CBSE Class 10 Elements of Business Test Paper 1

Multiple choice questions – 1 mark each

1. ABC Joint Company act like a normal person because it is created by
(a) Complicated rules
(b) Shareholders
(c) Control
(d) Law

2. XYZ limited received finance by issue of shares is called
(a) Short term
(b) Medium term
(c) Long term
(d) Very short period

3. In rural, backward and hilly areas special financial assistance is provided by
(a) Money lender
(b) Commercial Bank
(c) Regional Rural Bank
(d) Reserve Bank

4. Which is commonly used by business organisation as a source of short term finance?
(a) Lease financing
(b) ADR’s
(c) Trade Credit
(d) debentures

5. Siya wants to take leave from office. Which method is good for taking leave?
(a) Website
(b) Notices/Posters
(c) E-mail
(d) Business meeting

6. X wants to know the number of key elements in the communication process. It’s____.
(a) Five
(b) Six
(c) Seven
(d) E-mail

7. Riya offering goods at a price which customers can afford to pay, is a part of______.
(a) Selling function
(b) Marketing function
(c) Distributing function
(d) Purchase function

8. A minimum of ———- directors are required in a public company.
(a) 10
(b) 3
(c) 15
(d) 25

9. The maximum number of members in a Public Limited company can be______.
(a) 50
(b) 100
(c) 200
(d) Unlimited

(10) Which of the following is not a method of sale?
(a) Cash basis
(b) Sale on higher purchase basis
(c) Sale on credit basis
(d)Sale under instalment system

11. Following is the best mode of purchase of goods in bulk.
(a) Purchase by Inspection
(b) Purchase by Sample
(c) Purchase by Description
(d) Purchase from the nearest retailer

12. Making payment immediately at the time of purchase is called _______.
(a) Cash Purchase
(b) Credit Purchase
(c) Purchase in instalments
(d) Purchase by auction

13. ————Communication can be inward or outward.
(a) Vertical communication
(b) Horizontal communication
(c) Internal communication
(d) External communication

14. Credit cards are used for purchase of product through————-.
(a) Cash
(b) credit
(c) Online shopping
(d) Offline shopping

15. In every purchase the ————– pays money to the seller.
(a) shopkeeper
(b) buyer
(c) market
(d) producer

16. Receiving a sale order is an example of ________.
(a) Vertical communication
(b) Horizontal communication
(c) Internal communication
(d) External communication

17. Communication from the senior to the subordinate is ______.
(a) Horizontal communication
(b) Informal communication
(c) Vertical communication
(d) Verbal communication

18. There is no need of salesmen in __________________.
(a) Automatic vending machine
(b) Internet shopping
(c) Departmental stores
(d) Malls

19. Sales promotion can involve all of the following EXCEPT ______.
(a) Loyalty programme
(b) TV commercials
(c) Samples
(d) Coupons

20. Which of these is a tool of sales promotion?
(a) Free samples
(b) Advertisement
(c) Publicity
(d) Personal selling

21. Essential element of personal selling is ___________.
(a) Cheap product
(b) Face to face interaction
(c) Physical fitness of salesman
(d) Good behaviour of salesman

22. A good salesperson should be loyal to ___________.
(a) the customer
(b) the employer
(c) Both the employer and the customer
(d) Neither the employer nor the employer

23. A departmental store has—————- departments.
(a) one
(b) 2
(c) 10
(d) Large numbers

24. Read the following statements: Ascertain (A) and Reason (B)
Assertion (A) : Sale of goods and commodities in small quantities directly to the consumers is Retail Trade
Reason (R) Retail trade does not need sales promotion technique
Choose one of the correct alternatives given below
(a) Both Assertion (A) and Reason (R ) are true and Reason (R ) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true but Reason (R ) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true but Reason (R ) is false
(d) assertion (A) is false but Reason (R ) is true

25. Read the following statements:
Assertion (A) If a majority of its shareholders are dead, the company has to be wound up.
Reason(R) : Being a separate legal entity, the death of even all the members does not affect its life, company is stable.
Choose one of the correct alternatives given below:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false
(d) Assertion (A) is false but Reason (R) is true

26. Funds raised through loans or borrowings are:
(a) Borrowed funds
(b) Owner’s equity
(c) Share capital
(d) Government money

27. Who are called the real owner of the company?
(a) Employees
(b) Debenture holders
(c) Shareholders
(d) Creditors

Answers:

1. (d) Law
2. (c) Long term
3. (c) Regional Rural Bank
4. (c) Trade Credit
5. (c) E-mail
6. (d) Four
7. (a) Selling function
8. (b) 3
9. (d) Unlimited
10. (b) Sale on higher purchase basis
11. (b) Purchase by Sample
12. (a) Cash Purchase
13. (d) External communication
14. (c) Online shopping
15. (b) buyer
16. (d) External communication
17. (c) Vertical communication
18. (a) Automatic vending machine
19. (b) TV commercials
20. (a) Free samples
21. (b) Face to face interaction
22. (a) the customer
23. (d) Large numbers
24. Correct answer is (c): Assertion (A) is true but Reason (R) is false
25. Correct answer is (d): Assertion (A) is false but Reason (R) is true
26. Correct answer is (a): Borrowed finds
27. Correct answer is (c): Shareholders

Questions for three marks each:

28. (a) What is Internal Business Communication?
Answer:

Internal communication is the system of sharing information among the employees of a firm to keep them connected with each other. This way instructions and feedback are shared. Internal communications are of three types
(a) Downward communication: This flows from higher management to subordinates.
(b) Upward communication: Here, messages are forwarded from lower levels to higher executive levels.
(c) Lateral communication: Here, communication is exchanged among employees at the same level.

29. What is meant by Vertical Communication?
Answer:

Vertical communication is the two way process of sharing information – from higher up to lower down. In other word it is the exchange of information between different levels of authority in an organisation. Vertical communications may be downward or upward at different hierarchical levels.
Downward communication is sent from higher levels of management to lower- level employees. Information that flows from lower level employees to higher management is called upward communication.

30. V.K. Publishing house is a Private Limited Company. The publishing house requires huge investment for growth to expand all over the country. For this the board members were thinking to convert their publishing house into Public Company.
State any three features of Public Company.
Answer:

Three important features of a public company are:
(a) A public limited company is a separate entity from its shareholders.
(b)The second feature is that a public company has perpetual succession even if the membership changes.
(d) The minimum number of shareholders in a public company is 7, and the maximum number is unlimited.

31. “Sudha likes to buy rare art collection from a particular store”. In the light of the statement explain the meaning of speciality stores.
Answer:

A specialised store has the following features:
(i) It has a curated selection of products.
(ii) A specialised store offers quality and sometimes rare items.
(iii) Customers get personalised service from knowledgeable owners.

32. “For the successful running of a business it is necessary to know the difference between owner’s funds and borrowed funds”. State any three differences between the two.
Answer:

Three differences between owners’ funds and borrowed funds can be listed as follows:
(a) Repayment: Owners’ funds are not repayable as they are not loan but investment while borrowed funds are repayable after an agreed term with interest.
(b) Control: Owners’ funds give the owners complete control over the business while borrowed funds hamper them because of varying terms and conditions.
(c) Burden: Owners’ funds are not burdened with liabilities like interest payments. But borrowed funds can be a stress on the profitability as loans come with interest terms.

33. Explain the four advantages of newspaper advertising.
Answer:

The four major advantages of newspaper advertising are:
(a) Lasting impression: Newspaper advertisements make a lasting impression on the readers as it is not momentary experience and the audience has all the time in the world to judge them.
(b) Brand image: Newspaper can be a steady builder of brand image as consumers get enriched every-day that the message is internalised.
(c)Target audience: Newspapers target different categories of audiences like finance, education, properties, books etc. which cater to individual needs.
(d) trust building: Looking at an advertisement frequently builds a trust positivity as audiences become convinced about their authenticity.

34. Explain the concept of auction sale.
Answer:

An auction sale is usually a public sale of goods where buyers take part in competitive bidding and the highest bidder gets possession of the item put on auction. Auction sale may be open auction or closed auction. In the open auction, the buyers assemble at the auction venue and participate in bidding. A closed auction notice is advertised in newspapers and the prospective buyers send their offers in sealed covers. The offers are opened on a stipulated date and the highest bidder wins possession of the auctioned item. Banks and financial institutions usually dispose of non-performing assets in this manner.

35. A textile company is diversifying and starting a steel manufacturing plant. For this purpose, the company needs additional capital. The company wishes to raise the required funds through Borrowed funds. Explain types of borrowed funds.
Answer:

Borrowed funds can be of the following types:
(a) Debentures: Debentures are issued by companies to raise long term capital bearing fixed rate of interest. The debentures are paid back at a future date
(b) Bank loan: Bank loans are a major source of borrowed capital both as long-term and short-term capital. Usually, bank loan is conditional upon furnishing securities.
(b) Trade Credit: Trade credit is a common form of loan from business to business. It is raised for short term. Although there is no interest attached, the price of goods sold is adjusted considering the interest factor.
(d) Public deposit: Companies may invite and accept deposits from public as per RBI guidelines. The rate of interest on public deposits is higher than bank deposits and deposit can be accepted for three years.
(e) Commercial paper: Commercial paper is unsecured promissory note issued by a firm to raise short-term working capital. Usually, large amounts are transacted under this method.

36. State the advantages of Internet shopping (any four)
Answer:

The advantages of internet shopping are as follows
(i) Convenience: It is so convenient to buy things through internet. One has to choose a product, see the specifications, and make payment. A tentative delivery time is given when the product is delivered.
(ii) Price comparison: Internet shopping enables a buyer to compare prices of many brands so that a suitable choice can be made.
(iii) Wide choice: With hundreds of items and brands ,the buyer is spoilt for choice which is not possible in a fixed store.
(iv) Easy return: If the buyer is not satisfied with the product he has received he may choose to return it easily, just mentioning a reason is enough.

37. State any four limitations of internet shopping.
Answer:

The limitations of internet shopping are:
(i) Risk of fraud: As payment in internet shopping is normally made in advance, there is risk of getting defrauded as the business offering the goods may disappear.
(ii) Delayed delivery: Articles may take some time to be delivered as the delivery agents appointed by the seller may not be prompt.
(iii) Missing personal touch: In online shopping the buyer or the seller do not get to see each other. So, the personal touch or relationship of a regular shop will be missed.
(iv) Delivery mismatch: Often it happens that the item shown and chosen from the website is different from the item delivered. So, it has to be returned.

Questions for 6 marks each

38. Identify and name the tools of sales promotion in the following:
(i) To induce a customer to buy a product more frequently
(ii) Useful for drawing attention towards product improvement
(iii) When new product is to be introduced
(iv) To boost up sales in off season
(v) Full value of the product returned
(vi) 30% extra free with a packet of Maggi

Answer:

(i) To induce a customer to buy a product more frequently – Discount is given
(ii) Useful for drawing attention towards product improvement – Free samples are distributed.
(iii) When new product is to be introduced – Freebies are given.
(iv) To boost up sales in off season – Rebates are offered
(v) Full value of the product returned – Easy return policy to boost consumer confidence.
(vi) 30% extra free with a packet of Maggi – Quantity Gift given

39. What are the barriers of effective communication?

Answer:
The common barriers of effective communication are:
1. Physical barriers:
These are social distancing or closed office doors which are reluctant and are not open to conversation.
2. Emotional barriers:
Mistrust, stress or anger can be stumbling blocks as unhappy consumers are difficult to reach.
3. Cultural barriers:
Language and other cultural differences are obstacles which come in the way of effective communication.
4. Attitude problem: People may have negative attitude about an issue which may become a stumbling block in communication.

40. Mr. Nitin Kumar is working in a private company. He wants to purchase a car on instalment basis. Giving any three differences between deferred instalment method and hire purchase method suggest him the method he should follow to buy the car.
Answer:

Mr. Nitin is an employee of a private firm, he is not an institutional buyer. It is assumed that the amount of loan would not be very big and he would use the product for a reasonable period of time. As hire purchase does not give him ownership right, he does not have the right to sell the car until the end of the hire agreement.
So, it would be better for him to choose the instalment plan as it transfers ownership to him.
Hire purchase is suitable for high value items where rate of obsolescence is high. The car Mr. Nitin wants to purchase need not be replaced quickly and he can resale it or exchange it if he has ownership.
Considering all these factors it is suggested that Mr. Nitin go for the instalment option.

CBSE Class 10 Elements of Business Test Paper 1 – Completed