Worksheet INTERNAL TRADE

INTERNAL TRADE
IMPORTANT QUESTIONS
1. Aarika Traders a trading firm is conducting many activities such as grading of

products, packing into smaller lots, storage, transportation, promotion of goods,
collection of market information, collection of small and scattered orders of
traders and distribution of supplies to them.
Aarika Traders is running business as one of the links of indirect trade. Name
the link:
(a) Wholesaler
(b) Retailer
(c) Agent
(d) None of the above
2. Ms. Latika is running a business unit namely 'Latika Stores' in its locality. It
purchases a variety of products from the market, arranges for proper storage of
goods, sells the goods in small quantities, bears business risks, collect market
information, extends credit to the buyers and promotes the sale of products
through displays, participation in various schemes, etc.
Ms. Latika is running business as one of the links of indirect trade. Name the
link:
(a) Wholesaler
(b) Retailer
(c) Agent
3. Rama Shankar and Shiv Shankar are two brothers. Both are working as
itinerant retailers. They are the petty retailers who have independent shops of a
temporary nature in a business locality. They keep on changing their business
from one locality to another, depending upon the potentiality of the area.
Identify the type of itinerant retailers to which both the brothers are related:
(a) Hawkers and Peddlers
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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
(b) Cheap Jacks

(c) Pavement Traders
(d) Weekly Market Traders
4. Now-a-days a special type of 'Large Scale Retailers' are in vogue. Under

this type of arrangement, a number of shops with similar appearance are
established in localities, spread over different parts of the country. These
shops are run by the same organisation and have identical merchandising
strategies, with identical products and displays.
Identify the type of 'Large Scale Retailers':

(a) Chain Stores
(b) Malls
(c) Super Bazar
(d) Departmental Store
5. Internal trade means

(a) Trade within the boundaries of a country
(b) Trade between two countries
(c) Trade with a foreigner
(d) Trade at global level
6. Retail trade is the example of the type of internal trade on the basis of
_______
(a) Relationship
(b) Quantity
(c) Levels
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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
7. Producer → Wholesaler →Retailer → Consurner is the example of _____

(a) Retail trade
(b) Wholesale trade
(c) Indirect trade
(d) Direct trade
8. The wholesaler buys goods in a quantity.

(a) Less
(b) More
(c) Medium
9. Usually _____ purchases on cash and sells on credit.

(a) Wholesaler
(b) Retailer
(c) Company
(d) Broker
10. ____ keeps only samples in the shop.

(a) Company
(b) Retailer
(c) Wholesaler
(d) All of the above
11. _____ deals in a large number of goods.

(a) Retailer
(b) Wholesaler
(c) Broker
(d) Agent
FORMS OF MARKET (ECONOMICS)
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
12. _____ generally gives a pleasing get-up to his shop.

(a) Manufacturer
(b) Agent
(c) Wholesaler
(d) Retailer
13. ______ is the last step of the chain of business middlemen.

(a) Retailer
(b) Wholesaler
(c) Agent
(d) Customer
14. The facility of 'home delivery of goods' is generally provided by ______

(a) Wholesaler
(b) Retailer
(c) Agent
(d) Manufacturer
15. To selling only children garments is the example of _____

(a) Single-product shop
(b) Single line shop
(c) General Store
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
16. To sell readymade garments for children, men, women, etc. is the example
of ______
(a) Single-product shop
(b) Single-line shop
(c) General Store
(d) Departmental Store
17. What do you mean by a Cheap jack type of retail trade?
18. State any two advantages of supermarkets.
19. Define Internal Trade.
20. Mail order Houses provide a lot of convenience to the customers, yet they
are not very popular. Why? Give one reason.
21. A manufacturing Co. opens shops at different locations in India. He sells

goods on cash only. The shops have identical decorations. The prices of goods
are fixed. In this way they eliminate unnecessary middlemen thus benefiting the
consumers.
(a) Identify the type of shop referred to.

(b) Elaborate characteristics of such shops
22. Discuss services of retailers to manufacturers and wholesalers.
DEPRICIATION (ACCOUNTS)
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
23. Explain the features of Departmental store.
24. What is meant by Internal Trade? Explain its features.
25. What are the types of Internal Trade?
26. Write a note on GST. Explain any five features of GST.
27. What do you understand by the mail order business? Discuss the reasons of
its unpopularity in India.
28. Write a note on main documents to be used in Internal Trade.
29. Differentiate between Wholesale Trade and Retail Trade.
30. Write a note on ‘Malls’. What are its features.
31. What are Vending Machines? Which type of goods are suitable for vending
machines?
32. What do you mean by Chain Stores. What are its main features?
33. What are the advantages of Chain Stores?
34. When we buy some goods from market the shopkeeper issues us a Trade
Document. At the bottom of this document is written 'E. & Ο.E.'. What do you
understand from these letters.
Explain the justification of these letters.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
35. Several middlemen remain present between the producers and consumers.
Their presence causes unnecessary increase in the prices of goods. Some
consumers of a locality resolved to free themselves from the clutches of the
middlemen. They think that the profit which goes to the middlemen should come to
them.
You suggest to him what kind of business they should begin. All these people
know nothing about business. Therefore, tell them about the demerits or limitations
of business also.
36. Sanjana went to a retail shop to buy a perfume. She was surprised by the
salesman's behaviour towards him. The salesman was so kind to her and showed
a concern for her product requirements. Sanjana got so impressed with effective
display of products and the personal selling efforts of this salesman that she
purchased a perfume and a fairness kit without any plan to buy it. She also
referred this salesman to her friends because of his courteous behaviour. Identify
and state the service of retailer towards consumer highlighted in aforesaid
instance.
37. Prakash is a pretty trader who carry different varieties of fruits on his hand cart
and move from one colony to another to sell his merchandise at the doorstep of
the customers. State giving reason the type of retailer and its category under
which Prakash should be placed.
38. Pradeep is a pretty trader who sells newspapers and magazines near janpath
metro station, where huge floating population gathers. He did not change his place
of business so frequently.
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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
State giving reason the type of retailer and its category under which Pradeep
should be placed.
39. Ethos Ltd., is an authorized retailer selling several luxury watch brands. Every
watch that Ethos sells comes with the brand warranty and also places its Ethos
stamp. Well enjoyable and unforgettable experience. Now, Ethos Ltd. with an
outlet of watches exclusively for men at Lajpat Nagar, Delhi, is planning to open a
branch in Rohini, Sector 13 to meet the increasing demand. It operates with the
polic of cash sales and is very particular about the timings of the store.
On the basis of the given information about Ethos, Ltd., answer the following
questions:
a) Quoting the lines from the above paragraph, identify the type of fixed shop small
retailing business of Ethos Ltd.
b) Which type of fixed shop large retailing business is Ethos Ltd. planning to
engage in? Also, state any two features of the same business.
40. Sanchit, after completing his entrepreneurship course from Sweden returned
to India and plans to set up a different type of business of selling standardized
cosmetics under the name Cosmos traders by sending catalogues to the local
residents does not require heavy expenditure on infrastructural facilities. It results
in lots of savings to the buyers as well as sellers. The goods were delivered at the
doorstep of customers. He is also aware of the fact that in this system, there are
more possibilities of misunderstanding and mistrust between buyers and sellers.
The receipt and execution of orders will involve long time and delays. On the basis
of the given information about Cosmos traders, answer the following questions:
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INTERNAL TRADE
IMPORTANT QUESTIONS
a) Quoting the lines from the above paragraph, identify the fixed shop large
retailing business in which Cosmos traders in engaged in.
b) Explain any three merits of the type of fixed shop large retailing business
identified in part (a).
c) Explain any two limitations of the above identified business.
41. Shoppers stop has opened a new retail outlet in Patna. It offers a wide variety
of products, classified into well-defined units each one is confined to one kind of
product to satisfy every customer's need under one roof. It purchases goods
directly from the manufacturers and thus eliminate middlemen.
On the basis of the given information about shoppers stop, answer the following
questions:
a) Identify the types of large scale retail outlet by quoting the lines from above
case.
b) State five points of distinction between the above type of retail outlet and
multiple chain stores.
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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
42. Sarthak is dealing in goods on large scale. He buys the goods directly from the
manufacturing industries in bulk and supply the same to the shops in the local
areas. He is not dealing with the customers directly. He even provides financial
support to manufacturer, by providing advance while placing order. Sarthak
maintains huge quantity of stock, due to which he has to maintain large amount of
capital.
On the basis of the given information about sarthak, answer the following
questions:
a) Which type of business Sarthak is engaged in?
b) Name the parties between which Sarthak is acting as a linking pin.
c) Discuss the services rendered by Sarthak to any one party identified in part (b).
43. After a 17-year roller-coaster ride, the government of India, following the credo
of 'one Nation and one Tax' and wanting a unified market in order to ensure the
smooth flow of goods across the country implemented at the stroke of midnight on
1 July, 2017, in response of the Constitution Amendment Bill, a special reform
approved by the President of India in a the dignified function much like the one
which marked India's independence. Addressing a packed central hall of
parliament, prime Minister specified the historic nature of the reform. The
government has launched an app to facilitate a smooth transition to the new
reform.
On the basis of the given information about reform, answer the following
questions:
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
a) State the special reform approved by the President of India in the dignified
function much like the one which marked India's Independence.
b) What is the main aim of this special reform approved by the President of India.
c) Enlist the key features of the special reform approved by the President of India.
44. Write down the benefits of Mail Order Business.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
ANSWERS
1. Answer: (a)
2.Answer: (b)
3. Answer: (b)
4. Answer: (a)
5. Answer: (a)
6. Answer: (b)
7. Answer: (c)
8. Answer: (b)
9. Answer: (a)
10. Answer: (c)
11. Answer: (a)
12.Answer: (d)
13.Answer: (a)
14.Answer: (b)
15. Answer: (a)
FREQUENCY DIAGRAM (STATISTICS)
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
16.Answer: (b)
Answer 17: Retailers who operate temporary independent stores and

continually move their firm from one location to the next, depending on the
area's potential. They sell consumer goods as well as services such as
watches, shoes, and bucket repair.
Answer 18: Two advantages of supermarkets are-
Keep a large variety of goods in various patterns, colors, and sizes so that
purchasers can make better choices.
All sales are made in cash, and thus no bad debts exist.
Answer 19. Internal trade refers to the buying and selling of goods and services
within a country's borders. Internal Trade has the following characteristics such
as:
Buying and selling takes occur in the home country,

Payments made or received in the home country
Only a few formalities for traders to complete.
Answer 20. Ordering via mail Houses offer a lot of convenience to customers,
but they aren't extremely popular because they need a lot of money to spend
on product promotion, moreover due to chances of fraud by traders, the
consumers are apprehensive regarding this method.
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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
Answer 21. (a) Multiple store or a chain store. There are a lot of chain stores
with comparable appearances that have sprouted up in various locations
across the country. These various stores usually sell standardized and
branded consumer goods with a high turnover of sales. These stores are
owned by the same company and use the same merchandising tactics, as well
as the same products and displays.
Ans. (b) The following are the characteristics of chain stores:

The goods are dispatched to each of these shops from the head office,
which is located in a reasonably populous area where a significant number
of clients may be approached.
The shop is under the direct supervision of a Branch Manager, who is

responsible for its day-to-day management.
The head office is in charge of creating policies and ensuring that they are
executed.
The prices of goods in such shops are fixed, and all sales are conducted
in cash.
Answer 22. The services of retailers to manufacturers and wholesalers are:
Help in the distribution of goods: Retailers assist in the dissemination of

manufacturers’ products by making them available to end-users who may be
dispersed across a vast geographic area. As a result, they supply place utility.

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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
Personal selling: Retailers relieve producers of this work and considerably

assist them in the process of actualizing product sales by engaging in personal
selling efforts.
Enabling large-scale operations: Allows them to function at a somewhat large

scale, allowing them to focus totally on their other tasks.
Collecting market information: Retailers are a significant source of market data

about customer tastes, interests, and attitudes, which can help marketers make
critical marketing decisions.
Help in promotion: Manufacturers and distributors must engage in a variety of

promotional activities in order to improve product sales. Retailers take part in
these activities and encourage product sales.
Answer 23. The features of a departmental store are:
Type of Customers:Provide the best possible service to consumers in the

upper section of society for whom pricing is secondary.
Location: In the heart of a city, in a central location that caters to a big number
of customers.
Organization: Due to the vast size of these establishments, they are usually
organized as a joint-stock company with a board of directors.
Services: A departmental store incorporates both retail and warehouse

services.
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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
Purchase and sale mechanism: They have centralized purchasing systems

and sales are decentralized in several departments.
Answer 24. Meaning of Internal Trade:- Trade is very important for the
industrial development of a country. Trade means buying and selling of goods
or services with a view to making profit.
Trade that is carried on within the boundaries of a country is called Internal

Trade. It is also known as Home Trade.
Features of Internal Trade
Internal trade has the following chief characteristics:
(i) Trade within the Boundaries of the Country: Internal trade is carried on
within a single country. When trade crosses the boundaries of a country, it is
called foreign trade.
(ii) Free Movement of Goods: There is often no restriction on the sale or

purchase of goods in different states of the country.
(iii) Dealings in Local Currency: Under internal trade, the dealings are in the
national currency.
(iv) Special Act to Settle Disputes: In order to settle disputes arising out of
internal trade, the provisions of the Sales of Goods Act are applicable.

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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
Answer 25. Types of Internal Trade
Internal trade can be of different types. Its various types are following:
A. On the Basis of Relationship
On the basis of relationship, internal trade is of two types:
(a) Direct Trade: It has often been observed that there are certain mediators in
internal trade. For example, the producer sells the goods to the wholesaler,
the wholesaler sells the goods to the retailer and from there the goods reach
the consumers.
When the producers sell their goods directly to the consumers and not through
the mediators, it is called direct trade. It has been demonstrated in the
following diagram:
Advantages of Direct Trade: The chief advantages of the direct trade are the
following:
(i) No Artificial Scarcity of Goods: When the goods are sold through mediators,
sometimes they stock the goods and create an artificial scarcity. In this way
they earn undesirable profits. In the direct trade the possibility of the artificial
scarcity of goods is almost non-existent.
(ii) Receipt of Original Goods by the Consumers: The consumers receive the
original goods from the producer. The possibility of adulteration because of the
presence of the mediators is reduced
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
(iii) Double Profit to Producers: Under the direct trade the producer gets the profit
of both the stages i.e., of production and sale of goods.
(iv) Availability of Goods at Lower Price to Consumers: The producers add their
profit to the price of goods at the sale stage but this is less than the one added by
the mediators. Therefore, the consumers get the goods at a lower price.
(v) Benefit of Cash Sales to Producer: Under the direct trade the sales are in
cash. The producer is saved from the trouble of blocking his money in credit
transactions.
(b) Indirect Trade: In the indirect trade, a producer takes the help of mediators in
order to make his goods available to the consumers. There are three methods of
indirect trade:
(i) Through Wholesaler: In this method, a producer sells his goods to a

wholesaler, the wholesale trader sells the goods to the retailer who later on sells
them to the consumers.
(ii) Through Retailer: This method is used in case of the highly perishable goods.
In this case, the producer sells his goods directly to the retailer rather than selling
them to the wholesaler.
(iii) Through Agents: In this method, the producer does not sell his goods through
the wholesaler or the retailer, but sells them through the medium of agents.
These agents are known as brokers or commission agents.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
B. On the Basis of Levels
Internal trade can be divided into three parts on the basis of levels:
(i) Local-level Trade: Local trade remains confined to some village or a district.
This trade usually deals in primarily the goods of daily use and goods of
perishable nature. They include fresh fruits, milk, sweets, etc.
(ii) State-level Trade: A trade that is carried on in various districts of a state is

known as the state level trade. These goods chiefly include grains, pulses,
utensils, etc.
(iii) National-level Trade: A trade that is carried on in various states of a country

is called national level trade. This trade is usually carried on chiefly in sugar,
cloth and machinery.
C. On the Basis of Quantity
On the basis of quantity internal trade is of two types:
(i) Wholesale Trade: A wholesale trader purchases goods in huge quantity from
the producer and then sells them in small quantities to the retailers. The
wholesale trade is carried on only in one type of goods.
(ii) Retail Trade: A retailer purchases different kinds of goods from the different
wholesale traders. He sells these goods in small quantities to meet the
demands of the consumers. A retailer deals in different kinds of goods.

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CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
Answer 26: Ans. Goods and Services Tax (GST): Concept During the last
several years, in India, several differences were being noticed in the tax levied
on goods and services. The rates of tax on similar goods and services being
collected in different states were different. Not only this, but by the time the
goods and services reached the last (final) consumers, so many taxes were
being added to their (goods and services) price. As a result, on the one hand,
the consumers had to bear the heavy burden of taxes and on the other, the
traders had to remain helplessly confused in the Tax Net. (It should be borne in
mind that the tax levied on goods and services is known as the Indirect Tax.)
On the bases of the facts stated above, it can be said that there was a need for
such a system of Indirect Taxes as should be simple and should be uniformly
levied in all the states of the country. In this context, the slogan 'One Tax, One
Nation, One Market was given. The 'GST' is the result of this thinking. The GST
system in India came into force with effect from July 1, 2017.
The Key Features of GST are the following:
(i) Taxable Event Under GST: Prior to the coming into force of GST, the Tax on
the goods and sale - purchase of services was mainly levied at two stages:
First, at the time of Production, which is known as the Excise Duty and
secondly, at the time of Sale, known as the Sale Tax/ VAT. But now the Tax on
Goods and services is levied at the time of supply, that is at the time of sale.
Hence, now the Taxable Event will be considered only the supply, not
production and sale both.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
(ii) Nature of supply: The GST is decided on the basis of the nature of supply.
As is evident that the GST is of several types; namely, CGST, SGST, UTGST
and IGST, etc. When a particular tax will be levied depends on the nature of
supply. It is made clear in the figure given below.
(a) Intra-State Supply: On the supply of goods and services done within the
same State or Union Territory it is the CGST and SGST/UTGST which will be
levied.
(b) Inter-State Supply: On the supply of goods and services from one State or
Union Territory to another State or Union Territory it is the IGST which will be
levied.
(c) Import: On the import of goods and services it is the BCD (Basic Custom
Duty) and IGST both will be levied.
(d) Export: On the export of goods and services no GST will be levied in India.
(iii) Principle of Destination: According to this principle, the accrual of GST

takes place on the basis of the Destination or Consumption of goods and
services. In other words, the payment of GST will be done to the Taxing
Authority of that very State or Union Territory where the consumption of goods
and services will be finally done.
There can be two places related to the supply of goods and services: First, the
place of the seller and secondly, the place of buyer. Under the old system, the
Accrual of Tax took place at the place of the Seller, but under the GST, the
Accrual of Tax takes place at the place of the buyer. For example; if some
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
goods are supplied from Delhi to Rajasthan, it is an Inter State Transaction and
here the payment of IGST will be made to the Tax Authority of Rajasthan.
(iv) Dual GST System: In India it is the Dual GST system which has been
adopted. Under this system, the Centre and State Governments will have
equal share in the GST paid at the time of supply of goods and services. Such
a situation will arise only when the transaction of Sale- Purchase takes place at
the Intra-State level. The GST received on the supply will be divided into
CGST and SGST/UTGST.
Besides, if the sale-purchase transaction takes place at the Inter-State level,

the IGST will be paid to the Tax Authority of the place of consumption. The
IGST received in this way will have 50% share of the Government of place of
Destination and the remaining 50% share will be of the Central Government.
(v) GST Rates: GST Council has specified multi-tier tax structure of 0%, 5%,
12%, 18% and 28% as applicable to different categories of goods and
services.
Answer 27. Meaning of Mail Order Business: Some things are produced at a
particular place, but their consumers are far away from the place of their
production. Goods can be made available to the consumers with the help of
the middlemen. But in this system there is no need of any middlemen. The
consumer himself purchases the goods through mail. The consumers are
introduced to the goods through advertisement. The interested consumers
send their mail orders and they receive their goods through the medium of
postal department at their home. While receiving goods the payment is made
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
to the postal department. Sale-purchase including the payment is all

done through mail.
The mail order business has the following few features:
(i) Trading by Post: In this system, there is no personal contact between the
purchaser and the seller because the order is placed and goods are received
only through mail. These orders are supplied through VPP (Value Payable
Post).
(ii) Cash Trading: Under this system, the customer has to make immediate
cash payment on the receipt of the goods. If the purchaser does not make
payment, the postal department sends the goods back to the seller.
(iii) Trade without Shop: The seller does not need to establish any shop in the
market because his trade is carried on through mail. He runs his trade through
his workshops and godowns. His address is made known to the buyers
through the medium of advertisement.
(iv) Less Capital Requirement: Under this system, business can be started
with the help of a little capital. These traders purchase their goods both on
credit and in cash but they sell their goods only in cash.
(v) Effective Advertisement: The basis of this trade is advertisement.
Therefore, moden methods of advertisement should be adopted.
(vi) Wide Market: The market for this type of trade is very extensive. This trade
does not remain confined to just one country. It spreads to foreign countries
also.
(vii) End of Middlemen: This trade, like the multiple shops, also does not need
middlemen. The manufacturers themselves make things available to the
consumers.
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The main reasons for its unpopularity are following:
The buyer and the seller get many advantages. Even then this system of retail
trade suffers from many disadvantages which are described below:
(i) Lack of Credit Facility: The basis of this system is sales in cash. Those who
want to buy things on credit remain deprived of these services. As a result, the
total sales decline.
(ii) No Quick Delivery of Goods: A lot of time is consumed in ordering things
and getting their delivery. That is why the consumers who require things
quickly do not use this system.
(iii) Problem in Making Mailing Lists: The sellers write letters to the consumers
from the point of view of advertisement. It is difficult to know who can be the
possible buyers.
(iv) More Advertisement Expenses: The basis of this trade is only
advertisement. The advertisement is done on a large scale and in a modern
way. So much so the advertisement has to be carried to foreign countries.
(v) Increase in Price: The net price of the thing gets inflated because the mail
expenses are added to the actual price.
(vi) Possibility of Fraud: The basis of mail order business is advertisement.
Sometimes tricksters mislead the innocent public through advertisement and
exploit them. Once the goods sold, there is no facility of returning them in case
they turn out to be defective.
(vii) No Selection Facility: A thing is generally selected after examining it from
various angles but in this trade system the things are not present before the
customers. Therefore, there is no facility of selection of things.
(viii) No Facility of Returning Goods: In case the goods are not liked by the
customer, there is no facility of returning them.
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INTERNAL TRADE
IMPORTANT QUESTIONS
(vi) Possibility of Fraud: The basis of mail order business is advertisement.

Sometimes tricksters mislead the innocent public through advertisement and
exploit them. Once the goods sold, there is no facility of returning them in case
they turn out to be defective.
(vii) No Selection Facility: A thing is generally selected after examining it from

various angles but in this trade system the things are not present before the
customers. Therefore, there is no facility of selection of things.
(viii) No Facility of Returning Goods: In case the goods are not liked by the
customer, there is no facility of returning them.
Answer 28. Main Documents Used in Internal Trade
The following are the main documents used in the internal trade:
(i) Invoice: For credit purchase, the statement supplied by the seller giving
particulars of goods purchased is known an Invoice. It states seller's name and
address, particulars of goods purchased, such as quantity, quality, rate, total
value, sales tax, trade discount, etc. It is also called a Bill or Memo.
Recording in Purchase Book is made on the basis of this document as it is the

source document of the transaction. When recording is made in Purchase Book
✔
from the invoice, then on the invoice a tick mark ( ) is made and is filed.
(ii) Proforma Invoice: The statement (or forwarding letter) containing the details
of goods consigned from consigner to consignee is known as a Proforma
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nvoice. It gives the particulars regarding quantity, quality consigned. As the

consignment is not sold and the consignee is not the buyer, therefore, the
forwarding letter sent along with the information. It is also known as Interim
Invoice. The particular contained in a proforma invoice are liable to change
once the final invoice is made.
(iii) Debit Note: It refers to a Letter or Note which is sent mainly by the buyer to
the seller stating that his account has been debited by the mentioned amount
on account of goods returned herewith. It states the quantity, rate, value and
the reasons for the return of goods. Two copies of Debit Note are prepared,
out of which one is sent to the seller with the information that his account has
been debited by the said amount and second copy is kept in the office for
future reference. (Debit Note may also be used by the seller or buyer to rectify
some other error in the invoice.)
(iv) Credit Note: It refers to a letter or note which is sent by the seller to the
buyer stating that his account has been credited by the mentioned amount on
account of acceptance of his claim about the goods returned by him. Credit
note is prepared in duplicate. One copy is sent to buyer and one is kept in the
office. (Credit Note is also used to rectify some other error in the invoice.)
Answer.29
Basis of
rerailer Wholesaler
Difference
He purchases goods
He sells goods to consumers
from the producers
1.Nature of Trader after purchasing them from the
and sells them to the
wholesaler.
retailers.

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IMPORTANT QUESTIONS
2. Last The goods sold by them are The goods sold by them are
Transaction not resold. resold.
He purchases goods in small He purchases goods in

3.Volume of
quantity. large quantity.
Purchase
4.Number of He deals in many things. He deals in only a few

Goods things.
5.Scope of He usually carries on his His area of business is

spread over a large area.
Business trade at a single place.
6.Selection of Where consumers can reach Where trucks etc. and the
easily. retailers can reach easily.
Place
It requires a small capital. It requires more capital

7.Capital investment.
He sells 90% of goods in cash He sells 10% of goods in

8.Credit Facility
and 10% on credit. cash and 90% on credit.
This is the middle chain

9.Chain of This is the last chain of between the producers and
Middlemen business middlemen. the retailers.
10.Shop Essential to attract customers

Immateriaal
Decoration
11.Need
Rarely felt Utmost felt.
oGodowns

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IMPORTANT QUESTIONS
Answer 30. A mall means a kind of shopping complex where varied types of
products and services are available under one roof. In one or many buildings,
there are many stores/shops and they are connected to one another so that the
customer can easily move from one store to another. Shopping complexes like
these are well established in the metropolitan cities like Delhi, Mumbai, Kolkata,
Bengaluru, etc. and are running successfully. The malls are now being
introduced in other cities also in line with the success of those in the
metropolitan cities. It will not be wrong if we term them as the symbol of
modernity.
The following are the main features of malls:
(i) Big-sized Retail Shops: In this type of shopping complex, there are many
shops/outlets in one building. The size/area of every shop is very large.
(ii) Multiple Services: Apart from commodities/products, a customer gets many

other services in the malls. Customers not only purchase the products but also
avail of the latest facilities of entertainment and food.
(iii) Centrally Located: Often the malls are located at a place where everybody
can reach easily. Effort is made to ensure that it is centrally located in the city.
(iv) Numerous Goods: In the malls products are available for men, women and
children of every age group. So, the sales in the malls are not just made for
some products but for unlimited range of products.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
(v) Ownership: All the shops in the mall do not belong to just one person but
are owned by different persons. Different ownership increases competition.
(vi) Large-scale Advertisement: Advertisement on large scale is required to

attract the customers to the malls.
(vii) Huge Investment: The cost of the shop in the mall is very high. To
decorate the shop according to the latest trends also demands huge
investment. Apart from this, storing huge range of products of different sizes,
colour, design, etc. also requires huge investment. In. short, it can be said that
to run a shop in the mall huge capital is needed.
Answer 31. In many nations, coin-operated vending machines are handy for
selling a variety of things such as hot beverages, platform tickets, milk, soft
drinks, chocolates, newspapers, and so on. Vending machines are excellent
for selling pre-packaged brands of low-cost products with high turnover and
consistent size and weight. The initial cost of installing a vending machine, as
well as the ongoing costs of maintenance and repair, are, nevertheless, rather
significant.
Answer 32. Meaning of Chain Store: Under this system, there are numerous
shops selling the same kind of goods under one management. These shops
can be situated at various places in a city or in various cities. The things are
manufactured at one place and the manufacturer opens his own retail shops in
order to eliminate the middlemen. There is a parity in prices to attract the
customers and the shop is well decorated. There is a uniformity even in
decoration of all the shops. The most prominent example of it can be the 'Bata.

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IMPORTANT QUESTIONS
The following are the main features of the chain store:
(i) The things sold at all the places are manufactured at one place.
(ii) The owner of all the shops is an individual or a firm.
(iii) All the things are same in size, quantity and price.
(iv) The number of things sold are a few, just one or two things.
(v) A shop is opened at every place where there is a demand for the thing.
(vi) The sale is 100% in cash.
(vii) There is uniformity in the decoration of every shop.
(viii) The things of general consumption are sold in these shops.
(ix) These shops have an extensive area. There can be many shops in a town
depending on the population.
Answer 33. Advantages of Chain Store
The following are the main advantages of the chain store:
(i) Fixed and Single Price: The prices of things are determined beforehand and
this is the same at every place. This eliminates any chance of haggling and
there is confidence among of people about the prices.
(ii) End of Middlemen: After the establishment of these shops the manufacturers
do not need the middlemen. The commission paid to the middlemen is saved
and this benefits both the producer and the consumer.
(iii) Collective Advertisement: There is no need for a separate advertisement for

every shop because the advertisement is issued by the head office on behalf of
all the shops. This reduces the expenditure on advertisement.

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(iv) Economies of Production Scale: This is correct to say that as the scale of
production increases, the expenditure on production decreases. Under the multiple
System, the production is on a large scale. Therefore, all the economies available
to a large-scale producer are available to the multiple system of shops also.
(v) Goodwill in Public: Since things of the same size, quality and price are
available at all the shops, it adds to the confidence of the people. It is only the
confidence of the people that increases the goodwill of a business.
Answer 34. Its full name/form is "Errors and Omissions Excepted".
E. & O.E. (Errors and Omissions Excepted): It refers to that term which is used in
trade documents to say that mistakes and things that have been forgotten should
be taken into account. This term is used in an attempt to reduce legal liability for
incorrect or incomplete information supplied in a document such as price list,
invoice, cash memo, quotation, etc.
Answer 35. These people will find "Consumers' Cooperative Store" useful to be set
up, because this is only the business organisation which can save/free them from
the clutches of middlemen. But before beginning this business, it is necessary for
them to be aware of its demerits.
Demerits of Consumers Co-operative Store:
The main demerits of this business are the following:
i. Loss has to be faced when the market is dull.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
ii. There is a possibility of quarrels because the consumers form groups.

iii. There is a lack of speciality in these stores because the customers cannot
play the role of businessmen successfully.
iv. The spirit of cooperativeness is lost because of the large number of
members.
v. There is the facility of withdrawing one's capital. Sometimes, when a large
number of members take out their capital, it endangers the existence of the
store.
Answer 36. The service of retailer towards consumer is products information.

Retailers provided important information about the arrival, special features,
etc., of new products to the customers by arranging for effective display of
products and through their personal selling efforts. This serves as an important
factor in the buyers decision making process.
Answer 37. Prakash is an itinerant retailar (hawker) because he does not have
fixed place of to operate from. He keep on moving with his goods from one
colony to another in search of customers.
Answer 38. Pradeep is an itinerant retailer because he does not have a fixed
place of business to operate from. He is a street trader as he is located at a
place where huge floating population gathers. He does not change his place of
business frequently.
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INTERNAL TRADE
IMPORTANT QUESTIONS
Answer 39.
a) Ethos Ltd. is specialty shops as instead of selling a variety of products of
different types, this store specializes in the sale of a specific line of products.
Lines: "Ethos Ltd. is an authorized retailer selling several luxury watch brands"
b) Ethos Ltd. planning to start the multiple chain store. The features of multiple
chain store are:
i. These shops are located in fairly populous localities, where sufficient number of
customers can be approached. The idea is to serve the customers at a point which
is nearest to their residence or work place, rather than attracting them to a central
place.
ii. The prices of goods in such shops are fixed and all sales are made on cash
basis. The cash realised from the sales of merchandise is deposited daily into a
local bank account on behalf of the head office.
Answer 40.
a) The fixed shop large retailing business in which Cosmos traders is engaged in
Mail order business.
Lines: "A different type of business of selling standardized cosmetics under the
name Cosmos traders by sending catalogues to the local residents of Lucknow
and supplying goods to them through courier."
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
b) The advantages of mail order business are:

i. Limited capital requirement: Mail order business does not require heavy
expenditure on building and other infrastructural facilities. Therefore, it can be
started with relatively low amount of capital.
ii. Elimination of middle men: The biggest advantage of mail-order business is

that unnecessary middlemen between the buyers and sellers are eliminated.
This may result in lot of savings both to the buyers as well as to the sellers.
iii. Wide reach: Under this business the goods can be sent to all the places
having postal services. This opens wide scope for business as a large number
of people throughout the country can be served through mail.
c) The limitations of mail order business are:
i. No Credit Facilities: The mail order houses do not provide credit facilities to
the buyers. Thus, customers with limited means may not be interested in this
type of trading.
ii. Delayed Delivery: There is no immediate delivery of goods to the customers,

as receipt and execution of order through mail takes its own time.
Answer 41. Shoppers stop is a departmental store,
Lines: "it offers a wide variety of products, classified into well-defined units,
each one is confined to one kind of product to satisfy every customer's need
under one roof."
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
b) The key difference between departmental stores and multiple chain

stores are:
i. Location: a departmental store is located at a central place, where a

large number of customers can be attracted to it. As against this, the
multiple stores are located at a number of places for approaching a large
number of customers.
ii. Range of products: Departmental stores aim at satisfying all the needs
of customers under one roof. As such, they have to carry a variety of
products of different types. As against this, the multiple store generally
aim to satisfy the requirements of customers relating to a specified
range of their products only.
iii. Services offered: the departmental stores lay great emphasis on

providing maximum services to their customers. Some of the services,
provided by them include alternation of garments, restaurant and so on.
As against this, the multiple shops provide very limited services
confirmed to graduates and repairs if the sold out goods turn out to be
defective.
iv. Pricing: The multiple shop chains sell goods at fixed prices and
maintain uniform pricing policies for all the shops. As against this, the
departmental shops. As against this, the departmental stores do not
have uniform pricing policy for all the departments.
v. Credit Facilities: All sales in the multiple shops are made strictly on
cash basis. As against this, the departmental stores may provide credit

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IMPORTANT QUESTIONS
facilities to some of their regular customers.
Answer 42:
a) Sarthak is engaged in Wholesale trade.
b) The parties between which Sarthak is acting as Linking pin are

Manufacturers and retailers.
c) The services rendered by Sarthak to Manufacturers are:
i. Facilitating Large scale production: Wholesalers collect small orders from a

number of retailers and pass on the pool of such orders to the manufacturers
and make purchases in bulk quantities. This enables the producers to
undertake production on a large scale and take advantage of the economies of
scale.
ii. Bearing risk: the wholesale is deal in goods in their own name, take delivery
of the goods and keep the goods purchased in large lots in their warehouses.
In the process, they bear variety of risks such as the risk of all in prices, theft,
spoilage, fire, etc. so, they relieve the manufacturers from bearing these risks.
iii. Financial assistance: the wholesalers provide financial assistance to the
manufacturers in the sense that they generally make cash payment for the
goods purchased by them. To that extent, the manufacturers need not block
their capital in the stocks.
iv. Expert advice: As the wholesalers are in the direct contact with the retailers,
they are in a position to advice the manufacturers about various aspects
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
including customer's tastes and preferences, market conditions, competitive

activities and the features preferred by the buyers.
Answer 43:
a) The goods and services tax (GST) the special reform approved by the
President of India in the dignified function much like the one which marked
India's independence.
b) The main aim of GST is to make life easier for manufacturers, producers,
investors and consumers. GST is a destination-based single tax on the supply
of goods and services from the manufacturer to the consumer, and has
replaced multiple indirect taxes levied by the Central and the State
Governments, thereby, Converting the country into a unified market.
c) The key features of GST are:
i. GST is applicable on the 'supply' of goods or services as against the present

concept of tax on the Manufacture or sale of goods or on the services.
ii. It is based on the principle of destination-based consumption tax against the

present principle of origin-based taxation.
iii. Import of goods and services is treated as inter-state supplies and would be
subject to IGST in addition to the application custom duties.
iv. CGST, SGST and IGST are levied at rates mutually agreed upon by the
Central and the state under the aegis of the GST Council.
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
Answer 44. Benefits of Mail Order Business
This system of retail business benefits both the buyers and the seller. The
advantages of the mail order business can be described in the following way:
Benefits to Customers:-
The mail order business confers the following benefits on the customer:
(i) Home Delivery: The facility of home delivery is also available in other
systems of retail trade. But under those systems the customers have to go to
the shops to buy goods. In this system, however, one has simply to send an
order through mail and get the home delivery of goods.
(ii) Availability of Non-available Goods: Those things which are not available to
the consumers from the nearby areas can be got from distant places through
this system of trade.
(iii) Easy Money Arrangement: There is a time gap in the placing of orders and
the delivery of goods. This difference is of 8-10 days. The customer can make
arrangement for the necessary money during this period.
(iv) Price Comparison Possible: Price lists of various things from different
sellers are received. A comparative description of these lists can be made and
then things of good quality can be purchased at the minimum prices.
(v) Cheap Products: With the elimination of the middlemen, the prices also
CLASS 11 BUSINESS
INTERNAL TRADE
IMPORTANT QUESTIONS
decline which directly benefits the consumers.
(vi) Saving of Time: The customers do not have to waste their time in
searching out the goods they need because they get all the things at their
home.
Benefits to Sellers
The sellers get the following benefits through the mail order business:
(i) Less Capital Requirement: Under this system of retail trade, money is
mostly received along with the order. In case it does not happen, it is received
with the delivery of goods. Therefore, very little capital is required to run this
type of business.
(ii) No Expenses on Shop: A trader carrying on trade under this system does
not have to purchase a shop in some market does not have to pay any rent
either. On the other hand, expenses on decoration and expenditure on sellers
are also saved.
(iii) Wide Trading Area: Under this system the work-area is not confined to any
city or state. It may extend to the whole country or even some foreign
countries. This brings benefits of more sales.
(iv) No Fear of Bad Debts: There is no fear of bad debt because of cash
transactions.

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(v) No Need of Godowns: Generally, the goods are prepared after the receipt
of orders. Therefore, there is no need to manufacture the things beforehand
and store them in godowns.
(vi) Direct Contact with Customers: There is a direct contact between the
trader and the customer. Therefore, the customer can easily send his
complaints and suggestions to the seller.
(vii) No Need of Middlemen: Since there is a direct contact between the buyer
and the seller, there is no need of any middlemen. The amount of commission
to be paid to the middlemen is thus saved for the sellers.
(viii) Quick Payment: Under this system the goods are sent through VPP.
When the customer receives the VPP, the money reaches the seller within 2-3
days. In this way the payment is received very quickly.

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INTERNAL TRADE

1. Aarika Traders a trading firm is conducting many activities such as grading of

COMPLETE EXPLANATION OF THIS CHAPTER

(b) Cheap Jacks

4. Now-a-days a special type of 'Large Scale Retailers' are in vogue. Under

Identify the type of 'Large Scale Retailers':

5. Internal trade means

COMPLETE NOTES OF THIS CHAPTER

7. Producer → Wholesaler →Retailer → Consurner is the example of _____

8. The wholesaler buys goods in a quantity.

9. Usually _____ purchases on cash and sells on credit.

10. ____ keeps only samples in the shop.

11. _____ deals in a large number of goods.

FORMS OF MARKET (ECONOMICS)

12. _____ generally gives a pleasing get-up to his shop.

13. ______ is the last step of the chain of business middlemen.

14. The facility of 'home delivery of goods' is generally provided by ______

15. To selling only children garments is the example of _____

17. What do you mean by a Cheap jack type of retail trade?

18. State any two advantages of supermarkets.

19. Define Internal Trade.

21. A manufacturing Co. opens shops at different locations in India. He sells

(a) Identify the type of shop referred to.

22. Discuss services of retailers to manufacturers and wholesalers.

23. Explain the features of Departmental store.

24. What is meant by Internal Trade? Explain its features.

25. What are the types of Internal Trade?

26. Write a note on GST. Explain any five features of GST.

28. Write a note on main documents to be used in Internal Trade.

29. Differentiate between Wholesale Trade and Retail Trade.

30. Write a note on ‘Malls’. What are its features.

33. What are the advantages of Chain Stores?

RECTIFICATION OF ERRORS (ACCOUNTS)

INTERNATIONAL BUSINESS (BUSINESS)

c) Explain any two limitations of the above identified business.

PUBLIC PRIVATE & GLOBAL EN. (BUISNESS)

a) Which type of business Sarthak is engaged in?

b) Name the parties between which Sarthak is acting as a linking pin.

44. Write down the benefits of Mail Order Business.

10. Answer: (c)

11. Answer: (a)

15. Answer: (a)

FREQUENCY DIAGRAM (STATISTICS)

Answer 17: Retailers who operate temporary independent stores and

Answer 18: Two advantages of supermarkets are-

Buying and selling takes occur in the home country,

FORMS OF BUSINESS ORG. (BUISNESS)

Ans. (b) The following are the characteristics of chain stores:

The shop is under the direct supervision of a Branch Manager, who is

Answer 22. The services of retailers to manufacturers and wholesalers are:

Help in the distribution of goods: Retailers assist in the dissemination of

COMPLETE NOTES OF THIS CHAPTER

Personal selling: Retailers relieve producers of this work and considerably

Enabling large-scale operations: Allows them to function at a somewhat large

Collecting market information: Retailers are a significant source of market data

Help in promotion: Manufacturers and distributors must engage in a variety of

Answer 23. The features of a departmental store are:

Type of Customers:Provide the best possible service to consumers in the

Services: A departmental store incorporates both retail and warehouse

FREE NOTES/PDF PRACTICE PAPER DAILY UPDATE

Purchase and sale mechanism: They have centralized purchasing systems

Trade that is carried on within the boundaries of a country is called Internal

Features of Internal Trade