Class 12 Business Studies Sample Paper Term 2 Set A

Sample Paper Class 12

Please refer to Class 12 Business Studies Sample Paper Term 2 Set A with solutions below. The following CBSE Sample Paper for Class 12 Business Studies has been prepared as per the latest pattern and examination guidelines issued by CBSE. By practicing the Business Studies Sample Paper for Class 12 students will be able to improve their understanding of the subject and get more marks.

CBSE Class 12 Business Studies Sample Paper for Term 2

1. Identify and explain the two sources of the source of recruitment which cannot be used when the existing staff is either insufficient or does not fulfil the eligibility criteria of the jobs to be filled.
Answer : Two sources of internal recruitment:
1. Promotion refers to shifting of an employee to a higher position, carrying higher responsibilities, facilities, status and pay.
2. Transfer involves shifting of an employee from one job to another, one department to another, without substantive change in the responsibilities and status of the employee.

2. ‘MYKAA Limited ‘is dealing in all types of cosmetic products. It is enjoying increased demand for its product during the last few years. For the purpose of expansion the company needs ₹ 100 crores as additional capital. The company decides to raise funds through equity shares. Chirag Kapoor, the finance manager of the company recommended that the shares may be sold through issuing houses or brokers. Identify and explain the method recommended by Mr.Kapoor through which the company can raise additional funds for expansion purposes.
Answer : Offer for Sale: Under this method securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers. In this case, a company sells securities embolic at an agreed price to brokers who, in turn, resell them to the investing public.

3. Explain the two concepts which are part of the exercise which would reveal whether a company is understaffed, overstaffed or optimally staffed.
Answer : 1. Workload analysis: This would enable an assessment of the number and types of human  resources necessary for the performance of various jobs and accomplishment of organisational objectives.
2. Workforce analysis: This would reveal the number and type available.

4. “Measurement of a company’s progress may involve calculation of certain ratios like gross profit  ratio, net profit ratio, and return on investment etc. at periodic intervals”. Identify the function of management involved in the above context. Also briefly explain the step in the process of the  identified function discussed above.
Answer : a) Controlling
(b) Measurement of actual performance
Once performance standards are set, the next step is measurement of actual performance. Performance should be measured in an objective and reliable manner. There are several techniques for measurement of performance. These include personal observation, sample checking, performance reports, etc.

5. Mr. Pawan Kumar, the CEO of an E-Commerce start up, which was facing the problem of huge  employee turnover, decided to hold a meeting with the managers to discuss the issue. While  addressing the managers in the meeting, he advised them to take certain measures which focus on psychological, social and emotional factors, in order to motivate employees. Explain any two such measures discussed by him, when he suggested that job should be made interesting so that the job itself becomes a source of motivation, employees should be congratulated for good performance, also, stability regarding future income and work should be provided to employees, in order to develop a positive attitude among the subordinates.
Answer : Non monetary incentives: (Any two)
1. Job enrichment: It is concerned with designing jobs that include greater variety of work content, require higher level of knowledge and skill, etc,.
2. Employee recognition programmes: Recognition means acknowledgment with a show of appreciation.
3. Job security: Employees want their job to be secure. They want certain stability about income and work so that they do not feel worried about these aspects and work with greater zeal.

6. State any three points of importance of Directing.
Answer : Importance of Directing: (Any three)
1. Directing helps to initiate action by people in the organisation towards attainment of desired objectives.
2. Directing integrates employees’ efforts in the organisation in such a way that every individual effort contributes to the organisational performance.
3. Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership.
4. Directing facilitates introduction of needed changes in the organisation.
5. Effective directing helps to bring stability and balance in the organisation since it fosters cooperation and commitment among the people and helps to achieve balance among various groups, activities and the departments.


Define leadership as an element of Directing? Enumerate any two styles of Leadership.
Answer : Leadership indicates the ability of an individual to maintain good interpersonal relations with  followers and motivate them to contribute for achieving organisational objectives. (or any other  correct definition)
Styles of leadership (Any two):
(I)Autocratic or Authoritarian leader gives orders and expects his subordinates to obey those orders.
(ii) Democratic or Participative leaders will develop action plans and make decisions in consultation with their subordinates.
(iii) Laissez faire or Free-rein leader does not believe in the use of power unless it is absolutely essential.

7. List any three factors affecting the Working Capital requirement of a company. 
Answer : Factors affecting working capital requirement of the company (Any three) :
1. Nature of Business influences working capital requirements in a trading organisation which usually needs a smaller amount of working capital compared to a manufacturing organisation, while service industries which usually do not have to maintain inventory require less working capital.
2. Scale of operations influences working capital requirements in large organisations which require a large amount of working capital as compared to the organisations which operate on a lower scale.
3. Business cycle affects the requirement of working capital by a firm, as in case of a boom a larger amount of working capital is required as compared to the period of depression.
4. Seasonal Factors affect the working capital requirement, as in peak season large amounts of working capital is required and lower amount is required in the lean season.
5. Production cycle affects the working capital requirement, as it is higher in firms with longer processing cycles and lower in firms with shorter processing cycles.
6. Credit allowed in a firm with liberal credit policy results in a higher amount of debtors, increasing the requirement of working capital.
7. Credit availed by a firm, to the extent to which the firm avails the credit on purchases the working capital requirement is reduced.
8. Operating efficiency may reduce the level of raw materials, finished goods and debtors resulting in lower requirement of working capital.
9. Availability of raw material influences the working capital requirement as larger the lead time, larger the quantity of material to be stored and larger shall be the amount of working capital required.
10. If the growth potential of a concern is perceived to be higher, it will require a larger amount of working capital.
11. Higher level of competitiveness may necessitate larger stocks and increases working capital requirement.
12. The working capital requirement of a business becomes higher with higher rate of inflation.

8. Priya is a regional manager of XYZ. Ltd. She is a hardworking employee and is trying to reduce wastage of resources in her company. She has set standards for performance of different activities and is ensuring that targets are met according to these standards with minimal wastage of resources. She has set up CCTV cameras which helps her to keep a close check on the activities of the subordinates and know how the employees are performing. She also rewards the employees with a bonus when these standards are met. She is trying her best to ensure a good performance of her team this year through the application of an important function of management. Explain any two benefits of the function of management highlighted above.
Answer : Importance of controlling (Any two):
1. Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations, if any, and indicates corrective action.
2. Ensuring Order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour by keeping a close check on their activities.
3. Making efficient use of resources: Each activity is performed in accordance with predetermined standards and norms. This ensures that resources are used in the most effective and efficient manner.
4. Improving employee motivation: A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus, motivates them and helps them to give better performance.

9. Enumerate any five rights of a consumer under the Consumer Protection Act, 2019.
Answer : Rights of a Consumer under the Consumer Protection Act, 2019 (Any five):
1. Right to safety: The consumer has a right to be protected against goods and services which are hazardous to life, health and property.
2. Right to be informed: The consumer has a right to have complete information about the product he intends to buy including its ingredients, date of manufacture, price, quantity,
directions for use, etc.
3. Right to be assured: The consumer has the freedom to assess a variety of products at competitive prices.
4. Right to be heard: The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service.
5. Right to seek redressal: The consumer has a right to get relief against unfair trade practice of restrictive trade practices or unscrupulous exploitation in case the product or a service falls short of his expectation.
6. Right to consumer education: The consumer has a right to acquire knowledge and to be a well informed consumer throughout life.


Enumerate any five responsibilities of a Consumer Protection Act, 2019.
Answer : Responsibilities of a Consumer under the Consumer Protection Act, 2019 (Any five):
1. Be aware of various goods and services available in the market so that an intelligent and wise choice can be made.
2. Buy only standardised goods as they provide quality assurance.
3. Learn about the risks associated with products and services, follow manufacturer’s instructions and use the products safely.
4. Read labels carefully so as to have information about prices, net weight, manufacturing and expiry dates, etc.
5. Assert yourself to ensure that you get a fair deal.
6. Be honest in your dealings. Choose only from legal goods and services and discourage unscrupulous practices.
7. Ask for a cash memo on purchase of goods or services.
8. File a complaint in an appropriate consumer forum in case of a shortcoming in the quality of goods purchased or services availed.
9. Form consumer societies which would play an active part in educating consumers and safeguarding their interests.

10. State any five regulatory functions of the Securities and Exchange Board of India
Answer : Regulatory Functions of Securities and Exchange Board of India (Any five)
1. Registration of brokers and sub-brokers and other players in the market.
2. Registration of collective investment schemes and Mutual Funds.
3. Regulation of stock brokers, portfolio exchanges, underwriters and merchant bankers and the business in stock exchanges and any other securities market.
4. Regulation of takeover bids by companies.
5. Calling for information by under- taking inspection, conducting enquiries and audits of stock  exchanges and intermediaries.
6. Levying fee or other charges for carrying out the purposes of the Act.
7. Performing and exercising such power under Securities Contracts (Regulation) Act 1956, as may be delegated by the Government of India.

11. In an interview with a leading news channel, Mr. Rakesh Kwatra, CEO of ‘Get My Job” has suggested that the Companies which want more and more people to apply for jobs in their organisation should make the process of applying for jobs easier and candidate friendly. It is for this reason, he said, that most progressive companies today have a short application process. He also said that the application form filled by the candidate is very important as it is the information supplied in the application forms, which helps the manager in eliminating unqualified or unfit job seekers. The company can create a mechanism that attempts to measure  certain characteristics of individuals like aptitude, manual dexterity, and intelligence to personality. The candidate may then be called for an in-depth conversation to evaluate their suitability for the job.
(a) Name the process and steps in the process of identifying and choosing the best person out of a number of prospective candidates for a job discussed above.
(b) Also explain the next three steps in the process which can be subsequently performed by the  company.
Answer : (a).Selection
Steps in the process of selection discussed:
1. Preliminary Screening.
2. Selection Tests.
3. Employment interview
(b). Next two steps:
1. Reference and background checks – Many employers request names, addresses and telephone numbers of references for the purpose of verifying information and gaining additional information on an applicant. Previous employers, known persons, teachers and university professors can act as references.
2. Selection Decision- The final decision has to be made from among the candidates who passed the tests, interviews and reference checks. The views of the concerned manager will be generally considered in the final selection.
3. Medical Examination- After the selection decision and before the job offer is made, the candidate is required to undergo a medical fitness test. The job offer is given to the candidate being declared fit after the medical examination.

12. Vansh Limited is a large and reputed company which manufactures ventilators. After the outbreak of ‘COVID-19’ in 2020 the company witnessed an increase in revenue by 40%. It has plans to further increase its production capacity and also start production of PPE kits, sanitisers and masks in 2022. The Finance manager of the Company Mr. Rajiv feels confident about the future of the company and its liquidity position. Discuss the meaning of Dividend Decision and in the light of the above statement explain any two factors which should be considered by ‘Vansh Limited’ while formulating the dividend policy of the company.
Answer : Dividend decision: The decision involved here is how much of the profit earned by the company
(after paying tax) is to be distributed to the shareholders and how much of it should be retained in the business.
Factors affecting Dividend decision: (Any two)
1. Amount of Earnings: Dividends are paid out of current and past earnings. Therefore, earnings are a major determinant of the decision about dividend.
2. Growth Opportunities: Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. The dividend in growth companies is, therefore, smaller, than that in the non– growth companies.
3. Cash Flow Position: The payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash. Availability of enough cash in the company is necessary for declaration of dividend.
4. Access to Capital Market: Large and reputed companies generally have easy access to the capital market and, therefore, may depend less on retained earnings to finance their growth. These companies tend to pay higher dividends than the smaller companies which have relatively low access to the market.


Vedansh Limited has a share capital of ₹10,00,000 divided into shares of ₹100 each .For expansion purpose ,the company requires additional funds of ₹ 5,00,000 . The management is considering the following alternatives for raising funds : Alternative 1: Issue of 5000 Equity shares of ₹100 each  Alternative 2: Issue of 10% Debentures of Rs. 5,00,000 
The company’s present Earnings Before Interest and Tax ( EBIT) is ₹4,00,000 p.a. Assuming that the rate of Return of Investment remains the same after expansion , which alternative should be used by the company in order to maximise the returns to the equity shareholders. The Tax rate is 50%. Show the working.
Answer : Rate of Return of Investment is 4,00,000/10,00,000 X 100=40%
EBIT after expansion = 40% X 15,00,000=6,00,000

Class 12 Business Studies Sample Paper Term 2 Set A

The company should use Plan 2 in order to increase the return to the equity shareholders.

Class 12 Business Studies Sample Paper Term 2 Set A