, a house,
good furniture, you can use generators or inverters at home to avoid power cut and others.
All these improve our standard of living.
Savings help us to generate further income: We can use our savings or part of it in buying
shares, debentures, bonds, house property or keeping money in bank as fixed deposits. All
these can give us return in terms of dividend, interest, rent and others. This is an additional
income for us.
8. Give at least six avenues available to us to invest our money?
A. The following are the various avenues of investment.
1. Deposits in banks and post offices

2. Deposits in other schemes or certificates of bank and post office
3. Deposits in government bonds
4. Deposits in UTI and other mutual funds schemes
5. Deposits in corporate securities and deposits
6. Deposits in life insurance policies.
7. Deposits in real estate business
8. Deposits in business activities.
9. Money spent on buying shares of a company is not called expenditure? Why?
A. Sometimes people invest their saving in buying shares of various government and public
limited companies. If the company is performing well, the shareholders get good return as
dividend. So buying shares is not a expenditure. It is one of the sources to earn the income.
Sometimes the shareholders may not get anything due to losses. These investments are also
risky.
10. As a student of business studies give some tips to your friend to enable him to save money?
A. Saving money is the great feature of human being. Saving refer to the amount of money,
which kept aside from the current income for future use. We may be able to keep aside this
money either by reducing our expenditure or by increasing our income or by doing both.
 We can save the money by avoiding the misuse of power, water and
commodities.
 Avoid the purchase of luxurious items for maintenance of social status.
 Reduce the usage of vehicle if it is not necessary. By this we can reduce the
petrol expenses and vehicle maintenance cost.
 We can save the money either by reducing our expenditure or by increasing our
income. We can try for more savings.
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11. List any four factors we should keep in mind while deciding to invest our money?
A. Before investing money we must look into the following factors.
1. Ability to save
2. Safety and easy liquidity
3. Rate of interest
4. Factors linked with investment and the details of tax exemptions.
1. A part of income which is kept aside for future use is known as ___________
A. Savings
2. What we get from the savings.
A. Additional income from savings
3. Spending money for availing of different services is known as_____
A. Expenditure on services like banking, postal, transport and communication services.
4. What are the examples for expenditure on entertainment?
A. Watching movie or drama, going for a picnic or tour.
5. Individuals earn their income through various sources is known as _______
A. Total income of an individual.
1. Money kept aside from current income for future use called__________
2. Savings help us to raise our __________
3. Savings facilitate ________ development of the nation.
4. To save more money, it is important that we should keep a record of our total _____ and
expenditure.
5. An individual can save money by planning and cutting down their __________
Column-A Column – B
1. An individual‟s earnings from different [ ] A. Profit
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occupations taken together
2. A farmers income from the cultivation [ ] B. Wages or salary
of crops and vegetables.
3. Income earned from business activities [ ] C. Annual income
4. Income earned by keeping one‟s money [ ] D. Interest
in a bank
5. Earnings of those individuals who are [ ] E. Agricultural income
in employment
6. The government organization which [ ] F. Compulsory
promoting savings.
7. Small savings through post office is [ ] G. Economic development
maintained by
8. Savings leads to [ ] H. L.I.C of India
9. Expenditure leads to [ ] I. Government
10. An individual saving [ ] J Declining the worth
IV. State whether the following statements are Right or Wrong (½ Mark)
1. The money spent on items that give a return in future is called investment.
2. The economic status of the nation declines by people‟s saving.
3. Bank deposits did not give a fixed rate of interest.
4. The government gives a guarantee on deposits which are made in private institutions.
5. The premium on life insurance policy must pay periodically in a systematic manner.
6. Spending money on essential goods is called savings.
7. Savings are made by poor people only
8. Economical status increases in the position of poor becomes rich and rich becomes poor
situation.
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9. Saving habit depends up on the public interest.
10. Government not supporting for savings.
ANSWERS.
IV. 1. Savings 2. Standard of living 3. Economic
4. Income 5. Expenditure
V 1) C 2) E 3) A 4) D 5) B
6) H 7) I 8) G 9) J 10) F
VI. 1) Right 2) Wrong 3) Wrong 4) Wrong 5) Right
6) Wrong7) Wrong 8) Wrong 9) Right 10) Wrong
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Lesson 29
CHOOSING A CAREER
1. Describe the importance of self-employment in the present context of unemployment?
A. If an individual engages in any economic activity and manages it on his own is known as
self-employment. The importance of self-employment thus, arises outof its advantages from
different angles. The following are the advantages of self-employment
1. Growth of small-scale business: Small business units require small amount of capital
and can be more easily be started than large-scale business.
2. Scope of earning: There is strong motivation which prompts individuals to engage in
business on their own. The scope of increased earning is unlimited, as one can use one‟s
talent for his own benefit. Freedom of work and to take one‟s own decisions also adds to
the desire of people to do their best in business.
3. Entrepreneurship development: Qualities of innovativeness, creativity and ability to
operate in a more effective way is known as entrepreneurship. A person in self-
employment to be successful in business has to be innovative in all business activities.
Thus, self-employment also develops entrepreneurial qualities in individuals.
4. Promotes quality of service: Self-employed persons engaged in providing services are
better able to satisfy customer needs due to personalized nature of services.
5. Generating employment: Self-employment is the remedy for the problem of
unemployment in India. It is providing opportunities to the unemployed people.
6. Not competitive for large-scale business: Self-employment is limited to small-scale
business. It is not competitive for large-scale business
7. Opportunity: It is the best opportunity to the students, who are unable to promote their
education.
2. Explain the importance of choosing a career?
A. Choosing a career is an important aspect of life. The foundation stone of career building is
laid down by the career you choose.
 Career choice will probably affect an individual‟s eventful life-style more than any
other choices he/she makes.
 The influence of job touches many facets of life, shaping our values, attitudes and
habits.
 In a world dominated by cut-throat competition making right career choice in the
beginning is very important.
 Every individual will discover his or her own abilities in the process of choosing a
career.
3. Enumerate the possible areas in which a person can be self-employed?
186
A. In the process of career planning we may consider the following areas for self-
employment opportunity.
1. Small scale retail business: Single owner can easily start and manage small business
units profitably with the help of one or two assistants.
Ex: Book stall, fancy shop, kirana shop, cloth shop, medical shop.
2. Providing services based on individual skills: Services which can be rendered to

customers by individuals on the basis of specialized skill.
Ex: Repairing bicycles and scooters, tailoring, hairdressing and others.
3. Occupations based on professional qualifications: Activities which require

professional training and experience are also amenable to self employment.
Ex: Practicing doctors, lawyers, chartered accountants, pharmacists, architects and
others.
4. Farming on small scale: Opportunities are also there for self-employment in small scale
forming activities like dairy, poultry, fishery, horticulture, sericulture and others.
5. Village and cottage industries: These may be based on traditional inherited skills.
Ex: Hand spinning and weaving, hand knitting, stitching garments and others.
6. Arts and crafts: Those who have been trained in certain craftsmanship or art can be
self- employed in such occupations as those of goldsmiths, blacksmiths, and carpentry.
7. Other areas of self-employment: One can be self-employed as hawker or peddler
carrying goods like vegetables, eatables and snacks, household crockery‟s, even carpets,
cloths and others.
4. Differentiate between self-employment and wage employment?
A. The following are the differences between self-employment and wage employment.
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Basis Self-employment Wage employment
1. Nature 1. Engages in activities on one‟s 1. Engages in activities assigned

own by the employer
2.The position of the person is that 2. The position of the person is

2. Status or of owner and may be that of an that of an employee.
positions employer
3. Income or 3. Income or earning is not fixed.
Earning It depends on the ability of the 3. Income of the employed person
owner is fixed and may be increased if
the employer so decides.
4. Work involved is aimed at

4. Work earning more and increasing the 4. The work to be performed by
involved volume of business. The nature of the employee is specific and pre-
work cannot be decided in decided.
advance.
5. There is always risk of loss 5. There is no risk of loss, and

5. Risk bearing sometimes and earnings may reduced income
decline at times
6.The owner is free to decide how

6. Freedom of to run the business 6. The employee has to work
work according to the terms and
conditions of employment.
5. State the important qualities required for success in self-employment?
A. Self-employment is better than the wage employment. The following qualities are required
for success in self-employment for every person. These are as follows:
1. Mental ability: To be self-employed you need to have the ability to identify the most
suitable area where there is opportunity of self-employment, also you should have the
ability to take decisions with respect to all business operations, ability to deal with
different types of customers is equally important.
2. Alertness and foresight: A self employed person should be aware and alert about
changes taking place in the market so as to adjust his operations. He should also have
the foresight to anticipate changes to avail of opportunities and meeting threats likely to
arise in the near future.
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3. Self-confidence: The owner must have confidence about himself to overcome all the
problems and also while dealing with suppliers, creditors, customers and government
officials.
4. Knowledge about business: Any person who is self-employed in business must have
full knowledge about the business, including technical knowledge and skill for running
the business.
5. Knowledge of accounting: Any one running a business must keep record of all
transactions to ascertain profit or loss at periodical intervals, to pay his creditors on due
date and collect his dues from customers, besides making payment of taxes and others.
For all these purposes working knowledge of accounting is necessary for the person in
business
6. Other personal qualities: A person in self-employment has to have the qualities of
honesty, sincerity and be hard working.
1. What is the meaning of self-employment and wage employment?
A. Self-employment: If an individual engages in any economic activity and manages it on his

own, is known as self-employment.
Wage employment: Serving another person for wage or salary is known as wage
employment.
2. Define the term career?
A. Career literally means “an occupation with which opportunities for advancement or
promotion can be availed of in life”. Choosing career is an important aspect of life.
3. What are the needed skills for clerical job?
A. Generally the clerical employees have the following skills.
 Computational skills
 Ability to count
 Calculate and do arithmetical operations
 Technical skill
 Ability to handle office machines
 Ability to convey and interpret messages
4. What are the needed skills for Accountant Job?
A. Generally the Accountant has the following skills
 Conceptual skill
 Ability to handle foreign exchange transactions.
 Dealing with negotiable instruments.
189
 Sanctioning loan and advances
 Computational skill
 Technical skill
5. What are the needed features for store keeper job?
A. Generally store keeper has the following features
 Honesty
 Integrity
 Alertness
 Watchfulness
6. How is self-employment an alternative to large-scale industries?
A. Self-employment is the best alternative for large-scale industries due to the following
reasons.
 For controlling and the development of slum area

 For controlling the nature pollution
 For creating relations among people.
7. State the avenues of wage employment?
A. Job opportunities or avenues of wage employment exist in government offices, railways,

banks, insurance companies, factories, trading concerns.
1. What are the career avenues in business?
A. Wage employment, and self-employment
2. Telephone operator must have talent about?
A. Language
3. What is employment?
A. When any body engaged in an occupation to be engaged in an economic activity for earning
one‟s livelihood.
4. What is self-employment?
A. If an individual engages in any economic activity and manages it on his own is known as
self-employment.
190
5. The person who is in self-employment must have the ability about____
A. Identification of sources
6. Entrepreneurship identifies about_______
A. Innovations, creativity.
1. Occupation of the people is always related with _________ activity
2. At lower level, government departments mostly employ people for _________ jobs.
3. For the job of store keeper a person must have the skill of preparing _____ order
4. Fluency in _______ is essential for telephone operator
5. Ability to handle _____ is necessary in most of the clerical jobs
6. In self-employment a person should have the ability to identify ____________
7. To succeed in self-employment a person must have _______ in his own ability
8. Knowledge of accounting is necessary for a person in self-employment to

ascertain_________
9. Self-employment provides opportunities of earning livelihood for those unable to

pursue_______
10. Your choice of career should be based on your ________, __________ and _______
11. Communication skills ________ for any employment.
V. Choose the correct answer for the following questions (½ Mark)
1. The person who is in self-employment must have the ability to identify the [ ]
(A) Employment opportunities (B) Wage opportunities
(C) More profits (D) Market opportunities
2. Occupation of the people is always related with [ ]
(A) Social activities (B) Economical activities
(C) Musical activities (D) Non-economical activities
3. Important skill of the stenographer is [ ]
(A) Language (B) Hard work
(C) Translate the shorthand (D) Office administration
4. Telephone operator must have the skill about [ ]
(A) Education (B) Language
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(C) Sincerity (D) Ability
Column –A Column – B
1. Wage employment [ ] A. Language skill
2. Self-employment [ ] B. Negotiable instruments
3. Telephone operator [ ] C. Training institute
4. Accountant deals with [ ] D. Monthly salary or wage
5. I.T.I [ ] E. Employment opportunity
ANSWERS
VI 1 Economic 2. Clerical 3. Purchasing 4. Language
5. Office machines 6. Job opportunities for self-employment
7. Confidence 8. Profit or loss 9. Higher education
10. Abilities, aptitude and interest 11. Compulsory
V. 1) A 2) B 3) C 4) B
VI 1) D 2) E 3) A 4) B 5) C
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Lesson 30
ENTREPRENEURSHIP
1. Explain the features of an entrepreneur? (OR)
What are the qualities of a successful entrepreneur? Explain.
A. There may be many qualities needed to successfully run an enterprise. However, the
following qualities are considered important.
1. Initiative: In the world of business, opportunities come and go. An entrepreneur has to be
a man of action. He should be able to initiate action and take advantage of opportunity it
will not come again. Therefore, initiative on the part of entrepreneur is a must.
2. Willingness to assume risk: In any business there is an element of risk. It implies that a
businessman may be successful or unsuccessful. However, an entrepreneur always
volunteers to take risks to run a business and be successful.
3. Ability to learn from experience: An entrepreneur may commit mistakes. However,

once an error is committed, it leads to heavy losses. So, one should learn from his mistakes,
an entrepreneur, therefore, should have the ability to learn from experience.
4. Motivation: Motivation is key to success. This is necessary for success in every walk of
life. Once you get motivated to do something you will not rest unless you complete it. This
is an essential quality of a successful entrepreneur.
5. Self-confidence: A person who lacks confidence can neither do any work himself, nor
can inspire others to work. Self confidence is reflected in courage, enthusiasm and the
ability to lead. A successful entrepreneur must have self-confidence.
6. Orientation towards hard work: There is no substitute for hard work in life. While
running a business everyday, one problem or the other may arise. The businessman has to
be vigilant about it and solve it as early as possible.
7. Decision making ability: In running an enterprise, the entrepreneur has to take a number
of decisions everyday. He should therefore be capable of taking suitable and timely
decision.
2. Explain the importance of being an entrepreneur?
A. In entrepreneurship the individual is the most important element. Entrepreneurship is not

limited to any class, community, gender or religion. There is no age bar. Any person who
possesses certain traits and attitudes can become an entrepreneur.
193
1. An entrepreneur is an independent person and has enough scope for innovation.
2. An entrepreneur has passion for self-expression and realization of his dream by doing
something new and different.
3. An entrepreneur makes his own decisions and act on them.
4. An entrepreneur gets immense satisfaction and pleasure by working on one‟s own and
getting the rewards.
5. An entrepreneur generates employment for others.
6. An entrepreneur can make significant contributions to the development of the country
7. An entrepreneur realizes his personal goals and contributes to the welfare of the society
8. Above all he can be an achiever, realize his goals and prove one‟s achievements to the
world.
3. Explain various functions of the entrepreneur?
A. The following are the functions of an entrepreneur.
1. Identifying entrepreneurial opportunity: There are many opportunities in the world of

business. These opportunities are not visualised by common man, but an entrepreneur
senses the opportunities faster than others. An entrepreneur therefore, has to keep his eyes
and ears open and require imagination, creativity and innovativeness.
2. Turning ideas into action: An entrepreneur should be capable of turning his ideas in to
reality. He collects information regarding the ideas, products, practices to suit the demand
in the market. Further steps are taken to achieve the goals in the light of the information
collected.
3. Feasibility: The entrepreneur conducts studies to assess the market feasibility of the
proposed product or services. He anticipates problems and assesses quantity, quality, cost
and sources of inputs required to run the enterprise.
4. Resourcing: The entrepreneur needs various resources in terms of money, machinery,

materials and men to run the enterprise successfully. An essential function of an
entrepreneur is to ensure the availability of all these resources.
5. Setting up the enterprise: For setting up an enterprise the entrepreneur may need to
fulfill some legal formalities. He also tries to find out a suitable location, design the
premises, install the machinery and do many other things.
6. Managing the enterprise: One of the important functions of an entrepreneur is to run

the enterprise. He has to manage men, material, finance and organize production and
marketing of goods and services.
7. Growth and development: Once the enterprise achieves its desired results, the
entrepreneur has to explore another higher goal for its proper growth and development. The
entrepreneur is not satisfied only with achieving a set goal but constantly strives for
achieving excellence.
194
4. What are the factors you would like to consider if you start a small enterprise?
A. The following are various factors required to be considered while setting up any small
business.
i) Selection of business
ii) Choice of form of organization
iii) Selection of location
iv) Availability of labour
v) Availability of money and other sources
vi) Details of starting a small business
1. Name four famous entrepreneurs in India?
A. Four famous entrepreneurs in India are
i) J.R.D. Tata - TATA

ii) Kumara Mangalam Birla - Birla
iii) Dheerubai Ambani - Reliance
iv) Ajeemji Premji - Wipro
v) Narayana Murthy - Infosys
2. Motivation is necessary for success? Explain?
A. Motivation is key to success. This is necessary for success in every walk of life. Once you
get motivated to do something you will not rest unless you complete it. For example,
sometimes you become so much interested in reading a story or a novel that you do not
sleep unless you complete it. This kind of interest in the work comes through motivation is
an essential quality of a successful entrepreneur.
3. Define the term entrepreneurship?
A. Entrepreneurship comprises of various practices and skills of person those constantly strive
for growth and excellence through innovation, dynamism and acceptance of risk.
4. What are the factors you would like to consider if you start a small enterprise to produce
ball pen?
A. The following factors considered while producing a ball pen.
i) Marketing research.
ii) Availability of raw material
iii) Availability of labour
iv) Availability of capital
v) Verification of demand for the production.
195
III. Fill in the following blanks with suitable answer (1 Mark)
1. Money spent on buying machinery, building, equipment and others is known as _____
capital.
2. Money spent on buying raw materials and paying wages, salaries, rent, telephone bills and
electricity bills is known as _________ capital
3. The person who creates employment facilities is known as __________
IV. Match the following (½ Mark)
Column A Column B
1. Dheerubai Ambani [ ] A. Way to success
2. Premji Ajeemji [ ] B. Fear of loss
3. Motivation [ ] C. Reliance
4. Risk [ ] D. Wipro
5. Labour will get [ ] E. Wages
6. Self confidence [ ] F. Initiative, self confidence
V. Choose correct answer from the following questions (½ Mark)
1. Who participated in industrial development [ ]
(A) J.R.D. Tata (B) Gandhi (C) Nehru (D) Sonia Gandhi
2. Dheerubai Ambani started [ ]
(A) Wipro company (B) Birla company (C) Reliance company (D) Godrej company
3. The capital which used for meeting the expenses of wages and salaries.
(A) Fixed capital (B) Fluctuating capital (C) Both
(D) None of the above
ANSWERS:
III. 1. Fixed 2. Working 3. Entrepreneur
IV. 1. C 2. D 3. A 4. B 5. E 6. F
V. 1. A 2. C 3. B
196

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Lesson-1

I. LONG ANSWER QUESTIONS (5 Marks)

3. Describe the importance of business in modern society.

II. SHORT ANSWER QUESTIONS (3 Marks)

Basis Economic activities Non-economic activities

i. Purpose Economic motive Social and psychological motive

13. Describe the broad categories of business activities.

Ans: i-c, ii-a, iii-b

Ans: 1-d, 2-c, 3-a, 4-b

I. LONG ANSWER QUESTIONS (5 Marks)

Ans: i.True, ii. True, iii. False, iv. False, v. False

4. Describe primary industries.

On the basis of Size On the basis of Ownership On the basis of Functions

Private sector enterprises Public sector enterprises

1. What is meant by business or business activities?

Objective type questions:

1. A private company name should end with

Match the following

1. Define „sole proprietorship‟.

4. Describe the limitations of partnership form of business.

4. “Principal-Agent relationship is must for partnership”. Do you agree? Give reasons?

Minimum number of Minimum number of members Minimum number of

Maximum number of Maximum members of these There is no restriction on

Transferability of shares Restricted Freely transferable.

4. Enumerate the advantages of Joint Stock Company?

3. Distinguish between inland and ocean transport.

Ans: 1-d, 2-a, 3-e, 4-b, 5-c.

I. Essay Questions (5 Marks)

1. Describe any six characteristics of an ideal warehousing?

c. Cold storage facility for perishable goods is required.

d. Sufficient parking place for loading, unloading of vehicles is needed.

2. Explain any three functions of warehouses.

Ans. Functions of warehouses:

6. Grading and branding: On request, warehouses also perform the functions of

7. Transportation: In some cases warehouses provide transport arrangement to the

3. What is meant by public warehouse? State the functions of public warehouse?

4. Explain the need for warehousing.

Ans. Warehousing is necessary due to the following reasons.

(i) Seasonal Production: Agricultural commodities are harvested during certain

(iii) Large scale production: In case of manufactured goods, now-a-days

(v) Continuous production: Continuous production of goods in factories

5. What are various types of warehouses? Explain them briefly.

Ans. Warehouses are classified into 5 categories. They are

6. Distinguish between Public and Private warehouse.

7. Describe the Advantages of warehouses to the businessmen?

Ans. Warehousing offers the following advantages to the businessmen.

1. Protection and preservation of goods: Warehouse provides necessary facilities

II. Short Answer Questions (3 Marks)

2. What are the various types of warehouses?

Ans. Warehouses are 5 types

3. What are Co-operative Warehouses?

5. Write a note on Government warehouses?

6. Write briefly about grading and bonding functions of warehouses?

III. Very Short Questions

1. What facility is very much useful to the small businessmen?

Ans. Warehousing is very much useful facility to the small businessmen.

2. Who provides security to a warehouse?

Ans. Warehouse keeper provides security to warehouse.

3. What facility is needed to store seasonal products?

4. What is the important function of warehousing?

Ans. Storage of goods.

IV. Fill in the blanks (1 Mark)