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Classification of busniess activities - class-XI

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_______ is essential for satisfaction of human wants.

  1. Shareholders

  2. Competition

  3. Trade

  4. All of the above


Correct Option: C
Explanation:

Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. A system or network that allows trade is called a market. An early form of trade, barter, saw the direct exchange of goods and services for other goods and services.

An example of trade is the tea trade where tea is imported from China and purchased in the US. An example of trade is when you work in sales. An example of trade is the act of exchanging one item for another or one item for money.

_______ is required to undertake the business activities is provided by banking and financing institutions.

  1. Capital

  2. Investment

  3. Liability

  4. Interest


Correct Option: A
Explanation:

Wealth in the form of money or assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment. 2. Accounting: Money invested in a business to generate income.

They are purchased and used to help your company produce consumer goods or provide services. They are reported as assets on a company's balance sheet and often can be depreciated over time. Examples of capital goods include buildings, machines, equipment, furniture and fixtures.

Among the aids to trade, ________ removes the hindrance of risk.

  1. transport

  2. warehousing

  3. insurance

  4. banking and finance


Correct Option: C
Explanation:

Insurance is a means of protection from financial loss. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss. An entity which provides insurance is known as an insurer, insurance company, insurance carrier or underwriter. Insurance coverage is the amount of risk or liability that is covered for an individual or entity by way of insurance services. Insurance coverage, such as auto insurance, life insurance or more exotic forms, such as -one insurance is issued by an insurer in the event of unforeseen occurrences.

_______ helps to highlight the distinctive features and utility of different products.

  1. Advertising

  2. Communication

  3. Warehousing

  4. Branding


Correct Option: A
Explanation:
Advertising is a marketing communication that employs an openly sponsored, non-personal message to promote or sell a product, service or idea. Sponsors of advertising are typically businesses wishing to promote their products or services Advertising is the business or act of making something known to the public, usually through some type of paid media. An example of advertising is a company specializing in designing and implementing newsprint ads for other company's products.

Banks also facilitate in international trade by providing long-term financial assistance.

  1. True

  2. False


Correct Option: A
Explanation:

International trade is the exchange of capital, goods, and services across international borders. banks provide financial assistance by providing loans, credit letter etc which encourages importers and exporters to go global 

Customers can be made aware of the availability of goods through ______.

  1. distribution

  2. warehousing

  3. banking

  4. advertisement


Correct Option: D
Explanation:

Advertising is the attempt to influence the buying behavior of customers or clients with a persuasive selling message about products and/or services. 


In business, the goal of advertising is to attract new customers by defining the target market and reaching out to them with an effective ad campaign.

___________ creates time utility by supplying the goods at the right time to the consumer.

  1. Transportation

  2. Communication

  3. Insurance

  4. Warehousing


Correct Option: D

_____ is the agency which facilitate proper flow of goods.

  1. Government

  2. Trade

  3. Banking

  4. Communication


Correct Option: B
Explanation:

The trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. A system or network that allows trade is called a market. 

An early form of trade, barter, saw the direct exchange of goods and services for other goods and services. An example of trade is when you work in sales. An example of trade is the act of exchanging one item for another or one item for the money.

_______ helps in bring about stable and uniform prices indifferent markets as traders are able to equalize the supply of goods at different places according to demand.

  1. Transport

  2. Warehousing

  3. Banking

  4. Insurance


Correct Option: A
Explanation:

Transportation is a major contributor to the economy and a competitive force in business. It is the activity that physically connects the business to its supply chain partners, such as suppliers and customers, and is a major influence on the customer's satisfaction with the company.

The buyers and sellers are intimated through various communicating agencies.

  1. True

  2. False


Correct Option: A
Explanation:

Buyers demand goods and services; sellers supply goods and services. Markets exist when buyers and sellers interact. This interaction determines market prices and thereby allocates goods and services. The price is what people pay when they buy a good or service, and what they receive when they sell a good or service.

Among the aids to trade, _________ widens the market.

  1. Warehousing

  2. Insurance

  3. Banking

  4. Transport


Correct Option: D
Explanation:

Transportation is a major contributor to the economy and a competitive force in business.It is the activity that physically connects the business to its supply chain partners, such as suppliers and customers, and is a major influence on the customer's satisfaction with the company.

A network that allows trade is called a ______.

  1. networking

  2. specialization

  3. internet

  4. market


Correct Option: D
Explanation:

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers.

_______ helps to highlight the distinctive features and utility of different products. 

  1. Communication

  2. Insurance

  3. Warehousing

  4. Advertising


Correct Option: D
Explanation:

Advertising is a marketing communication that employs an openly sponsored, non-personal message to promote or sell a product, service or idea. Sponsors of advertising are typically businesses wishing to promote their products or services.

_______ enhances the social well being of citizens by exposing them to variety of quality products including luxury items.

  1. Warehousing

  2. Transportation

  3. Trade

  4. Insurance


Correct Option: C
Explanation:

Trade involves the transfer of goods or services from one person or entity to another, often in exchange for money. 

A system or network that allows trade is called a market. An early form of trade, barter, saw the direct exchange of goods and services for other goods and services.

_______ facilitates large scale and efficient business operations by providing liquidity and security.

  1. Transport

  2. Insurance

  3. Bank

  4. Warehouse


Correct Option: C
Explanation:

A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either directly or indirectly through capital markets. Due to their importance in the financial stability of a country, banks are highly regulated in most countries.

Resolution can be amended.
  1. True

  2. False


Correct Option: B
Explanation:

This statement is False because of the following reasons : 

(i) When motion is accepted in a meeting it is called resolution. 
(ii) A resolution is the final decision after full discussion and voting and is not subject to further discussion.
(iii) The business of the meeting is transacted through resolutions. 
(iv) A motion which is finally approved at the meeting is called a resolution.
(v) A resolution cannot be amended as it is a final decision taken in a meeting. (vi) Hence, a resolution cannot be amended. 

If you are going to put Rs. $1,00,000$ in a fixed deposit for a year at $10\%$ rate of interest, then you know how much interest your money will earn. What kind of a decision-making condition is this?

  1. Certain

  2. Uncertain

  3. Risk

  4. Normal


Correct Option: A

Limited liability company posses not more than $2$ of the following character
$1$. Limited liability
$2$. Raise funds from public
$3$. No separation of management from owners
$4$. Restriction on number of partners

  1. $2 & 4$

  2. $1 & 2$

  3. $1 & 3$

  4. $1 & 4$


Correct Option: A

Premises which are absolutely beyond the clutch of business enterprises are ________________.

  1. Non-controllable

  2. Controllable premises

  3. Avoidable premises

  4. (B) or (C)


Correct Option: A

Activities involved in physical involvement of goods from the factory to market etc. is called _____________.

  1. logistics

  2. Merger

  3. Mission

  4. None of the above


Correct Option: A

The regional offices are headed by the regional sectors.

  1. True

  2. False


Correct Option: A
Explanation:

It is true that regional offices are headed by the regional sectors.  It is sometimes referred to as branch offices. Regional offices reports to the headquarters or the home offices.

The Memorandum of Association is an unalterable document.
  1. True

  2. False


Correct Option: A
Explanation:

True, section 16 of the act provides that a company shall not alter the conditions contained in its memorandum except in the case in the manner and to the extend provided by the act.

According to Lord Salborne, “The memorandum of association is an important and unalterable (excluding a few conditions) charter. The company is incorporated only for such objects which are given in the Memorandum.”

State with reasons whether the following statements are True or False:
Nobody is liable for mis-statement in the prospectus. 

  1. True

  2. False


Correct Option: B
Explanation:
(i) Prospectus is a written document giving an invitation to the public to purchase shares or debentures of the company. 
(ii) It provides all the necessary information about a company, its business, the management, financial structure, etc. of a company. 
(iii) A prospectus must be prepared very carefully and accurately. 
(iv) It should contain true and correct information and honest disclosure of facts. 
(v) A company and all those persons (directors, promoters and others) can be held responsible for any mis-statement in the prospectus. 
(vi) These people have to face severe consequences. 
(vii) The shareholder can cancel the contract i.e. they can refuse to take shares and pay for it and can sue the claim for damage or losses. 
(viii) Persons authorising the issue of prospectus containing mis-statement are punishable with imprisonment of two years and a fine upto 5000/-. 
'Table A' acts as a silent salesman of the company. 
  1. True

  2. False


Correct Option: B
Explanation:
(i) Table 'A' is a model set of articles given by the Companies Act, 1956. 
(ii) If a public limited company does not prepare its own Memorandum of Association at the time of incorporation, it can adopt 'Table A' of the Companies Act. 
(iii) Prospectus, on the other hand is a written invitation to the public to subscribe to the share capital of the company. 
(iv) It gives all material information about.the company. 
(v) It aims at inviting investors towards company for investment in company's securities i.e. shares and debentures. 
(vi) It is must for every public company to prepare its prospectus. 
(vii) It is through the prospectus that the prospective investors know details of shares, offere by the company.
 (iii) All detailed information about company like business, management, financial structure, etc. are provided in the prospectus. 
(ix) It does all the activities like general salesman, so it is the prospectus who act as a silent salesman and not 'Table A'.

State with reasons whether the following statement is True or False:
Prospectus is a charter of the company.

  1. True

  2. False


Correct Option: B
Explanation:
(i) Prospectus is an invitation to public to purchase its shares and debentures. 
(ii) It is issued after the formation of company. 
(iii) The Memorandum of Association on the other hand is a basic or fundamental or prim' document of a company. 
(iv) It lays down the ranges of its activities.
(v) It is a public document and can be inspected by those who deals with the company. 
(vi) It states the nature of business activities: to:be conducted by the company.
(vii) It defines the relationship between the company and the outsiders.
(viii) All companies have to prepare their own Memorandum of Association. 
(ix) It is submitted to the Registrar of Companies for registration.
(x) It is a charter or constitution of a company. 
(xi) No company can be incorporated without Memorandum of Association. 
So it is clear, that prospectus is not the charter of the company. The Memorandum of Association is the charter of the-company.

State with reasons whether the following statements are True or False:
Prospectus is prepared only for filing with the Registrar. 

  1. True

  2. False


Correct Option: B
Explanation:

(i) Prospectus aims at inviting investors to subscribe for its shares and debentures. 

(ii) It is through prospectus that the investors know details of the shares offered by the company. 
(iii) The main idea to issue a prospectus is to collect capital for the company. 

(iv) It is must, for every public company to prepare its prospectus. 
(v) Sometimes a public company may not raise its capital by issuing shares to the public, but a company can raise capital through private sources. 
(vi) In such cases, a company need not draft and issue a prospectus. 
(vii) That is why, a company files a 'statement' instead of prospectus to the Registrar. 
(viii) Such a statement is called a statement-in-lieu of prospectus.
(ix) So, it is a statement-in-lieu of prospectus which is drafted for filing purpose only and not the prospectus.

State with reasons whether the following statements are True or False:
Any clause of memorandum can be altered easily. 

  1. True

  2. False


Correct Option: B
Explanation:

(i) The Memorandum of Association is the basic, primary and supreme document of the company.

(ii) It is to be filed with the Registrar of Company for the purpose of incorporation of company. 
(iii) It is therefore called charter or constitution of the company. 
(iv) The Memorandum of Association contain six clauses. 
(v) For alteration of any dame in the Memorandum of Association, specific procedure is required to be followed as per the provision laid down in the Companies Act, 1956. 
(vi) Such procedure of alteration is quite complicated and lengthy. 
(vii) For alteration in Domicile and Object clause, a special resolution is passed at the general meeting and a sanction is obtained from the 'Company Law Board.' 
(viii) For alteration of Liability clause a special resolution must be passed at the general meeting and a sanction for that is obtained from the court. 
Thus, any clause of memorandum cannot be altered easily.

What is true for Branch office?

  1. It is not allowed to carry on manufacturing activity on its own.

  2. It is allowed to carry on manufacturing on its own.

  3. It is allowed to carry on business without the permission of RBI.

  4. None of the above.


Correct Option: A
Explanation:

Branch, bough, limb refer to divisions of a tree. Branch is general, meaning either a large or a small division. Bough refers only to the larger branches: a bough loaded with apples. A limb is a large primary division of a tree trunk or of a bough: to climb out on a limb.

A “branch”, by contrast, will be a part of a company, organised so as to conduct business on behalf of that company. ... A branch is not a separate corporate entity, but is typically run along lines that are similar in concept to those of a subsidiary company.

The principles of right and wrong that are accepted by an individual or organization are the  ____________.

  1. Research and Development

  2. Company Image and Brand Equity

  3. Value System

  4. All of above


Correct Option: C
Explanation:

A hierarchy of values that all moral agents possess, demonstrated by their choices. Most people's value systems differ, making the imposition of a singular value system by the state a source of constant social warfare. This is an individualistic concept. One's value system is molded by one's virtues or vices.

Consider the following statements:
1. Through the Hawthorne Studies, Elton Mayo could support Mary Parker Follett's theory that the lack of attention to human relationships was a major flaw in other management theories.
2. The book - The Human Problems of an industrialised Civilisation, was written by Mary Parker Follett.
Which of the statements given above is/are correct?

  1. Only 1

  2. Only 2

  3. Both 1 and 2

  4. Neither 1 nor 2


Correct Option: A

Common examples for non-profit corporations are ________________.

  1. Educational corporations

  2. Charitable corporations

  3. Religious corporations

  4. All of above


Correct Option: D
Explanation:

Non-profit corporations are all such organisations that do not operate for profit earning purpose and usually possess some social motive for the business. Common examples- educational corporations, charitable corporations and religious corporations.

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