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Nature and Purpose of Business

Description: Nature and Purpose of Business
Number of Questions: 15
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Tags: Business studies Business Studies
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Which of the following is not a characteristic of business activities?

  1. Production and procurement of goods and services

  2. Dealing in goods and services on a regular basis

  3. Banking and finance for business activities

  4. Profit earning

  5. Element of risk

Show answer
Correct Option: C
Explanation:

This is not a characteristic of business activities. This is an auxiliary to trade that is meant as assistance to trade.

Which of the following industries is a part of the primary sector?

  1. Fish hatcheries

  2. Processing of raw iron

  3. Oil refineries

  4. Car industry

  5. Warehousing

Show answer
Correct Option: A
Explanation:

Fish hatcheries are a part of genetic industries and come under the category of primary industry sector.

The term _________ is used for activities in which mechanical appliances and technical skills are involved.

  1. commerce

  2. profession

  3. occupation

  4. business

  5. industry

Show answer
Correct Option: E
Explanation:

The term industry, is used for activities in which mechanical appliances and technical skills are involved.

Which of the following functions of a business enterprise facilitates the exchange of goods and services from producers to people who want them, at the place they want, at the time they require and at the price they are prepared to pay?

  1. Financing

  2. Advertising

  3. Marketing

  4. Human resource management

  5. All of the above

Show answer
Correct Option: C
Explanation:

Marketing refers to all those activities which facilitates the exchange of goods and services fom producers to people who want them, at the place they want, at the time they require and at the price they are prepared to pay. Advertising is a part of marketing whereas marketing encompasses transport and communication, advertising, warehousing, etc.

 

Which of the following statements is/are correct? A. There is an uncertainty of return in business activities. B. Commerce involves all activities that provide auxiliaries to trade. C. Industry refers to all economic activities.

  1. Only A

  2. Only B

  3. Only C

  4. Only A and B

  5. All of these

Show answer
Correct Option: A
Explanation:

Statement A is correct.

Manufacturing industries can be divided into separate categories on the basis of method of operation for production. Which of the following is/are the correct categories of manufacturing industries? A. Analytical industries
B. Synthetical industries
C. Processing industries
D. Assembling industries

  1. Only A and B

  2. Only A, B and C

  3. Only C and D

  4. Only B, C and D

  5. All of these

Show answer
Correct Option: E
Explanation:

This is the correct option as all of these are a part of manufacturing industries. Analytical industries analyse and separate different elements from the same materials. Example: oil refinery. Synthetical industries combine various ingredients into a new product. Example: cement. Processing industries involve successive stages for manufacturing finished products. Example: sugar and paper. These are a part of manufacturing industries apart from assembling industries. Assembling industries assemble different component parts to make a new product. Example: television, car.

Match the column I (Occupation) with column II (Mode of establishment ||| |---|---| |Column I |Column II| |A. Business|1. Service agreement| |B. Profession|2. Necessary legal formalities| |C. Employment|3. Membership of a professional body|

  1. A-1, B-2, C-3

  2. A-2, B-3, C-1

  3. A-3, B-2, C-1

  4. A-1, B-3, C-2

  5. A-3, B-1, C-2

Show answer
Correct Option: B
Explanation:

This is the correct matching. To begin a business the entrepreneur has make a decision and complete the necessary legal formalities before commencing business. To enter a profession an individual must have a membership of the professional body and a certificate of practice from that body. To gain employment an individual must have a letter of appointment and a service agreement with the organisation.

Which of the following is/are correct regarding risks in a business? a. Business risks arise due to uncertainties. b. Nature and size of business affect the degree of risk in a business. c. Risk is essential in business. d. Profit is the reward for risk taking.

  1. Only a and b

  2. Only c and d

  3. Only a and c

  4. Only a, c and d

  5. All of these

Show answer
Correct Option: E
Explanation:

This is the correct option as all the reasons are correct regarding risk in business.

Which of the following refers to the position of an enterprise in relation to its competitors?

  1. Profit earning

  2. Productivity

  3. Social responsibility

  4. Market standing

  5. Innovation

Show answer
Correct Option: D
Explanation:

Market standing refers to the position of an enterprise in relation to its competitors.

All activities involving the hindrances in the process of exchange are included in commerce. Match the hindrances with the activities ||| |---|---| |Hindrances to business |Activities to remove the hindrances| |A. Person|1. Trade| |B. Place|2. Transport| |C. Risk|3. Insurance|

  1. A-1, B-2, C-3

  2. A-2, B-3, C-1

  3. A-3, B-1, C-2

  4. A-2, B-1, C-3

  5. A-1, B-3, C-2

Show answer
Correct Option: A
Explanation:

This is the correct matching. The hindrance to the persons is removed by trade by making goods available to consumers. The hindrance to place is removed by transport by moving goods from places of production to markets. The hindrance to risk is removed by insurance against losses.

Which of the following activities are auxiliaries to trade? a. Transport and communication b. Banking and finance c. Insurance d. Warehousing e. Advertising

  1. Only a, b and c

  2. Only b, c, d and e

  3. Only a, b, c and e

  4. Only a, c, d and e

  5. All of these

Show answer
Correct Option: E
Explanation:

This is the correct option as all these services are auxiliaries to trade.

Match the column I (industry) with column II (category of industry ||| |---|---| |Industry |Category of industry| |A. Lumbering|1. Synthetical industry| |B Cattle breeding|2. Extractive industry| |C. Oil refinery|3. Genetic industry| |D. Cement|4. Analytical industry|

  1. A-1, B-2, C-3, D-4

  2. A-2, B-3, C-4, D-1

  3. A-3, B-1, C-2, D-4

  4. A-4, B-1, C-3, D-2

  5. A-1, B-4, C-2, D-3

Show answer
Correct Option: B
Explanation:

These are correctly matched. Lumbering is an extractive industry. Cattle breeding ia a genetic industry. Oil refining is an analytical industry. Cement is a synthetical industry.

Which of the following are correct regarding methods of dealing with a risky transaction for a business entity? a. It may take preventive measures to deal with risks. b. It may transfer its own risk to another entity. c. It may decide against entering risky transactions. d. It may assume risks in advance. e. It may share risks.

  1. Only a, b and c

  2. Only d and e

  3. Only a, c, and d

  4. Only c, d and e

  5. All of these

Show answer
Correct Option: D
Explanation:

These are correct. Rest are also correct.

Which of the following cannot be a cause due to which a business enterprise may face risk of losses?

  1. Natural

  2. Human

  3. Economic

  4. Technological

  5. Size of business

Show answer
Correct Option: E
Explanation:

Risk taking is inherent in a business but the size of a business has no direct consequence upon risk of losses. A big business is as susceptible to risk of losses as a small business.

Which of the following statements is/are incorrect? a. Profits can be taken as society’s approval to the utility of business. b. Profit maximisation indicates the efficient working of a business. c. There are hardly any sizeable business enterprises, whose only objective is profit maximisation.

  1. Only a

  2. Only b

  3. Only c

  4. All of the above

  5. None of the above

Show answer
Correct Option: E
Explanation:

This is the correct answer. None of the statements are incorrect.

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