ISC Commerce Question Paper 2015 Solved for Class 12

ISC Commerce Previous Year Question Paper 2015 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.

Part-I (20 Marks)
Answer all questions.

Question 1.
Answer briefly each of the questions (i) to (x)
(i) Enumerate the components of macro environment of a business concern.
(ii) What is meant by capital gearing ratio ?
(iii) Explain the meaning of gross working capital.
(iv) Distinguish between NEFT and RTGS.
(v) Distinguish between Unity of Direction and Unity of command.
(vi) Explain the term span of control.
(vii) What are the steps involved in the process of recruitment ?
(viii) What is meant by the term place in marketing mix ?
(ix) Explain branding.
(x) What is mobile banking ? State any two banking services available on mobile phone.
Answer :
(i) Macro environment is basically referred to the area of external business operations of a particular organization. The components of a macro environment have to be well analyzed before planning the course of marketing programmers as it affects the very performance of a product or an organization. All the factors affecting the performance of a firm in the macro environment are referred to as the components which could be economic, demographic, technological, natural, social .cultural, legal and political.

(ii) Capital gearing ratio is the ratio between the capital plus reserves i.e.. equity and fixed cost bearing securities. Fixed cost bearing securities include debentures, long-term mortgage loans etc.

(iii) Gross working capital is sum of current assets of a company and does not account for current liabilities. Gross working capital includes assets such as cash, checking and savings account balances, accounts receivable, short-term investments, inventory and marketable securities.

(iv) NEFT: NEFT- National Electronic Funds Transfer service can be used for sending funds inter-bank and intra-bank. The limit of remitting funds is from ₹ 1 to limitless.

RTGS : RTGS – Real Time Gross Settlement service can also be utilized for sending funds inter-bank and intra-bank, but the minimum amount is ₹ 2 lakh and no upper limit.

NEFT: Timings : 09:00 hours to 19:00 hours (Monday to Friday)
09:00 hours to 13:00 hours (Saturday)

RTGS: Timings : 09:00 hours to 16:30 hours (Monday to Friday)
09:00 hours to 13:30 hours (Saturday)


Basis of DifferenceUnify of CommandUnity of Direction
DefinitionA sub-ordinate must have one superior and receive orders only from him.Means activities aimed at the same objective.
ObjectivesPreventing dual subordination and creating accountability.All the activates aimed of the elected goal or plan.
Subject matterActivates and decisions made in light of the plan and objectives.One head and one plan for a group of activities with the same objective.

(vi) The span of control is the number of subordinates for whom a manager is directly responsible. Some companies also have an ideal span of control, which is the number of reports they feel a manager can effectively manage. In this case, if a manager has fewer reports than the ideal, they may feel he or she is not being effectively used, while if he or she is handling more they may feel that the manager is over-stretched and the reports will not receive enough direction.

(vii) Steps in Recruitment Process

  • Identify vacancy
  • Prepare job description and person specification
  • Advertising the vacancy
  • Managing the response
  • Short-listing
  • Arrange interviews
  • Conducting interview and decision making

(viii) Place is the element of the marketing mix that ensures that the product is distributed and made conveniently available for the consumer – at the right location at the right time. It is imperative that, when the consumer comes into the store to purchase a product, that product is readily available without any issue. Whenever consumers are faced with issues involving the availability of a product, it is almost certain that they will take their business somewhere else,

(ix) A brand basically serves as an identify for a company . This is much more than logos and names. The identity has to be created based on a different and unique idea and put through a compelling story . You have to make sure that it connects well with the all the potential customers and this should also form strong bonds with the customers.

(x) Mobile banking means banking through mobile phone. Mobile banking allow s you to bank anytime anywhere through your mobile phone. You can access your banking information and make transactions on your Savings Account. Loan Accounts and Credit Cards at absolutely no cost. With the new mShop facility on iMobile. you will now be able to recharge your mobile phone and book movie tickets.

Part-II (20 Marks)
(Answer any five questions)

Question 2.
(a) Explain any three features of business environment. [3]
(b) Discuss in brief any four factors that affect the working capital requirement of a company. [4]
(c) Explain any five rights of consumers as provided under the Consumer Protection Act. 1986. [5]
(a) All the external forces : Business Environment includes all the forces, institutions and factors which directly or indirectly affect the business organizations.

Specific and general forces : Business environment includes specific forces such as investors, customers, competitors and suppliers. Non-human or general forces are Social, Legal, Technological. Political, etc. which affect the business indirectly.

Inter-relation : All the forces and factors of business environment are inter-related to each other. For example with inclination of youth towards western culture, the demand for fast food is increasing.

Uncertainty: It is very difficult to predict the changes of business environment. As environment is changing very fast for example in IT. fashion industry frequent and fast changes are taking place.

(b) Nature of Business : The requirement of working capital of an enterprise depends upon the nature of business. A trading concern like a garments show-room, a service concern like an electricity undertaking or a transport corporation have a short operating cycle. Their requirement for working capital is small. A manufacturing concern like cotton textiles or woollen factory will have a long operating cycle specially if they are selling their goods on credit. Hotels and restaurants have minimum requirement of working capital 10 to 20% whereas trading and constmction industries have highest working capital requirement 80 to 90%.

Size of the Enterprise: An enterprise working on a high level of activity has a higher level of working capital requirement and vice-versa. An increase in production from time to time will tend to increase the need of working capital.

Seasonally of Operations: Those firms which have marked seasonality in their operations have fluemating working capital requirements. A firm manufacturing refrigerators will have maximum sales during summer seasons and minimum sales during winter seasons thus affecting its working capital. Such firms have a need of higher working capital during summers and lower in winter season.

Firms also experience cyclical fluctuations in the demand of their product and services. During upward swing in the economy, sales will increase and hence, debtors too. Under boom, the firms generally do substantial borrowing to increase their productive capacity. Whereas a decline in the economy results in low level of sales, inventories, debtors etc. Rather, firms try to reduce their short-term borrowings.

Market Conditions : When competitive conditions are prevailing in the market, a larger inventory of finished goods in heeded as customers may not be inclined to wait. Further, a liberal credit policy may be offered to the customer by the competitors. Both the conditions demand higher level of working capital, more investment in finished goods and debtors as well. A higher collection period will also imply tie-up of larger funds in book debts. Similarly, delayed payments, if not checked in time, may increase the working capital requirements much to the detrimental of the entrepreneur.

(c) (i) Right to be protected against the marketing of goods and sendees which are hazardous to life and property.
(ii) Right to be informed about the quality, quantity, potency, purity, standard and price of goods or sendees so as to protect the consumer against unfair trade practices.
(iii) Right to be assured , wherever possible , access to a variety of goods and sendees at competitive prices.
(iv) Right to be heard and to be assured that consumers interests w ill receive due consideration at appropriate forums.

Question 3.
(a) What is meant by trade credit ? Mention two advantages of trade credit as a short-term source of finance. [3]
(b) Explain any four types of debentures through which a public limited company can collect its borrow ed capital from the public. [5]
(c) What is retained earning 9 Explain any two of its merits and two of its demerits. [5]
(a) Trade credit is an important external source of working capital financing. It is a short-term credit extended by suppliers of goods and sendees in the normal course of business, to a buyer in order to enhance sales. Trade credit arises when a supplier of goods or sendees allow s customers to pay for goods and sendees at a later date. Cash is not immediately paid and deferral of payment represents a source of finance.

  • There are no formal legal instruments/acknowledgements of debt.
  • It is an internal arrangement between the buyer and seller.
  • It is a spontaneous source of financing.

(b) Redeemable Debentures: Redeemable debentures carry a specific date of redemption on the certificate. The company is legally bound to repay the principal amount to the debenture holders on that date.

Irredeemable (Perpetual) Debentures:
On the other hand, irredeemable debentures, also known as perpetual debentures, do not carry any date of redemption. This means that there is no specific time of redemption of these debentures. They are redeemed either on the liquidation of the company or w hen the company chooses to pay them off to reduce their liability’ by issues a due notice to the debenture holders beforehand.

Convertible Debentures : Convertible debenture holders have an option of converting their holdings into equity’ shares. The rate of conversion and the period after which the conversion w ill take effect are declared in the terms and conditions of the agreement of debentures at the time of issue.

Non-Convertible Debentures: Non-convertible debentures are simple debentures with no such option of getting converted into equity. Their state will always remain of a debt and will not become equity’ at any point of time. .

(c) Like an individual, companies too, set aside a part of their profit to meet future requirements. The portion of profits not distributed among the shareholders but retained and used in business is called retained earnings. It is also referred to as ploughing back of profit. This is one of the important sources of internal financing used for fixed as well as working capital. Retained earnings increase the value of shareholders in case of a growing firm.

Cheaper Source of Financing: The use of retained earnings does not involve any acquisition cost. The company has no obligation to pay anything in respect of retained earnings.

Financial Stability: Retained earnings strengthen the financial position of a business and thereby give financial stability to the business.

Improper Utilization of Funds : If the purpose for utilization of retained earnings is not clearly stated, it may lead to careless spending of funds.

Over-capitalization: Conservative dividend policy leads to huge accumulation of retained , earnings leading to over-capitalization.

Question 4.
(a) Distinguish between equity shares and preference shares. [4]
(b) Explain any four facilitating functions of marketing. [8]

Basis of DifferenceEquity’ SharesPreference Shares
DefinitionShares who do not enjoy any preference as regards payment of dividend and repayment of capital.Shares which enjoy preference as regards payment of dividend and repayment of capital.
Why chosenVoting rights only possible with equity shares.With preference shares investors enjoy: Liquidation preference Conversion(1:1. 1:0.5. l:2)can be decided upon performance of the company.
Rate of DividendFluctuating, depending on the availability of profits and recommendations made by the Board of Directors.Fixed.
Payment of DividendNo priority.Enjoy priority.

(b) Facilitating Functions of Marketing:
Selling : Selling is the core of marketing. It is concerned with the prospective buyers to actually complete the purchase of an article. It involves transfer of ownership of goods to the buyer. Selling plays an important part in realizing the ultimate aim of earning profit. Selling is enhanced by means of personal selling, advertising, publicity and sales promotion. Effectiveness and efficiency in selling determines the volume of company’s profits and profitability.

Buying and Assembling: It involves what to buy, of what quality’, how much from whom, when and at what price. People in business buy to increase sales or to decrease costs. Purchasing agents are much influenced by quality, service and price.
The products that the retailers buy for re-sale are determined by the needs and preferences of their customers. A manufacturer buys raw materials, spare parts, machinery, equipment’s, etc. for carrying out his production process and other related activities. A wholesaler buys products to resell them to the retailers.

Assembling means to purchase necessary component parts and to fit them together to make a product. ‘Assembly line’ indicates a production line made up of purely assembly operations. The assembly operation involves the arrival of individual component parts at the work place and issuing of these parts to be fastened together in the form of an assembly or sub-assembly .

Transportation: Transportation is the physical means by which goods are moved from the places where they are produced to those places where they are needed for consumption. It creates place, utility. Transportation is essential from the procurement of raw material to the delivery of finished products to the customer’s places. Marketing relies mainly on railroads, trucks, waterways, pipelines and air transport.

The type of transportation is chosen on several considerations, such as suitability, speed and cost of transportation sen ices. Transportation may be performed either by the buyer or by the seller.

Storage: It involves holding of goods in proper (i.e.. usable or saleable) condition from the time they are produced until they are needed by customers (in case of finished products) or by the production department (in case of raw materials and stores): storing protects the goods from deterioration and helps in carrying over surplus for future consumption or use in production.

Goods may be stored in various warehouses situated at different places, which is popularly known as warehousing. Warehouses should be situated at such places from where the distribution of goods may be easier and cheaper. Situation of warehouses is also important from the view of prompt feeding of emergency demands. Storing assumes importance when production is regional or consumption may be regional. Retail firms are called “stores’’.

Standardization and Grading : The other activities that facilitate marketing are standardization and grading. Standardization means establishment of certain standards or specifications for products based on intrinsic physical qualities of any commodity .

This may involve quantity (weight or size) or it may involve quality (colour, shape, appearance, material, taste, sweetness etc.) Government may also set some standards, for example, in case of agricultural products. A standard conveys a uniformity of the products. Grading means classification of standardized products into certain well defined classes or groups. It involves the division of products into classes made of units possessing similar characteristics of size and quality. Grading is very important for raw materials, marketing of agricultural products, mining products and forest products. Branded consumer products may bear grade labels A. B. C.

Question 5.
(n) Mention three remedies available to consumers under the Consumer Protection Act. 1986. [3]
(b) Explain any four merits of borrowing funds from financial institutions. [4]
(c) Explain any five ways of overcoming barriers to communication. [5]
(a) Remedies Granted under the Act. The District Forum / State Commission / National Commission may pass one or more of the following orders to grant relief to the aggrieved consumer

  • to remove the defects pointed out by the appropriate laboratory from goods in question.
  • to replace the goods with new goods of similar description which shall be free from any defect;
  • to return to the complainant the price or. as the case may be. the charges paid by the complainant;
  • to pay such amount as may be awarded by it as compensation to the consumer for any loss or injury suffered by the consumer due to negligence of the opposite party.

(b) Merits of Borrowing Funds from Financial Institutions:

Immediate Infusion of Cash:
The main benefit of borrowing money from a financial institution is the ability to obtain a large amount of money quickly. This money can be used for necessary purchases and investments, including investments in your ow n education. Financial institutions can lend more money than most friends and family members can.

Interest Rates:
Financial institutions attach interest rates to the principal amount borrow ed. An interest rate can either be a positive or a negative. Borrowers with good credit can attain a loan with a lower interest rate. This, in turn, makes the loan less expensive in the long run. Borrowers with poor credit scores can likely only attain a loan at higher interest rates. This can make borrowing money an expensive decision and possibly unattractive as a financial option. Interest rates also fluctuate. As such, borrowers should watch interest rates to borrow when rates are low. A strong credit score and favorable market interest rates produce a favorable borrowing environment.

Collateral is a legal interest, otherwise know n as a lien, that a financial institution places on an asset in case you default on your loan. A common form of this interest is the home mortgage. Collateral removes the risks a financial institution takes on when lending out large sums of money (a house mortgage or car loan, for example). Upon defaulting, the financial institution takes control of the asset and sells it for a profit to cover any losses. This secures the institution against losses and creates the freedom to lend out larger amounts. Loans backed by collateral, also known as secured loans, offer lower interest rates but present the clear danger of losing your property.

Traditional Banks and Credit Unions:
Traditional banks and credit unions offer different benefits to borrowers. Traditional banks offer sen ices to all potential customers. Even though anyone can potentially use the financial services of traditional banks, these financial institutions often offer loans at high interest rates. Credit unions, on the other hand, are open to specific groups of people, usually people who live in a specific geographical location or those who belong to certain professions. These financial institutions often offer their members lower interest rates, but. unlike a bank, not everyone can become a customer.

(c) Ways of overcoming barriers to communication
All the communication barriers as identified above, can be overcome with a conscious effort by observing the following rules.

  • Before initiating an interaction our ideas must be planned and clarified. In order to make our ideas clear, we may discuss them with others. Build a climate of trust and confidence between the participants.
  • A time sense must be observed between the speaker and the listener so that the listener may understand and appreciate the speaker s ideas
  • Our speech and gestures must be consistent with each other.
  • In order to eliminate misunderstanding or miscommunication the speaker must adopt question-answer technique. The feedback from the listener is necessary to clear doubts.
  • Use simple language understandable to the listener.
  • The message must have a purpose and must be addressed to the listener.

Question 6.
(a) Explain any three internal factors of micro environment of a business organization. [4]
(b) Explain the objective of marketing. [4]
(c) Planning is beneficial to all. In the light of this statement, discuss the importance of planning. [5]
(a) Internal Environment
Internal environment includes all those factors which influence business and which are present within the business itself. These factors are usually under the control of business. The study of internal factors is really important for the study of internal environment.

Internal micro-environment factors are:
The general vision of the company : This is developed by the management and leads the company ‘s activities to operations focused on production, technology, sales or market. It’s very important that the focus is on marketing, trying to appease both company’s and market’s objectives.

Marketing integration : Related to the general vision of the company . The marketing function must be an integrator function for all other functions, so that the marketing concept can be promoted.

Organizational culture : It represents a series of values and beliefs promoted company wide, being a result of cultural elements that characterize the people that run the business or support it: employees, managers, shareholders, union. Development of organizational culture is crucial.

Employees: This is the main internal micro-environmental factor that influences the company. considering that the employees are involved in all company’s operations. Employees’ satisfaction is important because it results in customer satisfaction.

(b) Objectives of Marketing
Creation of Demand : The marketing management’s first objective is to create demand through various means. A conscious attempt is made to find out the preferences and tastes of the consumers. Goods and services are produced to satisfy the needs of the customers. Demand is also created by informing the customers the utility of various goods and ser¬vices.

Customer Satisfaction : The marketing manager must study the demands of customers before offering them any goods or services. Selling the goods or services is not that important as the satisfaction of the customers’ needs. Modern marketing is customer- oriented. It begins and ends with the customer.

Market Share: Every business aims at increasing its market share i.e.. the ratio of its sales to the total sales in the economy. For instance, both Pepsi and Coke compete with each other to increase their market share. For this, they have adopted innovative advertising, innovative packaging, sales promotion activities, etc.

(c) Importance of Planning:
Focuses attention on objectives and results: Every organisation exists to achieve certain objectives Planning concentrates attention on the dominant goals of the organisation.

Reduces uncertainty and change : Uncertainly and risks are inevitable and planning cannot eliminate them. But planning enables an organisation to cope with uncertainty and change.

Planning helps to identify potential threats and opportunities. It also keeps management alert to the changing environment of business. In this way, planning provides additional strength to the organisation for survival and growth in the face of turbulence.

Provides sense of direction : Planning saves an organisation from drifting and avoids aimless activities. Planning makes work more meaningful and activities more orderly.

Helps in coordination : Planning is the best stage for the integration of diverse forces at work. Sound planning inter-relates all the activities and resources of an organisation.

The activities and efforts of various departments and divisions can be harmonized with the help loan overall plan, planning makes for balance and consistency in efforts Planning leads to a consistent and coordinated structure of operations.

Provides economy in operation : Planning facilitates optimum utilization of available resources. It makes at possible for things to occur which would not otherwise happen. It improves the competitive strength of an organization by helping it to discover and exploit opportunities a rational solution to problems, planning results in the use of most efficient methods of work.

Question 7.
(a) Differentiate between functional organization and divisional organization [3]
(b) What is meant by service ? Mention three features of service. [4]
(c) Coordination is the essence of management. Explain. [5]
(a) Functional Structure : In a functional structure, positions are grouped based on the type of work they do and the skills required to complete that work. Organizations employing this kind of structure divide themselves into functional areas like marketing, engineering and accounting.

Each functional area is usually led by an administrator with expertise in that field. The strengths of the functional structure include fostering, supervising and efficiently utilizing specialized resources.

Divisional Structure: In a divisional structure, an organization divides itself not into functional areas but into divisions. These divisions, which can be created around product lines, markets or geographic region, usually are given more independence and sometimes even act like separate companies. This structure is usually employed by businesses whose growth into new products, markets or regions makes the functional structure too complex and cumbersome. By creating these pseudo-sovereign divisions, decisions can be made more quickly and employees can specialize in the unique aspects of the division in which they work, providing for a more efficient use of resources.

(b) A service is an act or performance offered by one party to another. They are economic activities that create value and provide benefits for customers at specific times and places as a result of bringing desired change.

Services are activities performed by the service provider. Services cannot be seen, tasted, felt, heard or smelt before they are consumed.

Services are typically produced and consumed simultaneously. Inseparability of production and consumption increases the importance of the quality in services.

Services are deeds, performance or act whose consumption take place simultaneously; they tend to perish me the absence of consumption. Hence, services cannot be stored. The sen ices go waste if they are not consumed simultaneously.

(c) Coordination is not only a function of management but it is also an essence of the management process. Coordination is required in each and every activity and in each and every function of the management. Coordination is maintained in all the activities of the department, so that enterprise can be run efficiently and effectively. The concept of essence is related to the intrinsic nature of the object. Every function of management must in itself be coordinated. So it becomes the central task of the manager to reconcile the differences in approach, timing, effort or interest and to harmonize cooperative and individual goals. The reasons for treating coordination as the essence of management is as follow :

Coordination and Planning: Planning cannot prove effective if the sub plans of the organisation does not match with the overall or main plan. Coordination reconciles the policies and programmes of the various departments with the policies and programmes of the organisation, so that overall objectives can be achieved. Proper coordination as well is required when plans of the organisation are prepared with the participation of all the people who are involved in it. Further, coordination can be achieved through planning by integrating the plans of different departments.

Coordination and Organizing: Organisation would be poor if there is lack of harmony in vertical and horizontal authority relationships. Coordination helps in simplifying the organizational structure as well as reduces the conflicts. Coordination is required at the time of division of work i.e., delegating authority and creating responsibility. So for successfully performing the function of organizing, there is great need of coordination.

Coordination and Staffing: Staffing must be consistent with the needs and the resources of the enterprise. Even manager requires coordination for performing the function of recruitment, selection, training, development, performance appraisal, transfers, demotion, promotion etc. Placing the right person at the right place and at the right time requires coordination. So coordination is required for effectively performing the function of management.

Coordination and Direction: Direction cannot be proved effective if the orders and instructions given to the employees are not consistent with the requirements of the circumstances. Coordination promotes effective communication, leadership, supervision and motivation. Similarly, effective communication, leadership, motivation and supervision enhance coordination in the enterprise.

Coordination and Controlling : Controlling creates harmony between planning and the performance. For the measurement of actual performance, comparing it with the standards and taking the corrective action requires coordination of the different activities and the units in the organisation. So, coordination is required for the performance of the controlling function efficiently.

Question 8.
(a) What is a market ? Explain the meaning of capital market and money market. [3]
(b) Differentiate between traditional concept of marketing and modem concept of marketing. [4]
(c) What is meant by indirect channels of distribution ? Explain the types of indirect channels of distribution. [5]
(a) A market is a place where regular gathering of people for the purchase and sale of provisions, livestock and other commodities, takes place.

Capital Market:
The capital market is a market which deals in long-term loans. It supplies industry with fixed and working capital and finances medium-term and long-term borrowings of the central, state and local governments. The capital market deals in ordinary stock are shares and debentures of corporations and bonds and securities of governments.

The funds which flow into the capital market come from individuals who have savings to invest, the merchant banks, the commercial banks and non-bank financial intermediaries, such as insurance companies, finance houses, unit trusts, investment trusts, venture capital, leasing finance, mutual funds, building societies, etc.

Money Market:
Money market is the trade in short-term loans between banks and other financial institutions. Money markets allow banks to manage their liquidity as well as provide the central bank means to conduct monetary policy. Money markets are markets for debt instruments with a maturity up to one year. The most active part of the money market is the call money market (i.e., market for overnight and term money between banks and institutions) and the market for repo transactions. The former is in the form of loans and the latter are sale and buyback agreements – both are obviously not traded. The main traded instruments are commercial papers (CP’s), certificates of deposit (CD’s) and treasury’bills (T-Bills).


Basis of DifferenceTraditional MarketingModern Marketing
ComplexityTraditional market is not complex.Modern marketing is a complex thing.
Distribution ChannelsLess distribution channels.More and more distribution channels of marketing are coming up.
Movement of the PurchaserConsumers have to visit the market place for purchasing the products.Consumers don’t need to visit the supermarkets. They can place orders over the internet and have the goods delivered to their homes.
MiddlemenTraditional marketing depends on the services of middlemen.Modem marketing does not depend on the services of the middlemen.

(c) Indirect Channel:
If the producer is producing goods on a large scale, it may not be possible for him to sell goods directly to consumers. As such, he sells goods through middlemen. These middlemen may be wholesalers or retailers. A wholesaler is a person who buys goods in large quantities from producers; where as a retailer is one who buys goods from wholesalers and producers and sells to ultimate consumers as per their requirement. Involvement of various middlemen in the process of distribution constitute the indirect channel of distribution. Let us look into some of the important indirect channels of distribution.

This is the common channel for the distribution of goods to ultimate consumers. Selling goods through wholesaler may be suitable in case of food grains, spices, utensils, etc. and mostly of items, which are smaller in size.

Under this channel, the producers sell to one or more retailers who in turn sell to the ultimate consumers. This channel is used under the following conditions –

  • When the goods cater to a local market, for example, breads, biscuits, patties, etc.
  • When the retailers are big and buy in bulk but sell in smaller units, directly to the consumers.

Question 9.
Write short notes on :
(a) Directing [4]
(b) Formal organisation. [4]
(c) Internal sources of recruitment [4]
(a) Directing is certainly a part of controlling function. However, motivation is not a controlling function completely, it is an influencing factor. For motivation, we should first know the need of the other person. Encouraging someone to excel in his actions amounts to motivation but not a control function. Motivation is a complex activity. It includes shades of controlling activity, though in a positive mode. Threat is also amounts motivation, of course in a negative way. Motivation is the core of management. Before a manager or business owner can make any decisions, he needs to know how it affects his bottom line. It is crucial that the staff be motivated by the proper direction.

(b) Formal Organisation : When the managers are carrying on organizing process then as a result of organizing process an organisational structure is created to achieve systematic working and efficient utilization of resources. This type of structure is known as formal organisational structure. The salient features of formal organization are as follows :

  • Organization structure is laid down by the top management to achieve organizational goals.
  • Organization structure is based on division of labor and specialization to achieve efficiency in the operations.
  • Organization structure concentrates on the jobs to be performed and not the individuals who are to perform jobs.
  • The organization does not take into consideration the sentiments of organizational members.
  • The authority and responsibility relationships created by the organization structure are to be honored by every one.

(c) Internal Sources:
Best employees can be found within the organisation. When a vacancy arises in the organisation, it may be given to an employee who is already on the pay-roll. Internal sources include promotion, transfer and in certain cases demotion. When a higher post is given to a deserving employee. it motivates all other employees of the organisation to work hard. The employees can be informed of such a vacancy by internal advertisement.

Methods of Internal Sources:
The Internal Sources are given below:
Transfers : Transfer involves shifting of persons from present jobs to other similar jobs. These do not involve any change in rank, responsibility or prestige. The numbers of persons do not increase with transfers.

Promotions : Promotions refer to shifting of persons to positions carrying better prestige, higher responsibilities and more pay. The higher positions falling vacant may be filled up from within the organisation. A promotion does not increase the number of persons in the organisation.

A person going to get a higher position will vacate his present position. Promotion will motivate employees to improve their performance so that they can also get promotion.

Present Employees: The present employees of a concern are informed about likely vacant positions. The employees recommend their relations or persons intimately known to them. Management is relieved of looking out prospective candidates.

The persons recommended by the employees may be generally suitable for the jobs because they know the requirements of various positions. The existing employees take full responsibility of those recommended by them and also ensure of their proper behavior and performance.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2014 Solved for Class 12

ISC Commerce Previous Year Question Paper 2014 Solved for Class 12

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
    writing during this time.
  • Answer Question 1 from Part I and seven questions from Part II.
  • The intended marks for questions are given in brackets [ ].

Part – I (20 Marks)

Question 1.
Answer briefly each of the questions (i) to (x). [10 × 2]
(i) What is the meaning of business environment?
(ii) Enumerate the main forms in which financial assistance from a commercial bank may be available.
(iii) Write any two features of principles of management.
(iv) What is factoring?
(v) Distinguish between gross working capital and net working capital.
(vi) State any two points of distinction between recruitment and selection.
(vii) Differentiate between bearer debentures and registered debentures.
(viii) In the context of right shares, bring out the meaning of pre-emptive right.
(ix) What is marketing research?
(x) Mention any two specific differences between product and service.
(i) A business organization cannot exist a vacuum. It needs living persons, natural resources and places and things to exist. The sum of all these factors and forces is called the business environment.

(ii) Bank provides financial assistance in the following forms :

  • Loans and Advances to Priority and Non-Priority Sectors
  • Cash Credits to businessmen
  • Bank Overdrafts to businessmen and individuals
  • Discounting of Bills

(iii) (a) Principles of management are universal. They are applicable to all kinds of organizations- business and non-business. They are applicable to all levels of management.
Principles of management are flexible.
(b) Management principles are dynamic guidelines and not static rules.
(c) There is sufficient room for managerial discretion i.e., they can be modified as per the requirements of the situation.

(iv) Factoring is a transaction in which a business sells its accounts receivable, or invoices, to a third party commercial finance company, also known as a “factor.” This is done so that the business can receive cash more quickly than it would be waiting 30 to 60 days for a customer payment. Factoring is sometimes called “accounts receivable financing.”


Gross Working CapitalNet Working Capital
Gross working capital is the sum of current assets of a company and does not account for current liabilities.Networking capital is the difference between current assets and current liabilities.
Net Working Capital = Current Assets Current Liabilities
It does not take into account the liabilities of the company and as such is not a true indicator of the financial health of a company.It reflects operational efficiency and the ability to generate more sales.


Recruitment is the process of searching the candidates for employment and stimulating them to apply for jobs in the organization.Selection involves the series of steps by which the candidates are screened for choosing the most suitable persons for vacant posts.
Recruitment is a positive process i.e., encouraging more and more employees to apply.Selection is a negative process as it involves the rejection of the unsuitable candidates.


Bearer DebenturesRegistered Debentures
Bearer debentures are not recorded in the company’s debenture-holders’ register.Registered debentures are recorded in the company’s debenture-holders’ register with full details of every debenture holder.
Bearer debentures are negotiable.Registered debentures are not negotiable.

(viii) A privilege extended to select shareholders of a corporation that will give them the right to purchase additional shares in the company before the general public has the opportunity by the event there is a seasoned offering. A preemptive right is written in the contract between the purchaser and the company but does not function like a put option.

(ix) Marketing research is the process of planning, collecting and analyzing data relevant to a marketing decision. Marketing research is a broader term including market research Marketing research is concerned with all the major functions of marketing. Market research is primarily concerned with knowing the capacity of the market to absorb a particular product Marketing research is not only concerned with the jurisdiction of the market but also covers nature of the market, product analysis, sales analysis, time, place and media of advertising, personal selling and marketing intermediaries and their relationships etc.


A product is tangible – means it can be seen and touched.Service is intangible – means it cannot be seen and touched.
A product is durable and can be stored.Service cannot be stored. It can be produced and consumed.

Part – II (60 Marks)
(Answer any five questions)

Question 2.
(a) Explain why management is considered to be an art. [4]
(b) State and explain any four principles of E W. Taylor. [8]
(a) Art refers to the way of doing specific things: it indicates how an object can be achieved.
In the words of George R. Tern. “Art is bringing about a desired result through the application of skill.” Art is, thus, skilful application of knowledge which entirely depends on the inherent capacity of a person which comes from within a person and is learned from practice and experience. In this sense, management is certainly an art as a manager uses his skill, knowledge and experience in solving various problems, both complicated and non-complicated that arise in the working of his enterprise successful. In the words of Ernest Dale. “Management is considered as an art rather than science mainly because managerial skill is a personnel possession and is intuitive.”

(b) 1. Science, Not Rule of Thumb: This principle says that we should not get stuck in a set routine with the old techniques of doing work, rather we should be constantly experimenting to develop new techniques which make the work much simpler, easier and quicker.

2. Harmony, Not Discord: As per this principle, such an atmosphere should be created in the organisation that labour (the major factor of production) and management consider each other indispensable.
Taylor has referred to such a situation as a ‘Mental Revolution’. Taylor firmly believed that the occurrence of a mental revolution would end all conflicts between the two parties and would be beneficial to both of them.

3. Cooperation, Not Individualism: According to this principle, all the activities done by different people must be carried on with a spirit of mutual cooperation. Taylor has suggested that the manager and the workers should jointly determine standards. This increases involvement and thus, in turn, increases responsibility. In this way, we can expect miraculous results.

4. Development of Each and Every Person to His/Her Greatest Efficiency and Prosperity: According to this principle, the efficiency of each and every person should be taken care of right from his selection. A proper arrangement of everybody’s training should be made.
It should also be taken care that each individual should be allotted work according to his ability and interest. Such a caring attitude would create a sense of enthusiasm among the employees and a feeling of belongingness too.

Question 3.
(a) Distinguish between fixed capital and working capital of a business concern. [3]
(b) What are equity shares? Explain any three advantages of issuing equity shares from the point of view of a company. [4]
(c) Briefly explain any five factors to be considered while preparing a suitable capital plan. [5]

S.No.Fixed CapitalWorking Capital
1.It is required for investment.It is required for investment in current assets.
2.It is for the long-time period.It is for a short time period.
3.It does not change its form. It remains fixed.Its forms keep on changing.
4.Fixed capital is raised from shares, debentures and long term loans.It is raised from public deposit, trade credit and banks.

(b) Equity shares are the main source of finance of a firm. It is issued to the general public. Equity shareholders do not enjoy any preferential rights with regard to the repayment of capital and dividend. They are entitled to the residual income of the company, but they enjoy the right to control the affairs of the business and all the shareholders collectively are the owners of the company.

Advantages to Company
1. Long-term and Permanent Capital: It is a good source of long-term finance. A company is not required to pay-back the equity capital during its life-time and so, it is a permanent source of capital.

2. No Fixed Burden: Unlike preference shares, equity shares suppose no fixed burden on the company’s resources, because the dividend on these shares is subject to availability of profits and the intention of the board of directors. They may not get the dividend even when the company has profits. Thus they provide a cushion of safety against unfavourable development.

3. Creditworthiness: Issuance of equity share capital creates no change in the assets of the company. A company can raise further finance on the security’ of its fixed assets.

4. Risk Capital: Equity capital is said to be the risk capital. A company can trade on equity in bad periods on the risk of equity capital.

5. Dividend Policy: A company may follow an elastic and rational dividend policy and may create huge reserves for its developmental programmes.

(c) Every’ good plan should include financial controls during implementation. Financial control is a system developed to allow the business to control and monitor the acquisition, allocation and utilization of the financial resources to ensure they are done in accordance with the plan.

Factors to be considered while preparing a suitable capital plan:
(i) Objective: All capital plans should be designed to achieve the financial objectives of a company. The basic financial objective is the procurement of funds at the lowest cost.

(ii) Size of the firm: Capital plan must take into account the size of the firm. A large enterprise aiming at steady growth will need more funds. Post record and credit standing of the firm reputation and attitudes of management and the degree of the risk the firm is willing to assume also influence capital planning.

(iii) Market Conditions: Capital plan depends on the cost of alternative sources of finance and attitudes of financial institutions and banks. Availability of alternative sources of funds and their merits and demerits affects the choice of the type of securities to be issued.

(iv) Degree of risk: Degree of risk is another important factor while formulating a capital plan for an enterprise. The degree of risk which an enterprise is willing to assume influences capital planning. If an enterprise raises funds by issuing shares, there is a risk because it is not necessary to pay a dividend if profits are inadequate. However, too much dependence on shares may dilute control of the company.

Question 4.
(a) What are sweat equity shares? [3]
(b) List any four features of NEFT. [4]
(c) Briefly explain any five external factors of the microenvironment of business. [5]
(a) Sweat equity shares are equity shares issued by a company to its employees or directors at a discount, or as a consideration for providing know-how or a similar value to the company.
A company may issue sweat equity shares of a class of shares already issued if these conditions are met:
The issue of sweat equity’ shares should be authorised by a special resolution passed by the company in a general meeting. The resolution should specify the number of shares, current market price, consideration if any, and the section of directors/employees to whom they are to be issued. As on the date of issue, a year should have elapsed since the company was entitled to commence business.

(b) National Electronic Fund Transfer (NEFT) is a nationwide payment system used in India allowing bank’s customer to transfer fund easily on one to one basis. Under the system of NEFT any individual, firm or corporate can transfer funds electronically to another individual, firm or corporation. This facility is provided by banks across the country and allows remittance to Nepal as well.

Features of NEFT

  • NEFT is a paperless mode of remitting funds intra-bank, interbank, intra-city and intercity.
  • It is a very fast mode of getting credits into the accounts. An NEFT gets credited to the account after 2 hours on the same day or by the next morning.
  • NEFT is a cost-effective service as compared to Drafts or Cheques. Banks charge a very nominal fee for sending NEFT to the other accounts.
  • Banks do not charge any fee for inward credits into the accounts.

(c) External factors of the microenvironment of business are as follows:
Customers: As all businesses need customers, they should be customers-oriented. The firm’s marketing plan should aim to attract and retain customers through products that meet their “wants and needs” and excellent customer service.

Employees: Employing staff with relevant skills and experience is essential. This process begins at the recruitment stage and continues throughout an employee’s employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially in Service Sector Marketing. If a business employs staff without motivation, skills or experience it will affect customer service and ultimately sales.

Suppliers: Suppliers provide businesses with the materials they need to carry out their business activities. A supplier’s behaviour will directly impact the business it supplies. For example, if a supplier provides a poor service this could increase timescales or product quality. An increase in raw material prices will affect an organization’s Marketing Mix strategy and may even force price increases. Close supplier relationships are an effective way to remain competitive and secure quality products.

Shareholders: As organizations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organizational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business.

Media: Positive media attention can “make” an organization (or its products) and negative media attention can “break” an organisation. Organizations need to manage the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation. Some organizations will even employ public relations (PR) consultants to help them manage a particular event or incident.

Consumer television programmes with a wide and more direct audience can also have a very powerful impact on the success of an organisation. Some businesses recognize this and will change their reaction when consumers mention that they are going to contact a consumer television programme or the newspapers about the business.

Question 5.
(a) Distinguish between centralisation and decentralisation. [3]
(b) Write four methods by which the objectives of consumer protection can be achieved. [4]
(c) Describe any five qualities of a good leader. [5]
(a) Centralization and decentralization both are organizational structures which are followed in various organizations across the world. Both are quite opposite of each other and therefore it is important to know about the differences between centralization and decentralization:

1. While under centralization the decision making power is in the hands of top management. In other words all major decisions are taken at top management while lower management has no or very little power to make decisions regarding the company matters whereas under decentralization decision making authority is delegated to lower levels of the management, in simple words under this method all decisions are not taken by top management rather some decision making authority is delegated to middle and lower-level management.

2. Under centralization the chances of conflict among middle and lower-level managers is less because decisions are taken by higher management and all have to abide by it irrespective of their opinion whereas under decentralization chances of conflict increases because of multiple decision-making authorities due to delegation of power.

3. Centralized organizational structure is best suited for a small company which is operating in a limited geographical area because of its simplicity while decentralized organizational structure is ideal for big MNC companies which are operating in different geographical locations as in huge organizations it is not possible to have single or centralized decision making authority.

(b) 1. Self Regulation by Business: Enlightened business firms realise that it is in their longterm interest to serve the customers well. Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have set up their customer service and grievance cells to redress the problems and grievances of their consumers.

2. Business Associations: The associations of trade, commerce and business-like Federation of Indian Chambers of Commerce of India (FICCI) and Confederation of Indian Industries (CII) have laid down their code of conduct which lay down for their members the guidelines in their dealings with the customers.

3. Consumer Awareness: A consumer, who is well informed about his rights and the reliefs available to him, would be in a position to raise his voice against any unfair trade practices or unscrupulous exploitation. In addition to this, an understanding of his responsibilities would also enable a consumer to safeguard his interests.

4. Consumer Organisations: Consumer organisations play an important role in educating consumers about their rights and providing protection to them. These organisations can force business firms to avoid malpractices and exploitation of consumers.

Qualities of a good leader:
(c) Mental Strength: Some people have a misconception that only those people who are physically strong can become good leaders, but this is not the fact. A leader may not be physically strong but he needs to be mentally strong and firm in decisions.
Leadership is a quality which cannot be acquired by any person from the other but it can be acquired by self-determination of a person. Leadership can best be called the personality of the very highest ability-whether in the ruling, thinking, imagining, innovation, warring, or religious influencing.

Communication: A great communicator is some way or the other is always a great leader. These are skills need to be learned from childhood, to be a great leader a child has to be trained in vocabulary, grammar etc. The history reveals that the world’s greatest leaders are exceptionally great communicators. An effective leader should be a mesmerizing orator. His words should be effective enough to motivate your followers. The majority of the time of a leader is spent in communication or interacting with people so interpersonal skills is a must. While communicating with people always make sure that you are giving the right message so, simplify the message in order to give the intended message.
Intelligence and Alertness: The most important quality which a leader should possess is intelligence and alertness. A leader has to use his/her brain every time and also has to remain alert with eyes and ears open otherwise he/she could easily be carried by any fraud or enemy.

Action-Oriented approach: The other qualities of a leader include impartiality, action-oriented approach and positive attitude. A good leader should always be impartial towards all his followers, because the moment he becomes partial, he no longer remains a leader as he loses the confidence of others. The duty of a leader is to encourage and raise the standard of all his followers and not just a few of them, and he should always remember his duty.

Optimist perspective: A leader should also be an optimist having a positive attitude. He should not think negatively or plan something showing a negative attitude. A person who thinks or plans something’s showing his negative attitude never be a Leader. A leader should always be courageous. He should have the courage to face the troubles or problems and solving the problems by himself in place of blaming and embarrassing others.

Question 6.
(a) Explain any three barriers to communication. [3]
(b) Explain the features of planning as a function of management. [4]
(c) Explain the various steps involved in the process of organising. [5]
(a) 1. Semantic Barriers: There is always a possibility of misunderstanding the feelings of the sender of the message or getting a wrong meaning of it. The words, signs, and figures used in the communication are explained by the receiver in the light of his experience which creates doubtful situations. This happens because the information is not sent in simple language.

2. Psychological or Emotional Barriers: The importance of communication depends on the mental condition of both parties. A mentally disturbed party can be a hindrance in communication.

3. Organisational Barriers: Organisational structure greatly affects the capability of the employees as far as communication is concerned.

4. Personal Barriers: The above-mentioned organisational barriers are important in themselves but there are some barriers which are directly connected with the sender and the receiver. They are called personal barriers.

(b) Planning as a Function of Management: In the world of management, planning is as fundamental as it gets. If you recall, the first of the managerial function is planning. Many believe planning is the most fundamental of the managerial functions because all other functions, including organizing, leading, controlling and staffing, stem from the planning function. Planning prepares organizations for tomorrow today by assessing what an organization wants to accomplish and how it will go about achieving that goal.

Managers will spend much of their time planning for all sorts of things that may or will occur in the organization. Typically a manager will create a plan that is aimed at accomplishing some organizational goal such as increasing sales or improving customer service. However, it is important to note that planning is an ongoing step that can be highly specialized based on an organization’s goals, division goals, departmental goals and team goals. It is up to the manager to recognize what goals need to be planned within their individual area.

For example, let’s say Erin the enrollment manager has noticed a steady decline in the number of students enrolling in the business program, so she creates a goal to increase enrollments in that area. Erin must first spend time mapping out the necessary steps she and her team of enrollment advisors need to take to increase the enrollment numbers of undergraduate business students. These steps might include things like increasing online advertisements on business-related sites, creating a new advertisement for television or radio, asking current business students to talk to their friends and family about enrolling in the program or going out to local high schools or community colleges to speak directly with students who may be enrolling at the university in the next semester. The steps are then organized into a logical pattern so that Erin and her team can follow it.

(c) 1. Identification and Division of work: The organising function begins with the division of total work into smaller units. Each unit of total work is called a job.

And an individual in the organisation is assigned one job only. The division of work into smaller jobs leads to specialization because jobs are assigned to individuals according to their qualifications and capabilities. The division of work leads to systematic working. For example, in a bank, even an individual is assigned a job. One cashier accepts cash, one cashier makes payments, one person issues cheque books, one person receives cheques, etc. With the division of work into jobs, the banks work very smoothly and systematically.

2. Grouping the Jobs and Departmentalisation: After dividing the work in smaller jobs, related and similar jobs are grouped together and put under one department. The departmentation or grouping of jobs can be done by the organisation in different ways. But the most common two ways are:

(a) Functional departmentation: Under this method, jobs related to common function are grouped under one department. For example, all the jobs related to production are grouped under the production department; jobs related to sales are grouped under the sales department and so on.

(b) Divisional departmentation: When an organisation is producing more than one type of products then they prefer divisional departmentation. Under these jobs related to one product are grouped under one department. For example, if an organisation is producing cosmetics, textile and medicines then jobs related to production, sale and marketing of cosmetics are grouped under one department, jobs related to textile under one and so on.

3. Assignment of Duties: After dividing the organisation into specialised departments each individual working in different departments are assigned a duty matching to his skill and qualifications. The work is assigned according to the ability of individuals. Employees are assigned duties by giving them a document called job description. This document clearly defines the contents and responsibilities related to the job.

4. Establishing Reporting Relationship: After grouping the activities in different departments the employees have to perform the job and to perform the job every individual needs some authority. So, in the fourth step of the organising process all the individual’s arc assigned some authority matching to the job they have to perform.

The assignment of the authority results in the creation of the superior-subordinate relationship and the question of who reports to who is clarified. The individual of higher authority becomes superior and with less authority becomes the subordinate.
With the establishment of authority, the managerial hierarchy gets created (chain of command) and principle of scalar chain follow s this hierarchy. The establishment of authority also helps in the creation of managerial level.

The managers with maximum authority are considered as top-level managers, managers with little less authority become part of middle-level management and managers with minimum authority are grouped in lower-level management. So with the establishment of the authority the individuals can perform their jobs and everyone knows who will report to whom.

Question 7.
Write short notes on:
(a) Maslow’s theory of needs. [4]
(b) Line and staff organisation. [4]
(c) Modem concept of marketing. [4]
(a) Physiological needs include the most basic needs that are vital to survival, such as the need for water, air, food, and sleep. Maslow believed that these needs are the most basic and instinctive needs in the hierarchy because all needs become secondary until these physiological needs are met.
For example, an employer provides lunch breaks, rest breaks, and wages that are sufficient to purchase essentials. These address an employee’s physiological needs.

Here is another example. Have you ever had a hard time paying attention to what the professor is saying when you are hungry? Some students may not have had breakfast or even dinner the night before. Free and reduced breakfast and lunch programs have been implemented in schools to help students meet some of their physiological needs.
The next level of needs is safety needs. These include needs for safety and security. These are important for survival, but they are not as demanding as physiological needs.

An example in the business world is when employers provide a safe working environment, retirement benefits, and job security. In schools, an example of addressing safety needs include providing a safe and secure classroom and having a school resource officer on grounds. This reduces threats to student’s physical, mental, and emotional security.

We now come to our third level, social needs. Sometimes these are referred to as the love and belonging needs. These include needs for belonging, love, and affection. Maslow considered these needs to be less basic than physiological and security needs.
Relationships such as friendships, romantic attachments, and families help fulfill this need for companionship and acceptance, as does involvement in social, community, or religious groups. In the workplace, employers help fulfil these needs by creating a sense of community via team-based projects and social events. When people’s social needs are not met, they tend to be unhappy. This leads to loneliness, social anxiety, and depression.

After the first three needs have been satisfied, esteem needs become increasingly important. These include the need for things that reflect on self-esteem, personal worth, social recognition, and accomplishment.

(b) Line and staff organisation refer to a pattern in which staff specialists advise line managers to perform their duties.

  • Managers are of two types – Line Managers and Staff Managers.
  • Line Managers perform the functions of decision-making, issuing orders and controlling while Staff Managers perform the functions of advising, assisting and providing expert and specialised services.
  • There is unity of command.
  • There is a scalar chain.

Merits: This form of the organisation came to existence as an improvement over the line organisation. Line and staff organisation has removed serious drawbacks of the line organisation.
Specialization: It is based on planned specialisation, line managers get the benefit of specialized knowledge of staff specialists at various levels.

Encouragement to research and development programmes: The growth of an enterprise depends largely on various research and development programmes. The staff provides this service to the line departments.

Balanced decisions: Line managers may not have specialised knowledge in all areas and due to this line managers may sometimes give wrong orders or pass the wrong judgement. The suggestions and advice are given by the staff manager help them in making a rational judgement and balanced decisions.

Less burden on line managers: Staff managers relieve the line managers from the botheration of concentrating on the specialised functions like accounting, selection and training of employees, public relations etc. Thus there is a less burden online managers. Many problems that are ignored or poorly handled in the line organisation, can be properly covered. It is more flexible.

(c) Modern Marketing: Its main motive is customer satisfaction that is building a relationship with MIS customer and is achieved through an integrated, corporate-wide set of marketing activities. This technique understands the needs and desires of the customer and product is designed accordingly.

In modern marketing, consumers are more conscious as well as cautious about the product they consume. Their expectations always keep on increasing; even their consumption habits are changed. So to cope up with, marketing managers need to have the latest information which will be met by the MIS. Simultaneously, there is a growing consumerism. Peoples are not passive. They don’t want to have any exploitation by the marketer. They are ready to agitate immediately, which not good on the part of any progressive and developing marketing firm. Therefore, marketing managers need to avoid. Thereby acquiring the latest information through MIS.

Question 8.
(a) Explain any three elements of Promotion Mix. [3]
(b) Explain the meaning of [4]
(i) SMS alert
(ii) Fayol’s principle of centralization.
(c) Explain any five sources of external recruitment. [5]
(a) Promotion mix: It refers to all the decisions related to the promotion of sales of products and services. The important decisions of promotion mix are selecting advertising media, selecting promotional techniques, using publicity measures and public relations etc.
There are various tools and elements available for promotion. These are adopted by firms to carry on their promotional activities. The marketer generally chooses a combination of these promotional tools.
Following are the tools or elements of promotion. They are also called elements of promotion mix:

  1. Advertising
  2. Sales promotion
  3. Personal selling
  4. Public relation

1. Advertising: Advertisement can be defined as the “paid form of non-personal presentation and promotion of the idea, goods or services by an identified sponsor”.

It is an impersonal presentation where a standard or common message regarding the merits, price and availability of product or service is given by the producer or marketer. The advertisement builds a pull effect as advertising tries to pull the product by directly appealing to the customer to buy it.

Advertisement can be defined as the “paid form of non-personal presentation and promotion of the idea, goods or services by an identified sponsor”.

It is an impersonal presentation where a standard or common message regarding the merits, price and availability of product or service is given by the producer or marketer. The advertisement builds a pull effect as advertising tries to pull the product by directly appealing to the customer to buy it.

2. Sales Promotion: Sales promotion refers to short-term use of incentives or other promotional activities that stimulate the customer to buy the product. Sales promotion techniques are very useful because they bring :

  • The short and immediate effect on the sale.
  • Stock clearance is possible with sales promotion.
  • Sales promotion techniques induce customers as well as distribution channels.
  • Sales promotion techniques help to win over the competitor.

3. Personal- Selling: Personal selling means selling personally. This involves face to face interaction between seller and buyer for the purpose of sale.
The personal selling does not mean getting the prospects to desire what the seller wants but the concept of personal selling is also based on customer satisfaction.

4. Public Relations: Apart from four major elements of the marketing mix, another important tool of marketing is maintaining Public Relations. In simple words, public relations means maintaining public relations with the public. By maintaining public relations, companies create goodwill.
Public relations evaluate public attitudes; identify the policies and procedures of an organisation with the public interest to earn public understanding and acceptance.

The public does not mean only customers, but it includes shareholders, suppliers, intermediaries, customers etc. The firm’s success and achievement depend upon the support of these parties, for example, a firm needs the active support of middlemen to survive in the market, it must have good relations with existing shareholders who provide capital. The consumers’ group is the most important part of the public as the success of a business depends upon the support and demand of customers only.

(b) (i) An SMS alert is a service by which an SMS is sent to someone to alert him of an event.
From case to case, the SMS alert is set up based on a specific request of the recipient who will specify’ an alert threshold (stock exchange prices for instance) or it is directly sent out by a company (overdraft situation, flight delays, etc.).

(ii) Fayol believed that all employees of his company, from the foremen to the CEO. should receive some type of managerial training. He developed a list of principles of management. He believed that there were more than fourteen of them, but chose to focus on those he found to be the most useful in his own career. The fourteen principles that Fayol concentrated on were:

  • Division of Work
  • Authority’ & Responsibility
  • Discipline
  • Principle of One Boss
  • Unity of direction
  • Subordination of individual interests to the general interest
  • Fair Remuneration
  • Centralization & Decentralization
  • Scalar chain
  • Order
  • Equity
  • Stability of tenure of personnel
  • Initiative
  • Esprit de corps (building harmony and unity)

(c) External Sources of Recruitment
1. Campus Recruitment: These candidates are directly recruited by the company from their college/educational institution. They are inexperienced as far as work experience is concerned.

2. Private Employment Agencies/Consultants: Public employment agencies or consultants like ABC Consultants in India perform recruitment functions on behalf of a client company by charging fees. Line managers are relieved from recruitment functions and can concentrate on operational activities.

3. Public Employment Exchanges: The Government set up Public Employment Exchanges in the country to provide information about vacancies to the candidates and to help the organization in finding out suitable candidates. As per the Employment Exchange act 1959, makes it obligatory for the public sector and private sector enterprises in India to fill certain types of vacancies through public employment exchanges.

4. Professional Organizations: Professional organizations or associations maintain complete bio-data of their members and provide the same to various organizations on requisition. They act as an exchange between their members and recruiting firm.

5. Data Banks: The management can collect the bio-data of the candidates from different sources like Employment Exchange, Educational Training Institutes, candidates etc. and feed them in the computer. It will become another source and the company can get the particulars as and when required.

6. Casual Applicants: Depending on the image of the organization its prompt response participation of the organization in the local activities, level of unemployment, candidates apply casually for jobs through mail or handover the application in the Personnel dept. This would be a suitable source for temporary and lower-level jobs.

Question 9.
(a) Write the meaning of the following types of plans: [3]
(i) Policy
(ii) Procedure
(iii) Method
(b) Explain any four functions of a supervisor. [4]
(c) What is packaging? Explain three functions of packaging. [5]
(a) Policies: Policies are those general statements which are decided for the guidance of the employees while taking a decision. Their purpose is laying down a limit within which a particular work can be done or decision taken. Objectives decide what is to be achieved and the policies tell us how it can be achieved.

Procedures: Procedures are those plans which determine the sequence of any work performed. For example, the recovery’ of money from the debtors can be done in the following order:

  • Writing letters
  • connecting on telephone
  • Meeting personally
  • taking legal action.

This is the procedure of collecting money from all the debtors. There is a difference between policies and procedures. There can be two policies of the organization regarding the recovery of money from the debtors. (A) Tight collection policy, and (B) Lenient collection policy. Under the first policy, an effort is made to recover money from debtors is by treating him harshly. Under the second policy, the debtors will be given enough time for the payment of money while treating him leniently.

Methods: Methods is that plan which determines how different activities of the procedure are completed. Methods is not related to all steps but only to one step of the procedure, it is more detailed than procedure. There may be many methods to do a particular work. After extensive study, a method has to be selected from which a worker feels minimum fatigue, increase in productivity’ and there is a reduction in costs.

(b) Supervisor, being the manager in direct contact with the operatives, has got multifarious function to perform. The objective behind the performance of these functions is to bring stability’ and soundness in the organization which can be secured through an increase in profits which is an end result of higher productivity. Therefore, a supervisor should be concerned with performing the following functions:

1. Planning and Organizing: Supervisor’s basic role is to plan the daily work schedule of the workers by guiding them the nature of their work and also dividing the work amongst the workers according to their interests, aptitudes, skills and interests.

2. Provision of working conditions: A supervisor plays an important role in the physical setting of the factory and in arranging the physical resources at the right place. This involves providing the proper sitting place, ventilation, lighting, water facilities etc. to workers. His main responsibility is here to provide healthy and hygienic condition to the workers.

3. Leadership and Guidance: A supervisor is the leader of workers under him. He leads the workers and influences them to work their best. He also guides the workers by fixing production targets and by providing them with instruction and guidelines to achieve those targets.

4. Motivation: A supervisor plays an important role by providing different incentives to workers to perform better. There are different monetary and non-monetary incentives which can inspire the workers to work better.

5. Controlling: Controlling is an important function performed by the supervisor. This will involve

  • Recording the actual performance against the time schedule.
  • Checking the progress of work.
  • Finding out deviations if any and making solutions.
  • If not independently solved, reporting it to top management.

(c) The packaging is the process of enclosing or containing the product in bottles, plastic bags, wrappers. lubes, paper cartons and boxes etc. For the purpose of displaying useful information regarding the product, its contents, weight, size, price, constituents, usage necessary instruction about the usage and storing the product must be recorded on the package. The package reduces the risk of wastage, spoilage, leakage, metage and evaporation etc. in the process of transportation and storage.

Function of Packaging Protection
The fundamental functions of packaging are to protect it from sun, rain, moisture, insects and atmospheric contracts etc. Packaging maintains the product fresh and enhances its life. So, we use air-tight containers for certain products.

Easy identification
Every producer has its own distinct packaging, different from others with respect to design, size, colour and other specification packaging helps-us in the easy identification and immediate picking up of the product.

Packaging provides convenience in the transportation and storage of the product. It is convenient for consumers to use these products. Packaging of Tropicana Real and Frooti Juices facilitates their consumption. Packaging, no doubt helps us in the safe and convenient handling and storing of the product.

Sales promotion
It is rightly said that packaging works as a silent, salesman. It catches the attention of customers, who pick up the product, go through its description and are induced to purchase the product. Self-service is becoming more and more common in the field of shopping, where the customer picks up the product himself and makes its payment on the counter. Packaging in these circumstances promotes sales.

Innovative ideas
The producers sometimes develop innovative ideas about the packaging which promotes their sales. For examples, shampoo, tomato ketchup, surf, sugar, milk, oil etc., are sold in small pouches. In addition to the above functions packaging facilities branding of the product. Empty packages have their resale value for customers. Packaging builds an image of the product and its producers. Effective packaging is the source of prestige to its producers. Packaging continues to be more important in the modem growing completion, open, display of the product and self-service of the customers.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2016 Solved for Class 12

ISC Commerce Previous Year Question Paper 2016 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.

Part-I (20 Marks)
Answer all questions.

Question 1. [10 2]
Answer briefly each of the questions (i) to (x):
(i) State two components of legal environment of a business concern.
(ii) Why is working capital also known as circulating capital ?
(iii) What is meant by participating preference shares ?
(iv) Distinguish between advertising and personal selling.
(v) Why is feedback an important element in the communication process ?
(vi) Explain the principle of Esprit decorps as advocated by Henry Fayol.
(vii) What is meant by a product ?
(viii) Explain the meaning of coordination, as a function of management.
(ix) What are bonus shares ?
(x) Explain the concept of management by exception
(i) Two components of Legal Environment of a business concern are : (any two)

  • Laws and administrative orders of the government.
  • Judicial system of the country.
  • Flexibility and adaptability of laws.

(ii) Working capital is the portion of capital invested in short-term assets of a business. It consists of cash receipts from sales which are used to cover the cost of current operations. It is also known as circulating capital as it keeps circulating or revolving in business. It is invested, recovered and reinvested repeatedly during the business cycle.

(iii) Participating Preference Shares : The preference shares which get share in the surplus
profit of the company are known as participating preference shares. Preference shareholders get a fixed rate of dividend in case a surplus profit is left after paying fixed dividend to preference and equity shares. The participating preference shares get a share in that surplus profit.

(iv) Difference between Advertising and Personal Selling :

BasisAdvertisingPersonal Selling
(i) FormThis is impersonal.This is personal.
(ii) MessageThe similar message is given to all the customers.There is no uniformity in the message. It can be changed according to the behavior of customer.
(iii) TimeIt takes a little time in conveying the message to the customers.It takes more time in conveying the message to the customers.
(iv) FeedbackIt does not receive the customers reactions.It receives the customers reactions immediately.

(v) Feedback is a reversal of communication process in which receiver expresses his reaction to the sender of message. Feedback is important to ensure that receiver has received and understood the message.

(vi) Principle of Esprit De Corps Esprit De Corps means union is strength. Fayol emphasized on the team work. He suggested that every employee in the organisation must consider him as a part or member of a team and try to achieve the team goal because team contribution is always better and more than individual contribution. Management must develop a feeling of belongingness among the employees as they must feel themselves as members of organisation’s team and contribute maximum to achieve team’s goal.

(vii) A product is anything that can be offered to a market for attention, acquisition, use or consumption : it includes physical objects, services, personalities, place, organisations and ideas. A product has many other dimensions besides its physical appearance. In fact, a product is like an onion with several layers and each of the layers contributes to the total product image.

(viii) Coordination is the process by which activities of different departments are synchronized to ensure unity of action. It is the essence of management because it is inherent in all managerial functions.

(ix) Bonus shares are the shares which a company issues to its existing shareholders free of charge. i. e., as a bonus, in order to distribute large undistributed profit among its shareholders.

(x) In a large-scale organisation, keeping a close watch over all the activities is bound to be tedious and time consuming. If control is to be effective and economical it must focus attention only on factors critical to performance. Only significant deviations from standard should be reported to top level management and other problems should be entertained by the subordinates. For example, if telephones charges increase by 10% the deviation is too significant and it will be brought to the notice of top-level management.

Part – II (60 Marks)
Answer any five questions.

Question 2.
(a) Explain any three external elements of micro business environment. [3]
(b) Briefly explain any two sources of short term finance. [4]
(c) Explain the meaning of debentures. State any four disadvantages of debentures [5]
(a) Three external elements of micro business environment are :
Suppliers: Like the customers, the suppliers also influence business. If a business has only one supplier and he gets annoyed because of some reason, the supply of goods can be stopped and the very existence of the business can be threatened or endangered. Hence, efforts should be made to have various suppliers.

Competitors : The competing firms can influence business in a number of ways. They can do so by bringing new and cheap products in the market, by launching some sale promotion scheme or other similar methods.

Public : Public has different constituents like the local public, press or media etc. The attitude or behavior of these constituents can affect business units. For example, the local population can oppose some established firm whose business is excessively noisy. Similarly, if the media gives some favorable report about a particular company the price of its share can register an increase on this count.

(b) Two sources of short-term finance are :
Public Deposits: Public deposits are the deposits raised by business organisations directly from the public. These deposits usually offer a higher rate of interest as compared to interest on bank deposits. This source fulfills the medium as well as short term finance requirements of the business. Any individual willing to deposit money in a business firm, can do so by fulfilling a prescribed form. In return a firm issues a deposit receipt as acknowledgement of the debt. Public deposits are considered to be an important source for raising funds because their cost to the company is less than that of borrowings from banks.

Trade Credit: It refers to the credit provided by one firm to another for the purchase of goods and services. It is a source of short-term financing and facilitates purchase of goods and services without immediate payment. The volume and period of credit extended by the business firms varies from one industry to another and from one firm to another. Also, it varies from customer to customer in a particular firm. The various factors affecting the volume and period of credit include reputation of the purchasing firm, volume of purchases, past record of payment etc.

(c) Debentures are common securities issued under borrowed fund capital. Debentures are instruments for raising long-term debt capital. Debentures are called creditor ship securities because debenture holders are called creditors of a company.

A debenture can be defined as ‘a document or a certificate” issued by a company under its seal as an acknowledgement of its debt. Holder of debenture certificate is called debenture holder. Following are disadvantages of Debenture :

Fixed Obligation: Payment of interest is a fixed commitment of the organisation whether it is earning profit or not. Sometimes companies have to borrow fund for payment of interest to debenture holders.

Reduction in Credibility : Financial institutions and lenders hesitate to lend funds in the companies having more of debentures. The credit-worthiness of a company which has issued a large number of debentures is low.

Charge on Assets : Usually debentures are issued against securities of fixed assets. During the time of depression, if a company is unable to pay the regular amount of interest and finds it difficult to repay the amount, in this situation the debenture holders can have claim over the assets of the company.

No Voting Rights: The debenture holders are not allowed to vote in the management of the company. All the decisions regarding interest rate for debentures are taken by the equity shareholders only. Therefore, they remain at the mercy of equity shareholders.

Question 3.
(a) Write any four features of equity shares. [4]
(b) Explain any four factors that affect the capital structure of a company. [8]
(a) The features of equity shares are as follow :
Primary Risk Bearers : The equity- shareholders are the primary risk bearers of the company. In case the company suffers losses then equity- shareholders have to bear the loss. The due payment is given to creditors before paying the equity shareholders.

Claim over Residual Income : The equity shareholders have claim over the leftover income of the company only. They get share in the income left after satisfying the claims of all creditors, outsiders and preference shareholders.

Basis for Loans : Equity share capital is the basis on which loans can be raised. The amount of equity share capital adds to the credibility- of the company. The amount of equity share capital increases the confidence of the creditors.

Control : Equity shareholders have control over the activities of the company-. The equity shareholders have voting rights. The equity shareholders cast vote to select the Board of Directors w ho control and manage the affairs of the company.

(b) Following are the factors that affect the capital structure of a company :
Cost of Equity : Another factor which helps in deciding capital structure is cost of equity. Owners or equity shareholders expect a return on their investment i.e., earning per share. As far as debt is increasing earning per share (EPS), then we can include it in capital structure but w hen EPS starts decreasing with inclusion of debt then we must depend upon equity share capital only.

Floatation Costs: Floatation cost is the cost involved in the issue of shares or debentures. These costs include the cost of advertisement, underwriting statutory- fees etc. It is a major consideration for small companies but even large companies cannot ignore this factor because along with cost there are many legal formalities to be completed before entering into capital market. Issue of shares, debentures requires more formalities as well as more floatation cost. Whereas there is less cost involved in raising capital by loans or advances.

Risk Consideration : Financial risk refers to a position when a company is unable to meet its fixed financial charges such as interest, preference dividend, payment to creditors etc. Apart from financial risk business has some operating risk also. It depends upon operating cost, higher operating cost means higher business risk. The total risk depends upon both financial as well as business risk. If firm’s business risk is low then it can raise more capital by issue of debt securities where as at the time of high business risk it should depend upon equity.

Flexibility: Excess of debt may restrict the firm’s capacity to borrow further. To maintain flexibility it must maintain some borrowing power to take care of unforeseen circumstances.

Question 4.
(a) Briefly explain any three demerits of public deposits. [3]
(b) Differentiate between line organisation and line and staff organisation. [4]
(c) Write five features of an informal business organisation. [5]
(a) The demerits of Public deposits are :
Uncertainty : Public deposits is an uncertain and unreliable source of finance. During depression period the depositors may not respond. Also, deposits may be withdrawn whenever the financial position of the company is not stable.

Suitable for Short-term Finance : A company cannot depend upon public deposits for a long-term financing requirement as the maturity’ period of public deposits is between six months to three years.

Hindrance to Growth of Capital Market : Public deposits hamper the growth of a healthy capital market in the country. Widespread use of public deposits creates a shortage of industrial securities.

Line OrganizationLine and Staff Organization
(i) Line managers are generalists.(i) These are experts know n as staff to advise and assist the line officials.
(ii) There is strict discipline(ii) There is loose discipline.
(iii) It is not based upon planned specialization.(iii) It is based upon planned specialization
(iv) It is suitable for small scale operations.(iv) It is suitable for medium scale operations.

(c) The basic features of informal organisation are as under :

  • Informal relations are unplanned. They arise spontaneously.
  • Formation of informal organisations is a natural process.
  • Informal organisation reflects the pattern of human relationships.
  • Informal organisations are based on common taste, problem, language, religion etc.
  • The membership of the informal organisation is voluntary.
  • Informal organisation is unstable in nature, its life is generally short.

Question 5.
(a) Why is management considered as a science ? [3]
(b) Differentiate between centralization of authority and decentralization of authority. [4]
(c) State and explain the principles of management as laid down by F. W.Taylor. [5]
(a) Management is called a science because it has a systematic body of knowledge including concepts, principles and theories. But it is not a perfect science as its principles are mostly situation based and do not produce the same results every time. In fact, management is a social science as it deals with humans whose behavior is not fully predictable.

(b) Difference between Centralization and Decentralization

Point of differenceCentralizationDecentralization
(i) MeaningIt refers to concentration of power or authority’ at higher level only.It refers to every distribution of powers and authority at every level of management.
(ii) Authority at different levelsTop management retains maximum authority. The authority with middle and lower management is very low.The authority is systematically divided at every level.
(iii) SuitableIt is suitable for small scale and small size organisations.It is suitable for large scale organisations.
(ii) Freedom of ActionsManagers have less freedom of actionsManagers have more freedom of actions.

(c) Principles of Management as laid down by F.W. Taylor are:
Division of Work : Division of work refers to dividing the work into compact jobs and allocating these compact jobs to different individuals.

Authority and Responsibility : According to this principle, there should be a proper balance between authority and responsibility.

  • Authority is the right to give orders to subordinates and responsibility is the duty, which a subordinate is expected to perform by virtue of his position in organisation. Authority and responsibility go hand in hand.

Discipline : Discipline refers to obedience to rules and regulations of the organisation, which is necessary for systematic working of the organisation.

Unity of Command : According to this principle, each subordinate should receive orders and be accountable to one and only one superior.

Unity of Direction : Unity of Direction implies that there should be one head and one plan for group of activities having same objectives.

Subordination of Individual Interest to General Interest: According to this principle, interest of the organisation as a w hole must prevail over the interest of the individuals or employees.

Remuneration of Employees : According to this principle, overall pay and compensation should be fair to both employees and organisation.

  • The remuneration should be just and fair to everybody.
  • It should provide satisfaction to both employees and organisation.

Centralization and Decentralization : According to this principle, there should be proper balance between centralization and decentralization in the organisation. Centralization refers to concentration of authority at the top level, whereas decentralization refers to evenly distribution of authority at all levels of management.

Scalar Chain: Scalar chain is the chain of superiors ranging from the highest authority to the lowest level in the organisation.

Order: According to this principle, there should be a place for everything and every one.

  • If there is a fixed place for everything and it is present there, then there w ill be no obstruction in work.
  • It will lead to increased productivity and efficiency.

Equity : According to this principle, there should not be any discrimination among the employees on the basis of religion, language, caste, sex, belief or nationality

Stability of Personnel: According to this principle, there should be proper efforts to achieve stability and continuity’ of tenure of personnel.

Initiative : According to this principle, workers should be encouraged and given an opportunity to take some “initiative in making and executing the plans.

EspiritvDe Corps : According to this principle, management should take reasonable steps to develop a sense of belongingness and feeling of team spirit among employees.

Question 6.
(a) Explain any three objectives of management. [3]
(b) Explain the terms : [4]
(i) Labelling
(ii) Packaging
(c) Discuss the first five steps involved in the process of staffing. [5]
(a) The three objectives of management are :
Organisational objectives : Management is responsible for setting and achieving the objectives of an organisation. These objectives include :

  • Optimum utilization of resources.
  • Innovation and development of new product or a new method of production.
  • Securing maximum results with minimum efforts.
  • Integration of organisational and individual interest.

Social objectives: Social objectives deal with the commitment of an organisation towards society-. These objectives include :

  • Consumer satisfaction
  • Providing financial support to community
  • Preservation and protection of environment

Individual Objectives: It refers to ascertainment of the objectives in reference to the employees, while ascertaining personal objectives. It must be taken into consideration that in no way there is a clash between organisational and personal objectives.
These objectives include :

  • Providing good working conditions
  • Peer recognition
  • Good human relations amongst the workers
  • Integration of personnel objectives with corporate objectives.

(b) Labelling: Label is a slip which is found on the product itself or on the package providing all the information regarding the product and its producer. This can either be in the form of a cover or a seal. For example, the name of the medicine on its bottle along with the manufacturer’s name, the formula used for making the medicine, date of manufacturing, expair date, batch no., price etc., are printed on the slip thereby giving all the information regarding the medicine to the consumer. The slip carrying all these in details called Label and the process of preparing it as Labelling.

Packaging: Packaging aims at avoiding breakage, damage, destruction, etc., of the goods during transit and storage. Packaging facilitates handling, lifting, conveying of the goods Many a time, customers demand goods in different quantities. It necessitates special packaging. Packing material includes bottles, canister, plastic bags, tin or wooden boxes, jute bags etc.

(c) Staffing process includes the following steps :
Estimating the Manpower Requirements: At first step of staffing the need for required number of employees is estimated. Under this, it is ensured that capable employees are available in the adequate number. At the time of determining the number of persons required. The possibilities regarding promotions, retirements, resignation, etc. should be taken into consideration.

Recruitment: Recruitment is the process of searching for prospective employees and stimulating them to apply for jobs in the organisation. The main objective of recruitment is to create a pool of the prospective job candidates. Higher the number of people w ho apply for a job, higher will be the possibility of getting a suitable employee.

Selection : Under the process of selection, competent applicants are selected out of a large number of them. It is important to keep in mind that the ability of the applicant and the nature of work must match. The closest matching w ill bring the best results. To complete the selection process mam tests are conducted. Finally, an applicant is selected if he/she is declared pass in the interview .

Placement and Orientation : Placement means putting the selected candidate at the right job after considering his ability and capability . Orientation means introduction of new employees with the existing employees and rules and regulations of the organisation.

Training and Development : Training is to impart training and development to employees to increase their efficiency and effectiveness. Training reduces the cost of production and helps in the maintenance of machines and tools and reduces the number of accidents.

Question 7.
(a) Distinguish between method and procedure. [3]
(b) What is marketing 9 State two features of the modem concept of marketing. [4]
(c) Explain the need for consumer protection. [5]
(a) Difference between Procedures and Methods

(a) Procedures are sequences of steps to be followed for performing some important jobs.(a) Methods are formalized way of doing a routine and repetitive jobs.
(b) Procedures are more rigid.(b) Methods are less rigid or flexible.
(c) Procedures help in implementation of policy.(c) Methods help for standardization and co-ordination of activity.
(d) Example : Procedure for giving admission in school or giving contracts to an outside agency.(d) Example: Methods of valuation of stock or method of production.

(b) Traditionally marketing has been described in terms of its functions or activities. In this respect, marketing has been referred to as performance of business activities that direct the flow of goods and services from producers to consumers.

In modern times, emphasis is placed on describing marketing as a social process. It is a process whereby people exchange goods and sen ices for money or for something of value to them.

The main features of marketing are as follow:
Needs and Wants:
The main objective of marketing process is to satisfy the needs and wants of the customers. All the marketing activities are carried out to fulfill this objective. A need can be defined as sum total of all those items which are basic to human beings. For example, food, shelter, clothing, water etc. Culturally defined objects that are potential satisfies of needs are known as Wants. For example, basic need for water can take many forms such as cold drink or lemon water or tea or coffee etc. These forms are known as wants. An organisation must identify’ the various needs of their customers and should develop products and services that satisfy the same.

Creating a Market Offering:
Market offering means giving an offer for goods and services by describing its features like shape, size, qualify, uses etc. Suppose a computer is offered in a market: its various features like different sizes and prices at which it is available, technologies used, location of the shops at which it is available etc. are described. A good ’market offer’ is one which aims at complete consumers’ satisfaction.

(c) Following are points which highlight the need for consumer protection :
Consumer Ignorance : In many cases, consumers remain ignorant about their rights or do not have adequate measures to differentiate between genuine and spurious products Therefore, they need suitable protection in the form of consumer protection.

Widespread Consumer Exploitation : In the present business environment, there is scope for widespread consumer exploitation through a variety of malpractices, some even unconceivable by consumers. This necessitates protection of consumers.

Unorganized Consumers : Consumers are not organised like trade unions or trade associations which protect the interests of their members. They are unorganised and have no voice to convey their exploitation except through consumer protection measures.

Long-term Interest of Business : Consumer protection is quite relevant for long-term interest of business. The main focus of a business is on its consumers (the ultimate customers). Thus, serving the consumers by protecting their interests becomes the interest of business. Any unethical practice erases all positive effects of ethical practices.

Use of Social Resources : A business uses social resources of various types. Therefore, it is bound to serve the society by using its resources through adoption of fair trade practices which ensure consumer protection.

Social Responsibility : Social responsibility is a business objective along with other objectives. Since consumers are a part of society, consumer protection becomes an objective of a business. The business is required to balance various objectives.

Question 8.
(a) State three objectives of sales promotion. [3]
(b) Explain the meaning of e-banking. State any three features of e-banking. [4]
(c) Explain five factors that affect the pricing decision of a product. [5]
(a) Objectives of Sales Promotion:

  • To create, demand through the issue of free samples, premiums and other methods.
  • To educate the customers about the new products and about their uses.
  • To maintain and extend the market for an established product.
  • To remove or overcome competition.

(b) e-Banking: e-Banking or electronic banking is the latest wave in information technology. It can be defined as the services provided by the banks on internet. It involves low transaction cost, adds value to the banking relationship and empowers customers. Electronic services offered by the bank are Electronic Funds Transfer (EFT), Automated Tekker Machines (ATM), Electronic Data Interchange (EDI), Credit cards, Debit cards etc. These services help the customers to conduct banking transactions such as managing savings, applying for loans, checking accounts, paying bills etc. over the internet a personal computer, mobile telephone etc.
Features of E-Banking are :

  • It facilitates 24 hours banking services to the consumers.
  • It involves electronic services offered by the bank i.e.. Electronic Funds Transfer (EFT), Automated Teller Machines (ATM). Electronic Data Interchange (EDI) etc.
  • It provides greater security to the customers as they can avoid travelling with cash.
  • It also offers unlimited access to the bank.
  • It keeps a record of each and even transaction.

(c) The following factors to be kept in mind before pricing :
Cost of Production : The most important factor affecting price of a product or service is its cost. While fixing the price of a product or service all total costs (Fixed costs, semi variable costs or variable costs) and desired profit is added. No business firm likes to sell its product below the marginal cost of product. Moreover, profits are also must for the survival of business.

The Utility and Demand : Utility means the satisfaction which a customer receives from a consumption of a product. The buyer is ready to pay up to the point where the utility from the product is at least equal to the sacrifice made in terms of price paid. Demand also plays an important role in determining the price of the product. If there is less demand for the product, it would not be sold at a very’ high price and vice-versa. Thus demand should be predicted correctly before setting the price.

Extent of Competition in the market: If there is higher degree of competition, the price will be fixed at the lowest level and if there is lesser degree of competition, the price will be fixed at the upper limits. In addition, while fixing prices, the quality , price and features of competing products must be considered.

Government and Legal Regulations : Government and legal regulations also play an important role in fixation of prices. Sometimes the prices are fixed by the government for essential commodities. For example, government fixes the low price for life saving medicines for the diseases like cancer, aid etc. No business enterprise can charge more price as fixed by the government.

Pricing Objectives : Pricing objectives are another important factor affecting the fixation of price. These objectives include :

  • If a firm wants to capture a share of the market. It will fix the low prices so that greater number of people can be attracted.
  • In case of keen competition the firm can use the sales promotion techniques like discount, rebate etc.
  • Sometimes high prices are charged to cover high quality and high cost of research and development.

Question 9.
Write short notes on :
(a) SWOT analysis. [4]
(b) Marketing research. [4]
(c) Bank overdraft. [4]
(a) SWOT Analysis is an acronym for strengths, weaknesses, opportunities and threats. A SWOT Analysis can be carried out for a company, product, place, industry or person. It specifying the objective of the business venture and identifying the internal and external factors that are beneficial and non-beneficial to achieve that objective.

(b) Marketing research refers to a process which involves application of research process in . solving various marketing problems. First of all market information is gathered and analysed. This is necessary to understand the needs of customers and for taking marketing decision.

(c) Bank Overdraft is a temporary’ arrangement in the form of a sanctioned limit granted to the customers to overdraw from their current accounts. Interest is charged on the over drawn amount. The overdrawn limit is determined by the bank depending upon various issues like, credit worthiness of the customer, need and time interval for which the overdrawn is required.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2013 Solved for Class 12

ISC Commerce Previous Year Question Paper 2013 Solved for Class 12

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
    writing during this time.
  • Answer Question 1 from Part I and seven questions from Part II.
  • The intended marks for questions are given in brackets [ ].

Part – I (30 Marks)

Question 1.
Answ er briefly each of the questions (i) to (xv): [15 × 2]
(i) Define a Public Limited Company.
(ii) What is meant by Discounting of a Bill?
(iii) Give two disadvantages of written communication.
(iv) Define the term market.
(v) Give the significance of Association Clause of the Memorandum of Association.
(vi) Give any two factors that influence the price determination of a product.
(vii) What is meant by Cumulative Preference Shares?
(viii) Explain Joint Ventrue in relation to multinational corporations.
(ix) State any two differences between savings deposit and fixed deposit.
(x) Mention the steps involved in the organising function of management.
(xi) State any two features of ‘labelling’ in relation to marketing.
(xii) What is Certificate of Commencement?
(xiii) What is Economic and Non-economic environment of business?
(xiii) Expand the terms:
(b) EXIM Bank
(xiv) Explain management as a group.
(i) Out of syllabus

(ii) While discounting a bill, the Bank buys the bill (i.e. Bill of Exchange or Promissory Note) before it is due and credits the value of the bill after a discount charge to the customer’s account. The transaction is practically an advance against the security of the bill and the discount represents the interest on the advance from the date of purchase of the bill until it is due for payment.

(iii) Out of Syllabus

(iv) A market is any place where the sellers of a particular good or service can meet with the buyers of that goods and service where there is a potential for a transaction to take place. The buyers must have something they can offer in exchange for there to be a potential transaction.

(v) Out of syllabus

(vi) Factors determining the price of a product are:
(a) Cost:
While fixing the prices of a product, the firm should consider the cost involved in producing the product. This cost includes both the variable and fixed costs. Thus, while fixing the prices, the firm must be able to recover both the variable and fixed costs.
While fixing the price of the product, the firm needs to study the degree of competition in the market. If there is high competition, the prices may be kept low to effectively face the competition, and if competition is low, the prices may be kept high.

(vii) Cumulative preference shares are those preference shares which earn the right to receive arrears of dividend before a dividend is paid to the equity shareholders.
For example, a company has 10,000. 8% of preference shares of ₹ 100 each and dividend for the years 20013-2014 which has not been paid up.
Now the company has earned sufficient profits in 2015. Now the company shall pay ₹ 2,40,000 as a dividend for three years to the preference shareholders.

(viii) Out of syllabus

(ix) Out of Syllabus

(x) Steps in organization function of management:
Identification and classification of required activities
Grouping of activities necessary for the attainment of objectives
Assigning each group to a manager with the authority (delegation) necessary to supervise it. The provision for coordination horizontally (on the same organizational level) and vertically (in various division and departments)

(xi) (a) Labelling gives definiteness to the product and therefore identification of a product is easy.
(b) It stresses the standard and other special features of the product which are advertised.
(c) It enables to give clear instructions to the consumer as to the proper use of a product.

(xii) Out of syllabus

(xiii) The economic environment of business has reference to the broad characteristics of the economic system in which the business firm operates. The economic environment of the country includes economic system, macroeconomic parameters, and stages of the business cycle, financial system and economic policies of the government.
The non-economic environment includes political system, government policies, legal framework social system, cultural values, demographic factors, technological development and natural environment of the country.
The non-economic environment exercises a strong influence on the business. Normally the non-economic environmental factors are the key factors for all kinds of business activities in India.

(xiv) Out of Syllabus

(xv) Management as a group refers to all those persons who perform the task of managing an enterprise. As a group, management will include all managers from the chief executive to the first-line managers (lower-level managers). But in common practice management includes only top management i.e. Chief Executive, Chairman, General Manager, Board of Directors etc. In other words, those who are concerned with making important decisions, these persons enjoy the authorities to use resources to accomplish organizational objectives & also a responsibility for their efficient utilization.

Part – II (70 Marks)
(Answer Any Seven Questions)

Question 2.
(a) Explain any four advantages that host countries derive from multinational corporations. [4]
(b) Discuss any six privileges enjoyed by a Private Limited company. [6]
(a) Out of Syllabus
(b) Out of Syllabus

Question 3.
(a) Why should business assume social responsibilities ? Give any four reasons in support of your answer. [4]
(b) Discuss any six responsibilities of a business concern towards the consumers. [6]
(a) Out of Syllabus
(b) Out of Syllabus

Question 4.
(a) Distinguish between bonus shares and right-shares. [4|
(b) Define debentures. Describe any four types of debentures. [6]

Bonus SharesRight Shares
1. Bonus shares are issued free of cost to the existing shareholders in proportion to their holdings.1. These shares are issued at a price.
2. These shares are fully paid.2. These shares may be partly paid also.
3. Bonus issues are generally issued by profit-making companies by capitalizing the free reserves.3. These are issued at a price. The price offered are usually discounted from the trading price, that is the benefit to existing shareholders.
4. A shareholder cannot renounce the offer.4. A shareholder may renounce all or a part of the offer.

(b) A debenture is a medium or long term debt format that large companies use to borrow money. It is normally a loan that should be repaid on a specific date, but some debentures are irredeemable securities (sometimes referred to as perpetual debentures).
The majority of debentures come with a fixed interest rate. This interest must be paid before dividends are paid to shareholders.

Types of Debentures:
Redeemable Debentures: Redeemable debentures earn, a specific date of redemption on the certificate. The company is legally bound to repay the principal amount to the debenture holders on that date.

Irredeemable (Perpetual) Debentures
On the other hand, irredeemable debentures, also known as perpetual debentures, do not cam any date of redemption. This means that there is no specific time of redemption of these debentures. They are redeemed either on the liquidation of the company or when the company chooses to pay them off to reduce their liability by issues a due notice to the debenture holders beforehand.

Convertible Debentures: Convertible debenture holders have an option of converting their holdings into equity shares. The rate of conversion and the period after which the conversion will take effect are declared in the terms and conditions of the agreement of debentures at the time of issue.

Non Convertible Debentures: Non-convertible debentures are simple debentures with no such option of getting converted into equity. Their state will always remain of debt and will not become equity at any point in time.

Question 5.
Briefly discuss any five principles of management as formulated by Fayol. [10]
Fayol believed that all employees of his company, from the foremen to the CEO, should receive some type of managerial training. He developed a list of principles of management. He believed that there were more than fourteen of them, but chose to focus on those he found to be the most useful in his own career.
The fourteen principles that Fayol concentrated on were:

(i) Division of Work: Work should be divided among individuals and groups to ensure that effort and attention are focused on special portions of the task. Fayol presented work specialization as the best way to use the human resources of the organization.

(ii) Authority: The concepts of Authority and responsibility are closely related. Authority was defined by Fayol as the right to give orders and the power to exact obedience. Responsibility involves being accountable and is therefore naturally associated with authority. Whoever assumes authority also assumes responsibility.

(iii) Discipline: A successful organization requires the common effort of workers. Penalties should be applied judiciously to encourage this common effort.

(iv) Unity of Command: Workers should receive orders from only one manager.

(v) Unit of Direction: The entire organization should be moving towards a common objective in a common direction.

Question 6.
(a) Discuss any four advantages of using e.mails as a device of business communication. [4]
(b) Distinguish between informal communication and formal communication. [6]
(a) Out of Syllabus
(b) Out of Syllabus

Question 7.
(a) Describe any four objectives of advertisement. [6]
(b) What is the marketing mix? Explain the elements of the marketing mix. [4]
(a) Out of Syllabus

(b) The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix – Price, Product, Promotion and Place.

Price refers to the value that is put for a product. It depends on costs of production, segment targeted, the ability of the market to pay, supply-demand and a host of other direct and indirect factors. There can be several types of pricing strategies, each tied in with an overall business plan. Pricing can also be used as a demarcation, to differentiate and enhance the image of a product.
Product refers to the item actually being sold. The product must deliver a minimum level of performance; otherwise, even the best work on the other elements of the marketing mix won’t do any good.

Place refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for her to buy it is the main aim of a good distribution or ‘place’ strategy. Retailers pay a premium for the right location. In fact, the mantra of a successful retail business is location, location, location’.

Promotion refers to all the activities undertaken to make the product or service known to the user and trade. This can include advertising, word of mouth, press reports, incentives, commissions and awards to the trade. It can also include consumer schemes, direct marketing, contests and prizes.

Question 8.
(a) Explain any four advantages of borrowing funds from financial institutions. [4]
(b) Explain any six advantages of investing in mutual funds. [6]
Advantages of Borrowing Funds from Finacial Institutions
Immediate Infusion of Cash
The main benefit of borrowing money from a financial institution is the ability to obtain a large amount of money quickly. This money can be used for necessary purchases and investments, including investments in your own education. Financial institutions can lend more money than most friends and family members can.

Interest Rates: Financial institutions attach interest rates to the principal amount borrowed. An interest rate can either be positive or negative. Borrowers with good credit can attain a loan with a lower interest rate. This, in turn, makes the loan less expensive in the long run. Borrowers with poor credit scores can likely only attain a loan at higher interest rates. This can make borrowing money an expensive decision and possibly unattractive as a financial option. Interest rates also fluctuate. As such, borrowers should watch interest rates to borrow when rates are low. A strong credit score and favourable market interest rates produce a favourable borrowing environment.

Collateral: Collateral is a legal interest, otherwise known as a lien, that a financial institution places on an asset in case you default on your loan. A common form of this interest is the home mortgage. Collateral removes the risks a financial institution takes on when lending out large sums of money (a house mortgage or car loan, for example). Upon default, the financial institution takes control of the asset and sells it for a profit to cover any losses. This secures the institution against losses and creates the freedom to lend out larger amounts. Loans backed by collateral, also known as secured loans, offer lower interest rates but present the clear danger of losing your property.

Traditional Banks and Credit Unions: Traditional banks and credit unions offer different benefits to borrowers. Traditional banks offer services to all potential customers. Even though anyone can potentially use the financial services of traditional banks, these financial institutions often offer loans ai high-interest rates.

Credit unions, on the other hand, are open to specific groups of people, usually people who live in a specific geographical location or those who belong to certain professions. These financial institutions often offer their members lower interest rates, but. unlike a bank, not everyone can become a customer.

(b) Out of syllabus.

Question 9.
(a) What is the significance of the Articles of Association for a Join Stock Company? Give any three contents of the Articles of Association.
(b) Explain any six qualities of a good salesman.
(a) Out of Syllabus
(b) Out of syllabus.

Question 10.
Write short notes on:
(a) Audio-visual media of advertisement. [3]
(b) Ploughing back of profits [4]
(c) Technological environment of a business concern. [3]
(a) Out of syllabus

(b) Ploughing back of profits is an important source of internal financing by a company. It refers to the process of retaining a part of the company’s net profits for the purpose of reinvesting in the business itself. In other words, the savings generated internally by a company in the form of ‘retained earnings’ are ploughed back into the company for diversification of its business. This reduces their dependence on funds from external sources in order to finance their regular business needs. Such a source of finance may be used by the company for the following purposes:

  • For expansion and growth of the business
  • For strengthening the financial position of the company
  • For meeting various working capital requirements of the company
  • For redemption of old debts
  • For replacement of obsolete assets and modernization.

(c) Technology has revolutionized the way companies conduct business. Small businesses can implement business technology and level the playing field with larger organizations. Small businesses use computers, servers, websites and personal digital products to develop competitive advantages in the economic marketplace. Small business owners should consider implementing technology in their planning process. This allows owners to create operations using the best technology’ available.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2012 Solved for Class 12

ISC Commerce Previous Year Question Paper 2012 Solved for Class 12

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
    writing during this time.
  • Answer Question 1 from Part I and seven questions from Part II.
  • The intended marks for questions are given in brackets [ ].

Part – I

Question 1.
Answer briefly each of the following questions (i) to (xv): [15 × 2]
(i) Why does a Joint Stock Company enjoy perpetual existence?
(ii) What are the two ways in which a Joint Stock Company can be promoted?
(iii) What is a participating preference share?
(iv) Mention two ways of removal of a Director of a company.
(v) Give two advantages of public deposit from the point of view of a company.
(vi) Write any two features of principles of management.
(vii) Name the elements of directing function of management.
(viii) What does the capital clause of Memorandum of Association contain?
(ix) Give two agency functions of Commercial Banks.
(x) Explain feedback in the process of communication.
(xi) Mention any two limitations of direct mail advertizing.
(xu) State any two devices developed in the recent past for rapid and efficient communication.
(xiii) Expand the terms:
(b) IDBI
(xiv) Explain the integration concept of management.
(xv) Name two physical supply functions of marketing.
(i) Out of syllabus

(ii) Out of syllabus

(iii) The participating preference shareholder receives stipulated dividend and shares additional earnings with the common shareholders. But this share is usually non-cumulative which confirms the view that preference share does have both protective and profit participating provisions.

(iv) Out of Syllabus

(v) (a) No legal formalities: This system of raising finance is simple as it does not involve legal formalities which are required in the issue of shares and debentures.
(b) Economical: It is economical because the interest paid on deposits is usually less than the interest rate charged by banks and special financial institutions in advancing money. Moreover, deposits are returned whenever their need is not felt.
(c) Higher dividends: The company can adopt the policy of trading on equity if the company is earning more than the fate of interest to its public deposits. The company can pay a higher dividend to its shareholders and create a better reputation in the market.

(vi) (a) Principles of Management are Universal.
(b) Principles of Management are Flexible.

(vii) (a) Supervision
(b) communication
(c) Leadership
(d) Motivation

(viii) Out of syllabus

(ix) (a) Collection and Payment of Credit Instruments:
Banks collect and pay various credit instruments like cheques, bills of exchange, promissory notes, etc.
(b) Purchasing and Sale of Securities:
Banks undertake to purchase and sale of various securities like shares, stocks, bonds, debentures etc. on behalf of their customers. Banks neither give any advice to their customers regarding these investments nor levy any charge on them for their service, but simply perform the function of a broker.

(x) Feedback is essential in communication so as to know whether the recipient has understood the message in the same terms as intended by the sender and whether he agrees to that message or not. Receivers are not just passive absorbers of messages. They receive the message and respond to the subject matter about what they have understood. This response of a receiver to the sender’s message is called Feedback. Sometimes feedback could be a non-verbal, smiles, sighs and other times, it is oral. It can also be written like replying to an e-mail. etc.

(xi) Out of syllabus

(xii) Out of syllabus

(xiii) Out of syllabus

(xiv) The integration concept of management involves coordination of human and non-living resources into effective operating unit for the achievement of organizational objects.

(xv) Two Physical supply functions of marketing are:
(a) Storage
(b) Warehousing and storage.

Part – II
(Answer Any Seven Questions)

Question 2.
(a) Explain any four advantages of a Public Limited Company over a Private Limited Company. [4]
(b) Briefly explain any three merits and any three demerits of a Gov eminent Company. [6]
(a) Out of syllabus
(b) Out of syllabus

Question 3.
(a) What are the additional requirements that a public limited company has to fulfil after its incorporation, in order to obtain a certificate of commencement? [4]
(b) Enumerate the functions of a Promoter. [6]
(a) Out of Syllabus.
(b) Out of Syllabus.

Question 4.
(a) Give any four difference between a managing director and a manager. [4]
(b) Explain any six circumstances under which the office of a director falls vacant. [6|
(a) Out of Syllabus.
(b) Out of Syllabus.

Question 5.
(a) Explain any four advantages of Mutual Funds. [4]
(b) What is fixed capital? Discuss any four factors affecting the fixed capital requirement of a Joint Stock Company. [6]
(a) Out of Syllabus.

(b) Fixed capital consists of land, buildings, plant, machinery’, fixtures or any other property that is permanently committed to the business. (Example, for the last item is the regular working capital). These assets are not fixed in the sense of their value but fixed in the sense that they are committed to the business for a long period of time and difficult to be converted into cash in a short period. Fixed capital is usually highly specialized and if the business does not earn the minimum required rate of profits, these assets cannot be disposed of except at a loss. The fixed asset is needed to carry on profitable operations over a long period of time.

Factors affecting the requirement of fixed capital:
1. The scale of Operations:
Larger the spread of business activities, greater is the need for fixed capital. If a manufacturing enterprise is operating on a small scale, it will require less amount of fixed capital. On the other hand, a large-scale manufacturing enterprise will need relatively more amount of fixed capital.

2. Choice of Technique:
Those manufacturing enterprises which make use of modern and automatic machines need a large amount of fixed capital. On the other hand, those enterprises in which production is carried out mainly through manual labour need for fixed capital is very little.

3. Technology Upgradation:
There are some businesses where a fixed asset is used and which does require immediate change. These days computer technology is undergoing rapid changes. Therefore, those companies whose business is computer-based need more fixed capital.

4. Growth Prospects:
There are two types of organisations from the point of view of growth:

  • Such organisations, which have no possibility of growth. They do not need additional fixed capital in future,
  • Such organisations have more possibilities of growth. They need more additional fixed capital. Such organisations make a choice of the sources of finance well in advance so that in case of need additional finance can be made available.

Question 6.
Explain the steps involved in the process of personal selling. [10]
Out of Syllabus.

Question 7.
(a) Define planning. Write any three limitations of planning. [4]
(b) Explain the importance of management in modem times. [6]
(a) Planning means looking ahead and chalking out future courses of action to be followed. It is a preparatory step. It is a systematic activity which determines when, how and who is going to perform a specific job. Planning is a detailed programme regarding future courses of action.
Limitations of Planning:

  • Planning has a tendency to make administration inflexible.
  • Planning implies prior determination of policies, procedures and programmes and strict adherence to them in all circumstances.
  • There is no scope for individual freedom.
  • The development of employees is highly doubted because of which management might have faced a lot of difficulties in future.
  • Planning therefore introduces inelasticity’ and discourages individual initiative and experimentation.

Misdirected Planning

  • Planning may be used to serve individual interests rather than the interest of the enterprise.
  • Attempts can be made to influence the setting of objectives, formulation of plans and programmes to suit one’s own requirement rather than that of the whole organization.
  • The machinery of planning can never be freed of bias. Every planner has his own likes, dislikes, preferences, attitudes and interests which is reflected in planning.


  • Planning is a time-consuming process because it involves the collection of information, it’s analysis and interpretation thereof. This entire process takes a lot of time specially where there are a number of alternatives available.
  • Therefore planning is not suitable during emergency or crisis when quick decisions are required.

(b) The significance of management in the modem business world has increased tremendously due to the following challenges.

  • Growing size and complexity of the business.
  • The increasing specialization of work.
  • Cutthroat competition in the market.
  • Growing unionization of labour.
  • Sophisticated and capital intensive technology.
  • The increasing complexity of business decisions.
  • Need for research and development.
  • Need for optimum utilization of scarce resources

Management is equally important at the national level. It is an agent of change and economic growth. The prosperity, power and prestige of a nation depend upon the competence and dedication of its managers and administrators.

Question 8.
(a) Give any four advantages of written communication. [4]
(b) Explain any six principles of effective communication. [6]
(a) Out of syllabus
(b) Out of syllabus

Question 9.
(a) Explain any four objectives of Marketing. [ 4 ]
(b) Describe any four departments of an Advertising Agency. [6]
Answer :
(a) Objectives of Marketing:
(i) To Increase Sales
One of the most important goals of marketing for-profit entities is driving business and increasing sales. Marketing needs a good return on investment – meaning the increase in sales should significantly exceed the cost of marketing – and should, therefore, be specific.

(ii) To Improve Product Awareness
A marketing effort can be focused on reviving or invigorating interest in a product that has been on the market for a long time or about which people have long-standing attitudes.

(iii) To Establish in the Industry
A new organization finds it extremely difficult to be heard in a crowded market place, with a public distracted by many stimuli. It has to induce all efforts by means of marketing activities to be heard in the market place.

(iv) Brand Management
Maintaining a place in the mind of the public takes work, and some marketing efforts are simply aimed to maintain prominence in the public space. Major organizations known worldwide often run ads that simply use images and tone to remind consumers of the brand, rather than promote a particular product or service.

(b) Out of syllabus

Question 10.
Write short notes on:
(a) Marketing Research. [4]
(b) Informal Communication. [3]
(c) Staffing as a function of management. [3]
(a) Marketing research is a systematic process. It first collects data about the marketing problem. Secondly, it records this data. Then it analyses this data and draws conclusions about it. After that, it gives suggestions for solving the marketing-problem. So, marketing research helps to solve marketing problems quickly, correctly and systematically.
Marketing research collects full information about consumers. It finds out the needs and expectations of the consumers. So, the company produces goods according to the needs and expectations of the consumers.

(b) Out of syllabus

(c) Staff is an important managerial function -Staffing function is the most important managerial act along with planning, organizing, directing and controlling. The operations of these four functions depend upon the manpower which is available through staffing function.
Staffing is a pervasive activity- As staffing function is carried out by all managers and in all types of concerns where business activities are carried out.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2011 Solved for Class 12

ISC Commerce Previous Year Question Paper 2011 Solved for Class 12

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
    writing during this time.
  • Answer Question 1 from Part I and seven questions from Part II.
  • The intended marks for questions are given in brackets [ ].

Part – I

Question 1.
Answer briefly each of the questions (i) to (xv). [15 × 2]
(i) State two advantages of a joint-stock company.
(ii) Mention the steps necessary for the incorporation of a joint-stock company.
(iii) What are the qualification shares?
(iv) What is the statutory requirement regarding the number of Directors of a Public Limited Company?
(v) What is meant by Balanced Mutual Funds?
(vi) What is meant by Universality of Management?
(vii) Give two advantages of press media over audio-visual media of advertising.
(viii) What is the Principle of Equity, as laid down by Henri Fayol?
(ix) Mention any two specific differences between selling and marketing.
(x) Outline the steps involved in the process of communication.
(xi) Write two objectives of a Prospectus of a company.
(xii) How is cash credit different from a loan?
(xiii) Briefly describe any two aims of sales promotion.
(xiv) Explain the meaning of buying and assembling as a function of marketing.
(xv) Mention two circumstances under which a private limited company is deemed to be a public limited company.
(i) (a) Joint-stock companies shares are freely transferable. All shareholders are free to transfer their shares without the consent of anyone.
(b) The liability of the members of a Joint-stock co.are limited to the face value of the shares they possess or to the amount of guarantee accepted by them.

(ii) The steps necessary for the incorporation of a joint-stock co. are threefold. Initially, a necessary document has to be prepared and filed, this is followed by payment of necessary fees and lastly by obtaining the certificate of incorporation.

(iii) Qualification shares are the no. of shares that the first directors of the company have to subscribe and pay for. The qualification shares taken by the directors is prescribed in the Articles.

(iv) The size of the Board of Directors varies from company to company however under the Companies Act, the minimum no. of directors for a Public Limited Co. is (3) Three.

(v) Mutual funds that invest in equity shares, as well as bonds, are known as Balanced Mutual Funds. The idea is to provide both growth and income benefits to investors.

(vi) According to F. W. Taylor, the fundamental principles of management are applicable to all human activities and all types of organisation. Managerial knowledge can be transferred from one organisation to another.

(vii) While press media of Advertising has a wide circulation, audio-visual media has a limited circulation. While the cost of press media is moderate, the cost of audiovisual media is high.

(viii) The principle of equity as laid down by Henri Fayol states that there should be equity in dealing with subordinates. There should be no discrimination made between employees. Favouritism should be avoided.

(ix) Marketing is a wide concept including a host of activities while selling is a narrow concept and is a part of marketing. Marketing focus is on the needs of the buyer. While the focus of selling is on the needs of the seller.

(x) The steps involved in the process of communication are:

  • Sender – The person sending the message.
  • Message – It’s the subject matter of communication.
  • Encoding – The matter has to be translated into a mutually known language,
  • Channel – A medium has to be chosen to send the message.
  • Receiver – The person who is supposed to receive the message.
  • Decoding – Interpreting the message to understand it.
  • Feedback – It completes the process of communication.

(xi) Two objectives of a prospectus of a company :
(a) To provide information about the company to the public so that they may be attracted to invest in the company’s shares or debentures.
(b) To let the investors know the terms and conditions as well as the guidelines with regards to the company’s shares and other instruments on offer.

(xii) (a) In case of a loan, a specified amount is sanctioned by the bank which the borrower may
withdraw in Lumpsum or by cheques against the sum. In case of cash credit, the bank places the specified amount to the credit of the borrower, the borrower draws the money as and when required.
(b) Interest on the loan is charged on the full amount used or not used. Interest on cash credit is charged only on the amount actually used by the borrower.

(xiii) Two aims of sales promotion are:

  • To create demand, to arouse interest in the buyer so that the interest may be converted to a desire for the product ending in the sale of the product.
  • To stabilise sales earlier demand must be sustained, these activities reassure the customers about the quality and price of the product and helps in facing competition.

(xiv) Buying is the first step in the process of marketing. It means the procurement of raw materials, components and finished products. It involves several activities such as selecting the source of supply, ascertaining the suitability of goods and negotiating the terms of purchase. Assembling begins after the goods have been purchased. It involves the collection of goods already purchased from different sources at once commonplace. It facilitates standardisation and grading.

(xv) A Private limited company is deemed to be a public limited company under the following circumstances:

  • Where a private company holds 25% or more of the paid-up share capital of a public company.
  • Where the average sales turnover of a private company for the last three years is more than five crore rupees.

Part – II
(Answer any seven questions)

Question 2.
(a) Explain in brief, any four advantages of a multinational company. [4]
(b) The Memorandum is considered as the prime document in company formation. Give three reasons to justify this statement. [6]
(a) The merits of a Multinational company may be stated as follows:
(i) Research and development activities: Multinational corporations have greater capability for research and development activities in comparison to national companies. Multinationals survive in the international market through their advanced research and development activities.

(ii) Foreign capital: Multinationals have huge capital resources at their command. They provide foreign investment by setting up subsidiaries and joint ventures in host countries. They promote capital formation and ensure a sound choice of projects. They have access to external capital markets.

(iii) Lower cost of production: Multinational corporations carry on operations on a large-scale, which ensures economies in material, labour and overhead costs. The lower cost of production has benefitted the consumers since they get better quality goods at cheaper prices.

(iv) Professional managers: Multinationals employ highly sophisticated techniques of management and develop professional managers. These corporations help to increase specialisation, speed up decision-making and improve operational efficiency. They shape the composition and character of world markets.

(b) The Memorandum of Association is the most important document of a company. It defines the objects and powers of a company and the company’s relationship with the outside world.
It is the most essential document for a company due to the following reasons:

  • Informing the name, address, object, capital and liability of the company to outsiders is very important as it builds trust and confidence among investors.
  • It lays down the objects and scope of activities of the company. It also states the limits up to which a company can move.
  • The provision of this document cannot be changed without passing a special resolution (75% majority). In certain cases, the changes can be made by seeking permission from the company Law Board or Central Government.

Question 3.
Distinguish a Public Limited Company from a Private Limited Company. [10]
1. Number of members: A private company can be registered with two members while a public company must have at least seven members. A private company cannot have more than fifty members excluding its past and present employees. A public company can have any number of members.

2. Invitation to the public: A private company cannot invite the public by issue of the prospectus to subscribe to its share capital. On the other hand, a public company is free to invite public to subscribe to its share capital. However, it is under no legal binding to invite public to subscribe to its shares or debentures.

3. Transferability of shares: There is a restriction on the transfer of shares in a private limited company. The transfer shall not be allowed unless agreed to by all the existing members of the company.

4 Commencement of business: A private company can start its business immediately after incorporation. A public company must obtain the certificate of commencement of business before starting its business operations.

5. Articles of association: A private limited company must prepare and file its own articles of association. But a public limited company may adopt the model Articles as given in the Companies Act.

Question 4.
(a) Mention any four duties of a Director of a company. [4]
(b) Explain any three methods of appointment of directors. [6]
(a) The duties of Directors depends upon the nature and size of the company. It is necessary for the Directors to carefully examine the Articles of the company before exercising the powers and performing their duties.
Statutory Duties:

  • Disclosure of relevant facts: It is the duty of the Directors to see that the prospectus issued by the company makes disclosure of all relevant facts and figures.
  • Holding qualification shares: It is the duty of the elected Directors to purchase qualification shares and to hold them.
  • Attending Board meeting: It is the duty of the Directors to attend Board meetings regularly in the best interest of the company.
  • Getting permission for loans from the Central Government: It is the duty of the Directors to get permission from the Central Government while taking loans from the company.

(b) Methods of appointment of Directors:
The appointment of Directors may be made in the following manner:
(i) Appointment of first Directors by promoters of the company [Section 254]: The first Directors of the company are usually appointed by the promoters. Otherwise, the signatories to the Memorandum are deemed to be the Directors, till the first Directors are elected at the first annual general meeting.

(ii) Appointment of Directors by shareholders at the annual general meeting [Section 255]: Subsequent appointment of Directors is made by the shareholders at the annual general meetings. In case of a public company and a subsidiary private company, two-thirds of the total number of Directors must be appointed by the company at the annual general meeting. At every annual general meeting, one-third of the elected Directors shall retire by rotation. The retiring Directors may be re-appointed.

(iii) Appointment of Directors by the Central Government [Section 408]: The Central Gov eminent may appoint some Directors for a period of not more than three years, in the case of mismanagement of company affairs.

Question 5.
(a) Discuss any four advantages of ploughing back of profits from the company’s point of view. [4]
(b) Explain any four sources of working capital of a company. [6]
(a) Ploughing back of profits from the company’s point of view offers the following benefits:

  • It is the most convenient and economical method of finance, no legal formalities are involved and no negotiations are to be made. No return is to be paid on retained earnings and no fixed obligations are created.
  • The financial structure of the company remains fully flexible. No charge is created against the assets and no restrictions are put on the freedom of management to raise further finance by floating new securities in the market.
  • Ploughing back of profits adds to the financial strength and creditworthiness of the company. A company with large reserves can face unforeseen contingencies and trade cycles with ease and economy.
  • Retained earnings can be used to redeem debts and to replace obsolete assets. A company with large reserves can take advantage of business opportunities.

(b) (i) Nature of Business: Public utilities and service organisations require little working capital as sales are on a cash basis. There is a little time gap between production and sales and these enterprises do not maintain large stock of goods. In trading and manufacturing concerns, on the other hand, a large amount of working capital is needed to maintain stocks and to sell goods on credit.

(ii) Size of the Enterprise: The volume of business has a direct influence on working capital requirements. Large firms require working capital for investment in current assets and to pay current liabilities.

(iii) Length of Operating cycle: Complex and roundabout process about production require a long time to prepare the finished product. Greater is the time and cost involved in production higher is the investment in inventories and wage bill. For instance, a firm manufacturing an aircraft requires a larger amount of working capital than a firm producing confectionery. When the cost of raw materials is a major part of the total cost working capital requirements are high. In the sugar industry sugarcane continues more than two-third of the cost of sugar.

(iv) Terms of purchase and sale: A firm buying raw materials and other resources on credit and selling goods on a cash basis will require less investment in working capital. On the other hand, an enterprise which purchases raw materials on a cash basis but sells the finished product on a credit basis will need greater working capital. The credit policy’ of the firm while selling goods to customers and efficiency in collection of debts also influence the amount of working capital in a firm.

Question 6.
(a) Mention any four functions of IFCI. [4]
(b) State any six utility functions of a commercial bank. [6]
(a) (i) To provide medium and long term assistance to industrial concerns for:

  • setting up of new industrial undertakings.
  • expansion on diversification of existing concerns.
  • modernization and renovation of existing concerns.
  • meeting working capital requirements.
  • meeting existing liabilities.

(ii) To grant loans to industrial concerns repayable within 25 years.
(iii) To underwrite shares stocks, bonds etc. of the industrial enterprise to be disposed of within 7 years.
(iv) To subscribe directly to the shares and debentures of public limited companies.

(b) (i) Safe Custody of valuables: Bank accepts previous articles like gold, silver, insurance policies etc. for safe custody. Bank maintains safe deposits values for these valuables.

(ii) Issues of Letter of Credit: Bank issues a letter of credits, drafts, circular notes etc. to their customers and thus help the customers in making money available to them at the place of requirement.

(iii) Issue of traveller’s cheques: Bank often issue travellers’ cheques for the benefit of tourists travellers’ cheque can be easily encashed in another branch of the same bank. This relieves the tourists from the anxiety of carrying cash during the tour.

(iv) Accepting bills of exchange: Bank often accepts bills of exchange on behalf of its customers for a small commission. This enables the customers to obtain superior credit of the bank,

(v) Underwriting of Capital issues: Bank provides service of understanding capital issues and loans raised by Government and companies. Bank charges a commission at a specified rate for these services.

(vi) Providing Credit Information: Banks are frequently requested to provide information relating to the creditworthiness of their customers. This service is useful to the sellers specially in credit sales.

Question 7.
(a) Why is Coordination considered to be the essence of Management? [4]
(b) Describe the following principles of Management: [6]
(i) Authority and Responsibility.
(ii) Stability of tenure.
(iii) Division of work.
(a) Coordination is a conscious and national managerial function of pulling together. Various components of organised activity pre-determined goals. The significance of co-ordination may be understood on the basis of the following factors :
(i) The backbone of Management: Management is essentially a task of co-ordination of all internal as well as external forces and activities that affect the organisation. Co-ordination may be regarded as a mother function of management in which all other functions (like planning, organising directing and controlling) are embedded.

(ii) Unification of activities: Co-ordination reduces diversity among various departments and individual employees. It is not possible to achieve the specialised task of various departments and individual employees. It is not possible to achieve specialist tasks of various departments without perfect co-ordination. Coordination welds the various sequents and parts of the organisation into one entry.

(iii) Core of Group efforts: Co-ordination is indispensable in group efforts for accomplishing common goals. Co-ordination integrates various activities for effective achievement of common goals. Co-ordination reconciles the employee’s goals with both department and organisation goals.

(b) (i) Authority and Responsibility: Authorin’ is a right to give order and power to exert obedience.
Responsibility implies the obligation to perform the work in the manner desired and directed. Authority and responsibility must go by side. There should be parity between authority and responsibility. Authority without responsibility leads to irresponsible behaviour while responsibility without authority makes a person ineffective.

(ii) Stability of Tenure: This principle states that one subordinate should receive orders from one superior only. The subordinate should be accountable to that superior from whom he received orders. In other words every employee should have only one boss. Dual on multiple commands creates chaos in the organisation since it undermines authority. Authority should be delegated in such a manner that a subordinate works under one superior only.

(iii) Division of work: Division of work implies dividing the total task into compact jobs and allocating these compact jobs to different individuals. The object of division work is to facilitate specialisation and improve efficiency. Due to the division of work higher productivity’ and better performance is possible. When an individual does the same job on a repetitive basis he specializes in his task and thus acquires speed and accuracy in the performance.

Question 8.
(a) Explain any four objectives of communication. [4]
(b) Give any six differences between formal and informal communication. [6]
(a) (i) Promotion of managerial efficiency: Communication is a lubricant to string the smooth operation of the management process. It keeps people working in accordance with the decisions of the management.

(ii) Co-operation through understanding: It induces human being to put forth genuine efforts in work performances. It inculcates the understanding of employees and leads them to greater efforts. It ensures efficiency in work in all respects.

(iii) The motivation of employees: It helps in moulding employees behaviour favourably. It encourages the employees to accept new ideas for the completion of the works systematically. It leads to better employer-employee relations.

(iv) Basis of leadership action: Effectiveness of leadership is greatly influenced by the adequacy and clarity of communication. Personal communication is essential for maintaining man to man relationships in leadership.

Formal CommunicationInformal Communication
(i) It allows an officially established chain of command.(i) It takes place independently through unofficial channels.
(ii) Work-related matters.(ii) Mainly social matters.
(iii) Written communication(iii) Verbal communication
(iv) Impersonal manner(iv) Personal manner
(v) It is slow as it follows a planned path.(v) It is fast because it has no prescribed path.
(vi) The chances of distortion of information are very low.(vi) It can easily be distorted.

Question 9.
(a) Explain any four facilitating functions of Marketing. [4]
(b) “Advertising is a social waste.” Comment. [6]
(a) (i) Financing: This is the service of providing credit and money necessary for the producer on
the seller to make goods available to the consumers. Financial is the lifeblood of modern business. It is the lubricant that facilitates the marketing of products. The prosperity working and future of a business unit mainly depends on the availability of adequate finance. Finance should also be available in sufficient amounts to face trade cycles, recession etc.

(ii) Price Determination: This is the process of fixing the price of a product on service. Generally, the price of a product is determined by the following factors:

  • The demand for the product
  • Nature of the product
  • Cost of the product
  • Extent of competition
  • Government regulation if any etc.
  • Condition of product

The price of a product should be determined in such a way that it brings in the largest volume of sales with a sufficient margin of profit.

(iii) Grading: This refers to the classification of goods into well-defined classes on the basis of certain standards. The main objective of grading to introduce uniformity. It facilitates the fixation of prices of various grades in advance. It is costly to sell graded goods as consumers.

(iv) Sales Promotion: This is an effort to stimulate consumers to purchase more and more of a particular commodity. It is a marketing effort the function of which is to inform customers about the merits of a product on sen ice. It is used to create; capture and maintain demand. It influences the attitudes of behaviour and the purchase decision of consumers.

(b) Some people consider advertising a social waste. They point out the following limitations and dangers of advertising:
1. Higher Prices: Advertising involves huge expenditure thereby increasing the cost of distribution. Manufacturers and traders charge higher prices from consumers to recover the money spent on advertising. However, excessive and unbalanced advertisements increase cost and prices. Effective advertisement help to reduce costs and price by widening markets and providing economies of large scale operations.

2. Artificial living: Advertising multiplies the needs of people and encourages wasteful consumption. It persuades people to buy products which they do not need or cannot afford. People are encouraged to buy even products which are harmful to their health eg. cigarettes, wine, etc. Advertising promotes artificial living and extravagance by creating demand for trivial goods.

3. Misleading: Advertising often deceptive and misguides consumers. Exaggerated and false claims are made in advertisements to dupe innocent people. Bogus testimonials and other questionable means are used to sell goods of doubtful value.

4. Growth of monopolies: Advertising creates brand preference and restricts free competition. Large and well-established firms spend huge amounts on advertisements to kill new and small concerns. Advertising encourages the survival of the mightest rather than of the best.

5. Wastage of national resources: Manufacturers create trivial and artificial differences in their products to develop brand loyalty through advertising. The natural resources, capital equipment and labour which go into the production of such items amount of waste as these could better be employed in creating new industries, valuable stationery, time and energy used in advertisement go waste because most of the advertisement either escape the attention of people or are ignored by them. It is also regarded as a waste because of most of the advertisement shift demand from the one brand to another instead of increasing the total demand.

6. Unethical many advertisements are highly objectionable because they undermine moral values and ethics. Vulgar advertisements may also spoil the landscape and divert the attention of people driving on roads.

Question 10.
Write short notes on:
(a) Holding company. [2]
(b) The crossing of cheques. [4]
(c) Management – Science and Art. [4]
(a) Holding Company: A holding company is one that directly or indirectly holds more than 50% of equity’ share capital or controls the composition of the Board of Directors of some other companies.
A company may become a holding company in any of the following three ways:

  • By holding more than 50% of the paid-up equity’ share capital of another company: or
  • By holding more than 50% of the voting rights of another company: or
  • By holding the right to appoint the majority of the Directors of another company.

(b) A crossed cheque is a cheque, the amount of which is payable through the account of the payee. It cannot be cashed at the counter of the bank. If it is stolen, nobody can encash the cheque. Two parallel lines are to be drawn across the face of the cheque with the words ‘Account Payee’ in order to make a cross cheque.
A cheque is said to be crossed when two transverse parallel lines are drawn across its face (with or without any words):

  • The crossing of a cheque ensures security and protection to the true owner of the cheque.
  • It helps to detect the bonafide owner of the cheque.

(c) Management as a science: Science is a systematised body of knowledge, which can be acquired through observations and experimentations. The basis of science is to search for information by means of determining the cause-effect relationship through observations and experimentation.
The essential features of science are as follows:

  • Systematised body of knowledge.
  • Continued observations.
  • The universal validity of principles.
  • Principles-based on experiments.

Now let us see how far management fulfils these requirements to qualify as a science.

(i) Systematised body of knowledge: Science is a systematised body of knowledge which is based on a cause-effect relationship. Management viewed science as it is also a systematised body of knowledge built up by management make use of scientific methods for observations followed by management practitioners and experts over a period of time. The principles of management make use of scientific methods for observations.

(ii) Continued observations: Science uses the scientific methods of observations which are unbiased and objective. The knowledge of management has been acquired through the continuous efforts of many experts and practitioners over a period of years. The methods of observations followed by management are not completely objective, since management deals with human beings whose behaviour cannot be predicted.

Management as an Art
Art refers to the application of skill and knowledge to attain the desired result. Art is concerned with the practical application of theoretical knowledge. The function of Art is to accomplish concrete ends. It represents the methods of doing specific things and indicates how an objective is to be achieved. Every art is practical and is concerned with the creation of something.
Art has the following five essential features:

  • Practical knowledge.
  • Personal skills.
  • Result – Oriented approach.
  • Constructive skill (i.e. creativity).
  • Regular practice aimed at further improvement.

Now let us see how far management fulfils these requirements to qualify as an art:
(i) Practical knowledge: Art presupposes the existence of theoretical knowledge. Art is concerned with the application of theoretical knowledge. Therefore, every form of art has both theoretical and practical aspects. Management is an art of getting things done through people to accomplish desired results. Management is concerned with putting the available knowledge into practise so as to accomplish predetermined goals.

(ii) Personal skills: Every manager has his own style of working the taste of management lies in the skillful used of one’s technical knowledge to ensure maximum productivity and profitability. The manager has to use his personal skill and knowledge in solving many complicated problems to accomplish desired results. Therefore, management is a practice and performance.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2017 Solved for Class 12

ISC Commerce Previous Year Question Paper 2017 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.

Part – I (20 Marks)
Answer all questions.

Question 1. [10 × 2]
Answer briefly each of the questions (i) to (x):
(i) What is meant by Macro Environment ?
(ii) What is the importance of finance to a business concern ?
(iii) Give two merits of Inter Corporate Deposits.
(iv) Define Management as a process.
(v) Explain the principle of Authority and Responsibility, as laid down by Henry Fayol.
(vi) What is Demand Draft ?
(vii) State any two features of advertising.
(viii) Give two points of difference between training and development.
(ix) Mention two physical functions of marketing.
(x) Agrim purchased a Diesel Car for ₹ 7 Lakhs from an automobile Company and found its engine to be defective. Despite many complaints, the defect w as not rectified. Suggest the appropriate authority where Agrim under his right as a consumer, could file a complaint
(i) A macro environment is the condition that exists in the economy as a whole, rather than in a particular sector or region. In general, the macro environment includes trends in gross domestic product (GDP), inflation, employment, spending and monetary and fiscal policy . The macro environment is closely linked to the general business cycle as opposed to the performance of an individual business sector.

(ii) Finance is an important functional area of business. It deals with timely procurement of funds and their effective utilisation. For optimal procurement, different sources of finance are compared in terms of their costs and associated risks.

(iii) (a) No Procedural Delays
(b) Easy availability of finance.

(iv) As a process, management refers to a series of inter-related functions or elements to achieve stated objectives through the effective utilization of human and other resources. It involves five functions, namely,

  • planning,
  • organizing,
  • staffing,
  • directing or leading and
  • controlling.

As shown in Fig. 1 it is through the performance of these functions that management is able to effectively utilize manpower and physical resources such as money or capital, machines, materials, methods, etc. to produce goods and services required by the society.
ISC Commerce Question Paper 2017 Solved for Class 12 1
(v) Authority and Responsibility : Authority is the right to give orders to the subordinates and to use the resources of organisation. Responsibility is the duty which the subordinate is expected to perform by virtue of his position in the organisation. Responsibility must be expressed either in terms of functions or in terms of objectives. When a subordinate is asked to control the working of a machine, the responsibility’ is stated in terms of function and when a subordinate is asked to produce a certain number of pieces of a product, the responsibility is created in terms of targets.

(vi) A demand draft is a negotiable instrument similar to a bill of exchange. A bank issues a demand draft to a client (drawer), directing another bank (drawer) or one of its ow n branches to pay a certain sum to the specified party (payee).

(vii) The features of advertising are as follows :
It is a paid form of communication: Advertisements appear in newspapers, magazines, television or on cinema screens because the advertiser has purchased some space or time to communicate information to the prospective customers.

It is a non-personal presentation of message : There is no face to face contact with the customers. That is why. it is described as non-personal salesmanship. It is a non-personal form of presenting products and promoting ideas and it supports personal selling. It simplifies the task of sales-force by creating awareness in the minds of potential customers.


DefinitionTraining means imparting skills and knowledge for doing a particular job.Development means growth of an employee in all respects.
DurationTraining programmes are organised for short term.Development takes place over a longer period of time.

(ix) Gathering and Analyzing Information : Gathering and analyzing market information is necessary to identify the needs of the customers and take various decisions for the successful marketing of products and sendees. This is also important for making an analysis of the available opportunities and threats as well as strengths and weaknesses of the marketers and helps in deciding what opportunities can best be pursued by it. For example, rapid growth is predicted in several areas in India including internet, cell phones, cooked foods, ready made garments, etc. These areas offer opportunities to the producers and marketers.

Packaging and Labelling : Packaging is traditionally done to protect the goods from damage in transit and to facilitate easy transfer of goods to customers. But now it is also used by the manufacturer to establish his brand image as distinct from those of his rivals. Patanjali Honey’. ‘Boro Plus’. ‘Amul Butter’, ‘Tata Salt’ and All Out’ are some examples in this regard.

(x) District Forum

Part – II (60 Marks)
Answer any five questions.

Question 2.
(a) Explain three disadvantages of Preference shares from the investors’ point of view. [2]
(b) Effectiveness of leadership depends on the qualities of the Leader. Explain any four qualities that a good leader should possess. [4]
(c) Explain the importance of Business Environment in shaping the future of a business. [5]
(a) Disadvantages of Preference shares from the investors point of view are :
No voting right: Generally preference shareholders do not have any voting rights. Hence, they cannot have the control over the management of the company.

Fixed dividend only: Preference shares can get only fixed rate of dividend. They may not enjoy more profits of the company.

Taxation : In the taxation point of view, preference shares dividend is not a deductible expense while calculating tax. But, interest is a deductible expense. Hence, it has disadvantage on the tax deduction point of view.

(b) Qualities of a good leader are as follows :
Appreciative: A wise leader values their team and the person. Success is only achieved with the help of others. What’s more, genuine appreciation provides encouragement, develops confidence, and builds on strengths.

Confident: Trust and confidence in leadership is a reliable indicator of employ ee satisfaction. Good leaders aren’t afraid of being challenged. Their confidence inspires.

Compassionate : A good leader uses compassion to perceive the needs of those they leads and to decide a course of action that is of greatest benefit to the person and the team.

Courageous : A courageous leader is prepared to take risks when no one else will. A courageous leader has faith in other people. A courageous leader raises difficult issues, is ready to give difficult feedback, and share unpopular opinions.

(c) To be more specific, proper understanding of the social, political, legal and economic environment helps the business in the following ways :
Determining Opportunities and Threats : The interaction between the business and its environment would identify opportunities for and threats to the business. It helps the business enterprises for meeting the challenges successfully.

Giving Direction for Growth : The interaction w ith the environment leads to opening up new frontiers of growth for the business firms. It enables the business to identify the areas for growth and expansion of their activities.

Continuous Learning : Environmental analysis makes the task of managers easier in dealing with business challenges. The managers are motivated to continuously update their knowledge, understanding and skills to meet the predicted changes in realm of business.

Image Building : Environmental understanding helps the business organisations in improving their image by showing their sensitivity to the environment with in which they are working. For example, in view of the shortage of power, many companies have set up Captive Power Plants (CPP) in their factories to meet their own requirement of power.

Meeting Competition : It helps the firms to analysis the competitors’ strategies and formulate their own strategies accordingly.

Identifying Firm’s Strength and Weakness : Business environment helps to identify the individual strengths and weaknesses in view of the technological and global developments.

Question 3.
(a) Give three differences between advertising and personal selling. [3]
(b) Explain any four features of a budget. [4]
(c) You are the finance manager of a newly established company. The Directors have asked you to determine the amount of fixed capital requirement for the company. Explain any five factors that you w ill consider while determining the fixed capital requirement for the company .[5]

BasisAdvertisingPersonal Selling
1. NatureIt involves non-personal or indirect communication between the buyer and the seller.It involves face-to-face interaction between the buyer and the seller.
2. PurposeIt is done to increase product image, enhance sale volumes and fight competition.It is carried out to provide personalized attention to the customer.
3. MethodsIt involves several media such as radio, T.V., newspapers, magazines, outdoor, etc.It involves oral presentation and use of gestures by the salesperson.

(b) Features of budget are as follows :

  • A budget is a statement of expected results expressed in quantitative terms.
  • It provides a standard by which actual observation can be measured and by which variations can be checked.
  • It is a single use plan since it is prepared for a particular period of time.
  • A budget forces an enterprise to make in advance a numerical compilation of expected cash flows, expenses and revenues, capital outlays or machine hour utilization.

(c) The requirement of fixed capital depends upon various factors which are explained below :
Nature of Business : The type of business Co. is involved in is the first factor w hich helps in deciding the requirement of fixed capital. A manufacturing company needs more fixed capital as compared to a trading company, as trading company does not need plant, machinery, etc.

Scale of Operation : The companies which are operating at large scale require more fixed capital as they need more machineries and other assets whereas small scale enterprises need less amount of fixed capital.

Technique of Production : Companies using capital-intensive techniques require more fixed capital whereas companies using labour-intensive techniques require less capital because capital-intensive techniques make use of plant and machinery and company needs more fixed capital to buy plant and machinery.

Technology Up-gradation : Industries in which technology up-gradation is fast need more amount of fixed capital as w hen new technology is invented old machines become obsolete and they need to buy new plant and machinery whereas companies where technological up-gradation is slow they require less fixed capital as they can manage with old machines.

Growth Prospects : Companies which are expanding and have higher growth plan require more fixed capital as to expand, they need to expand their production capacity and need more plant and machinery so more fixed capital is required.

Question 4.
(a) Give three points in support of the statement, ‘’Organizing is an important function of management.” [3]
(b) What is social environment ? Enumerate any three components of social environment. [4]
(c) Briefly discuss any five features of principles of management. [5]
(a) The benefits of a sound organisation are discussed below :
Benefits of Specialization : Organisation is based on division of work which leads to specialization. In other words, jobs are created which require special qualifications, training and aptitude. People are appointed on the jobs on the basis of their area of specialization. This would lead to efficiency in performance and better quality’.

Clarity of Working Relationships : Organisation helps in creating well defined job and also clarifying the limits of authority and responsibility of each job. Thus, everybody working in the organisation knows the amount of authority and responsibility associated with his job. This would help in reducing conflicts over use of authority by different people in the enterprise and avoid confusions and duplication of work.

Optimum Utilization of Resources : Organisation leads to creation of distinct jobs and departments by systematic division of various activities. This would help in avoiding duplication of efforts and overlapping of duties among various individuals and departments. As a result, there would be optimum utilization of all kinds of resources.

Social Environment consists of the customs and traditions of the society in which business is existing. It includes the standard of living, taste, preferences and education level of the people living in the society where business exists.

The businessman cannot overlook the components of social environment as these components may not have immediate impact on the business but in the long run the social environment has great impact on the business.

For example, when the Pepsi Cola Company used the slogan of “Come Alive” in their advertisement then the people of a particular region misinterpreted the word “Come Alive” as they assumed it means Coming out of Graves. So, they condemned the use of the product and there was no demand of Pepsi Cola in that region. So, the company had to change its advertisement slogan as it cannot survive in market by ignoring the sentiments of the people.

Some Aspects of Social Environment:

  • Quality of life
  • Importance or place of w omen in workforce
  • Birth and Death rates
  • Attitude of customers towards innovation, life style etc.
  • Education and literacy rates
  • Consumption habits
  • Population
  • Tradition, customs and habits of people

(c) The principles of management have the following characteristics or features :
Universal Application : The principles of management are universal in nature. They are applicable to all kinds of organisations and situations. For example, the principle of unity of direction is widely applied to all types of activities and to all organisations. Similarly, the principle of division of work has found application in all kinds of organisations in order to achieve the benefits of specialization. However, the extent of division of work may vary from situation to situation.

General Guidelines : Management principles have been evolved by management thinkers out of their experience and analysis. That’s why, they have been expressed in the form of general statements. Management principles cannot be stated as exact as the principles of physical sciences. The obvious reason is that management principles deal with human beings. Thus, no manager can ever be sure about the behavior of human beings who have different backgrounds, perceptions and needs.

Developed by Practice and Experimentation : Many of the management principles have been developed by practitioners including Henry Fayol, F. W. Taylor and L. Urwick. For example, Henry Fayol suggested principles of general management as a result of practice and F.W. Taylor developed principles of scientific management by virtue of his practice and experimentation. In particular. Taylor conducted experiments on time study, motion study and fatigue study to increase the efficiency of workers and reduce their fatigue and Henry Fayol suggested the principles to create conducive environment for people at work.

Flexibility : The principles of management are flexible in nature. Refinements in principles can take place as per need of the situation faced. Thus, they must be accepted as flexible and dynamic guidelines and not as rigid or static rules. They can be accepted as ‘diagnostic guides’. The application of management principles depends upon specific situation being faced by the manager. They can be modified by the manager to meet the needs of the situation. For example, the principle of division of labor may not be applicable in small firms to the same extent as in large firms.

Influence Human Behavior: The principles of management are meant for influencing human behavior and getting higher performance from them. They guide them how to respond under different situations. For example, principles like division of work, unity of command, discipline, unity of direction, etc., help the managers to regulate the behavior of operative employees. However, because of complex nature of human behavior, management principles might have limited application.

Question 5.
(a) What are the objectives of personal selling ? [3]
(b) Explain the following :
(i) SMS alerts
(ii) ATM [4]
(c) Explain any five points of importance of controlling, as a function of management. [5]
(a) Personal selling is used to meet the following objectives of promotion in the following ways :
Building Product Awareness : A common task of salespeople, especially when selling in business markets, is to educate customers on new product offerings. In fact, salespeople serve a major role at industry trades shows where they discuss products with show attendees. But building awareness using personal selling is also important in consumer markets. As we will discuss, the advent of controlled word-of-mouth marketing is leading to personal selling becoming a useful mechanism for introducing consumers to new products.

Creating Interest : The fact that personal selling involves person-to-person communication makes it a natural method for getting customers to experience a product for the first time. In fact, creating interest goes hand-in-hand with building product awareness as sales professionals can often accomplish both objectives during the first encounter with a potential customer.

Increases Sales : The main objective of all the business firms is to increase sales. Customers can have doubts regarding the quality of the product. The salesman can clarify the doubts and objections raised by the customers on the spot. Hence, sales increases.

(b) SMS Alerts : It is a facility used by some banks or other financial institutions to send messages (also called notifications or alerts) to customers’ mobile phones using SMS messaging, or a service provided by them which enables customers to perform some financial transactions using SMS.

ATM : ATM stands for an automated teller machine and also known as an automatic teller machine is an electronic telecommunications device that enables the customers of a financial institution to perform financial transactions, particularly cash withdrawal, without the need for a human cashier, clerk or bank teller.

(c) The following benefits may be derived from a sound system of control :
Accomplishment of Organisational Goals : Control helps in achieving business objectives. It ensures regular supply of factors of production and production of high quality of goods and services at economical costs. This is how it helps in achieving, the profitability objective of the business. Further, managerial control includes production control, financial control and other controls which are essential to achieve the objectives of the enterprise.

Judging Accuracy of Standards : Through controlling, a manager can judge whether the standards or targets set are accurate or not. An accurate control system revises standards from time to time to match them with environmental changes.
m Making Efficient Use of Resources : Each activity is performed in accordance with predetermined standards. As a result there is better use of resources and wastage’s and inefficiencies arc reduced.

Improving Motivation of Employees : The existence of clear-cut standards performance has a positive impact on the behaviour of the employees. They feel motivated while performing their duties and work as dedicated employees. As a result, there is higher quality and productivity in the organisation.

Ensuring Order and Discipline : Controlling insists on continuous check on the activities of employees and thus creates an atmosphere of order and discipline. The employees are made aware of their duties and responsibilities very clearly . They know clearly the standards against which their performance will be judged. These standards motivate the employees work efficiently.

Question 6.
(a) Distinguish between marketing and selling. [3]
(b) Explain any four objectives of communication. [4]
(c) Explain the first five steps involved in selecting suitable work force in an organisation. [5]

1. ScopeMarketing has a very wide scope and includes selling also. It covers all activities concerned with identification and satisfaction of customers’ needs and wants.Selling is only a part of marketing. Its scope is restricted to maximizing volume of sales.
2. FocusMarketing focuses on customer’s needs of want-satisfying goods.Selling focuses on seller’s needs.i.e. corn erting his goods into cash.
3. SequenceMarketing begins before actual production takes place.Selling takes place after the production.
4. EmphasisEmphasis is given on product planning and development to match products with customers’ needsEmphasis is placed on sale of goods already produced.

(b) The objectives of communication are as follows :
To Motivate Employees : Communication seeks to make employees interested in their duties and in the company as a whole. Managers inspire workers to work hard towards the achievement of organisational objectives. Good communication can mould employees’ behavior and create cordial industrial relations. It provides information and instills in each employee a sense of pride in the job. It also reflects management’s interest in employees.

To Promote Managerial Efficiency : Communication aims at improving the efficiency of management. Managers provide guidance to employees through communication.

To Implement Decisions Quickly : Effective communication is designed to implement decisions quickly. Subordinates understand managerial decisions and take steps to implement them through communication.

To Carry Out Change : Free flow of ideas and information reduces workers resistance to new technology and other changes. It makes new ideas acceptable to people and they adapt more quickly to the changing circumstances.

(c) Efficient performance of staffing involves the following activities or steps :
Estimating Manpower Requirements or Human Resource Planning : This is the first step in the process of staffing. It is concerned with determining the number and type of staff required for the organisation. It involves the following steps :

  • making inventory of current human resources in terms of their qualifications, training and skills, and
  • assessing future human resource needs of all the departments.

Job analysis is concerned with finding details related to all jobs. After conducting job analysis, the managers come to know the qualifications and qualities of employees required to perform each job.

Recruitment : It involves attracting suitable people to apply for vacant jobs in the organisation. Recruitment refers to identification of the sources of manpower availability and making efforts to secure applicants for the various job positions in the organisation.

Selection : Selection is the process of choosing and appointing the right candidates for various jobs in the organisation. It includes receiving and screening of applications, employment tests, interviews and medical examination of candidates together with verification of references.

Placement and Orientation : When a new employee reports for duty , he is to be placed on the job for which he is best suited. Placement is a very important process as it can ensure “right person doing the right job”. If a new employee is not able to adjust on his job. he may be given some training or transferred to some other job.

Orientation is concerned with the process of introducing or orienting a new employee to the organisation. The new employees are familiarized with their units, supervisors and fellow employees They are also to be informed about the working hours, tea or coffee breaks, lunch period, procedure for availing leaves, safety precautions, medical facilities, transport facilities, etc.

Training and Development : Systematic training helps in increasing the skills and knowledge of employees in doing their jobs. Various methods of training can be used to enhance the knowledge and skills of the employees. On-the-job methods are more useful for the operative employees and off-the-job methods can also be employ ed for the supervisory personnel.
ISC Commerce Question Paper 2017 Solved for Class 12 2
Question 7.
(a) Explain Buying and Assembling, as function of marketing. [3]
(b) What is meant by R.T.GS ? Give any two features of R.T.GS. [4]
(c) Management is the dynamic, life giving element in every business. In the context of this statement, explain the importance of management in modern times. [5]
(a) Buying : Buying is the first step in the process of marketing. It involves what to buy. what quality, how much, from whom, when and at. what price. People in business buy to increase sales or to decrease costs. Purchasing agents arc much influenced by quality , sen ice and price. The products that the retailers buy for resale are determined by the need and preferences of their customers.

Assembling : After buying all the materials purchased it should be collected at a central place, it is called assembling. Assembling is required for all kinds of products whether they are agriculture product, consumer product or industrial product.

(b) Real Time Gross Settlement (RTGS) is an electronic form of funds transfer where the transmission takes place on a real time basis. In India, transfer of funds with RTGS is done for high value transactions, the minimum amount being ₹ 2 lakh. The beneficiary account receives the funds transferred, on a real time basis.

Features of R.T.G S.

  • An RTGS electronic fund transfer facilitates fund transfer on real time basis. In case of a holiday, the amount gets credited on the next working das.
  • RTGS could also be done offline by submission of the remittance form at the bank branch of the remitter.
  • RTGS avoids the cost involved in other instruments of fund transfer such as demand draft.

(c) Importance of Management are as follows :
Helps in accomplishment of organisational goals : It is the management which determines the goals of the organisation and of various departments and functional groups. The goals are communicated to the employees to seek their cooperation and to ensure coordination. All organisational activities are directed towards the organisational objectives. Clear-cut definition of goals is essential for the success of any organisation.

Helps in efficient utilization of resources : Management ensures efficient utilization of resources to reduce costs and increase productivity and profitability Through planning and organisation, management eliminates all types of wastage’s and achieves efficiency in all business operations. Management motivates workers to put in their best performance. This would lead to the effective working of the business.

Creates dynamic organisation : All organisations operate in a dynamic environment. In order to survive and grow, each organisation has to adapt itself according to the needs of the environment. Employees generally resist changes in the organisation. Management helps them to adapt to the changes so that the organisation is able to maintain its competitive edge.

Helps in accomplishment of personal objectives : Management leads the group members to motivate them to achieve their personal objectives while working for the organisational objectives. Management helps them to satisfy their physical, social, and psychological needs so as to develop a cooperative and committed team.

Helps in development of society : Efficient management of resources is equally important for the development of society . According to Peter Drucker. “Management is the crucial factor in economic and social development.” The development of a country virtually depends upon the quality of management of its resources. Efficient management of resources helps in the development of nation in the following ways :

  • provision of good quality products and services;
  • creation of employment opportunities;
  • technological innovations for the betterment of society; and
  • contribution to economic growth and development.

Question 8.
(a) Give three points of difference between Taylor’s and Fayol’s Principles of Management
(b) Explain four advantages of raising funds from commercial banks.
(c) Discuss any five points of importance of marketing.

BasisF. W. TaylorHenry Favol
1. PerspectiveHe worked from bottom to top level. His center of study was the operator at the workshop.He worked from top level to downward laying stress on unity of command, unity of direction, coordination, etc. He was concerned with overall administration of the enterprise.
2. Unity of CommandHe recommended               functional foreman ship which violates unity of command.He advocated unity of command so that each worker gets order from one boss only
3.ApplicabilityTaylor’s scientific management is applicable to industrial organisations only.Fayol’s principles have universal application.
4.  Formation of PrinciplesHis principles are based on observation and experimentationHis principles were drawn from his personal experience of managing organisations.

(b) Following are the advantages of raising funds from commercial banks :

  • Raising funds from commercial banks are available for the specified period.
  • It provides benefit of trading on equity.
  • Repayment can be made out of future earnings.
  • Interest paid on bank loan is deductible for determining taxable profits.

(c) Importance of marketing are as follows :
Standardization and Grading : Standardization means setting quality standards to achieve uniformity’ in the product. Standardization provides consistent quality assurance to consumers. Consumers are assured about the quality of product offered by the seller. Grading means classify ing the product on certain accepted benchmarks or bases. The bases of classification can be size, quality etc. Grading is necessary when a company is not following strictly the technique of standardization. Through grading, the marketer can get higher price for quality product. Grading is generally done in agricultural products like wheat, rice, pulses, apples, mangoes, etc.

Packaging and La belling : Packaging is traditionally done to protect the goods from damage in transit and to facilitate easy transfer of goods to customers. But now it is also used by the manufacturer to establish his brand image as distinct from those of his rivals. ‘Patanjali Honey’, ‘Boro Plus’, ‘Amul Butter’, ‘Tata Salt’ and ‘All Out’ are some examples in this regard.

Another activity’ connected with packaging is labelling. Labelling means putting identification marks on the package. The label is an important feature of a product. It is that part of a product which contains information about the producer of the product. A label may be a part of a package or may be a tag attached directly to the product. The label is used to communicate brand, grade and other information about the product. It works as a silent salesman.

Branding: It is the process of stamping a product with some identifying name or mark or a combination of both. In other words, branding means giving a distinct individuality to a product. A brand name consists of words, letters and/or numbers which may be vocalized. A brand mark is that part of the brand which appears in the form of a symbol, design, or distinctive coloring or lettering. It is recognized by sight. Some of the popular brands include Airtel, Videocon, Lux, Saridon, Nirma, etc.

Customer Support Services : This function relates to developing customer support services such as after sales services, handling customer complaints and adjustments, providing credit facilities, maintenance services, technical services, etc. All these services aim at providing maximum satisfaction to the customers, which is the key to marketing success in modern days. Customer support services prove very effective in bringing repeat sales from the customers and developing brand loyalty’ for a product.

Pricing: Price is the exchange value of a product. Determination of price of a product is an important function of a marketing manager. Price of product is influenced by the cost of product and services offered, profit margin desired, prices fixed by rival firms and Government policy.

Question 9.
Write short notes on :
(a) Publicity. [4]
(b) Secured Debentures. [4]
(c) Programme, as a type of plan. [4]
(a) Publicity is an effective non-personal promotional tool which has very high credibility . It is any non-paid mention of an organisation and its products in the mass media like newspapers, journals, radio, T.V., etc. Any organisation can come to the attention of the public by doing something which is newsworthy. For example. Tata Motors got wide publicity when it introduced the cost effective Nano Car. The unique features of the car were highlighted in every media, both in and outside the country . Similarly, a company can get coverage in the news media by sponsoring some sports or cultural event. It need not pay anything to the media for publicity, but has to supply the necessary information to the media.
Publicity has the following salient features :

  • Publicity’ is a non-paid form of dissemination of some important information. It does not involve any direct payment as in the case of advertisement.
  • It is a non-personal form of communication by the media.
  • It does not have any sponsor as the information is passed on to the general public as a news item.

(b) These are the debentures that are secured by a charge on the assets of the company . These are also called mortgage debentures. The holders of secured debentures have the right to recover their principal amount with upward amount of interest on such debentures out of the assets mortgaged by the company. In other words, the company makes a default in payment, the debenture holders can recover their dues from the mortgaged property .

(c) A programme is a detailed statement about a project which outlines the objectives, policies, procedures, rules, tasks, human and physical resources required and the budget to implement any course of action. The minutest details are worked out within the policy framework. A programme is action based and result oriented. It prescribes how resources of enterprise should be used. It is also a single use plan because it is not used in the same form time and again once the objectives have been achieved.

A programme is a sequence of activities directed towards the achievement of certain objectives. It lays down the definite steps which will be taken to accomplish a given task. It also lavs down the time to be taken for the completion of each step. For example, a company may have production programme, sales programme, training programme, expansion programme, etc.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2010 Solved for Class 12

ISC Commerce Previous Year Question Paper 2010 Solved for Class 12

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start
    writing during this time.
  • Answer Question 1 from Part I and seven questions from Part II.
  • The intended marks for questions are given in brackets [ ].

Part – I (Compulsory)

Question 1.
Answer briefly each of the questions (i) to (xv). [15 × 2]
(i) List any two features of planning as a function of management.
(ii) HOW are the first directors of a company appointed?
(iii) Mention any two limitations of direct mail advertising.
(iv) What is meant by gangplank?
(v) Mention any two drawbacks of public deposits as a source of finance.
(vi) What is horizontal communication?
(vii) State two functions of exchange with reference to marketing.
(viii) What is the significance of the objects clause in the Memorandum of Association of a company?
(ix) What is staffing?
(x) What are Multinational Companies?
(xi) Give any two conditions under which a cheque is dishonoured by a banker.
(xii) Explain any two demerits of a joint-stock company.
(xiii) What are mutual funds?
(xiv) Who is an alternate director?
(xv) What are retained earnings?
(i) Planning is selecting priorities and results (goals, objectives, etc.) and how those results will be achieved. Planning typically includes identifying goals, objectives, methods, resources needed to carry out methods, responsibilities and dates for completion of tasks.

(ii) First directors of a company are appointed by the original investors (members or subscribers) usually from among themselves and are named in the Articles of Association. However, mention in the Articles does not constitute a valid appointment until the person gives his or her signed consent to hold the office of the director, and is not disqualified (for any reason) from holding that office.

(iii) (a) There is a relatively high cost per contact.
(b) It may be difficult to obtain updated, accurate mailing lists.

(iv) A Gang Plank is a temporary arrangement between two different points to facilitate quick and easy communication as explained below:
ISC Commerce Question Paper 2010 Solved for Class 12 1
In the figure given, if D has to communicate with G he will first send the communication upwards with the help of C. B to A and then downwards with the help of E and F to G which will take quite some time and by that time, it may not be worth therefore a gangplank has been developed between the two.
Gang Plank clarifies that management principles are not rigid rather they are very flexible. They can be moulded and modified as per the requirements of situations.

(v) (i) Public deposits are an uncertain and unreliable source of finance.
(ii) Public deposits distort the interest rate pattern.
(iii) Public deposits are generally not available to new companies and those with uncertain earnings.

(vi) Horizontal communication is that communication which flows in the same level of management For example – communication between the manager of the sales department and manager of purchases department.

(vii) (a) Exchange helps in the process of marketing.
(b) Exchange creates utility.

(viii) The Objects clause is the most important clause of the company. It specifies the activities which a company can cany on and which activities it cannot carry on. The company cannot carry on any activity which is not authorised by its Memorandum of Association. This clause must be specified.

  • Main objects of the company to be pursued by the company on its incorporation
  • Objects incidental or ancillary to the attainment of the main objects
  • Other objects of the company not included in (i) and (ii) above.

In case of the companies other than trading corporations whose objects are not confined to one state, the states to whose territories the objects of the company extend must be specified.

(ix) Staffing is the management function devoted to acquiring training, appraising and compensatin’- employees.

(x) A multinational company is a company having production and distribution centres located in more than one country. It carries on business not only in the country’ of its incorporation but also in other countries. For example-Sony, HP, etc.

(xi) A cheque can be dishonoured by a banker in the following conditions:

  • When there is no sufficient balance in the account on which the cheque has been issued.
  • If there is any alteration on the cheque and that alteration has not been authorized by the account holder.
  • When the signatures put on the cheque do not match with the signatures stored in the records of the bank.

(xii) (a) Unsatisfactory management
(b) Difference of opinions
(c) Heavy expenses of formation.

(xiii) A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis. Currently, the worldwide value of all mutual funds totals more than $30 trillion.

(xiv) An alternate director is a temporary’ director who can represent an elected director at a meeting of the board of directors, provided (1) the articles of association of the company allow for such arrangement and the other elected directors of the firm do not object.

(xv) Retained earnings are the undistributed profits of the company. These earnings help the company to avoid external borrowings.

Part – II
(Answer Any Seven Questions)

Question 2.
(a) Briefly explain any four demerits of a Government Company. [4]
(a) Briefly explain any four demerits of a Government Company. [4]
(b) What is a private limited company? State any eight privileges enjoyed by it. [6]
(a) Demerits of Government Companies are:

  • Lack of accountability: A government company is not fully responsive to the parliament or the general public. It enjoys special privileges. It may not act for the public interest.
  • Political interference: In actual practice politicians and bureaucrats interfere in the functioning of Government companies. Such interference cause lack of ness in management and adverse effect in proficiency.
  • Indifferent management: Government companies are generally managed by Government servants and other Government officers. They are not hard-working and take little personal interest in running the company on a sound business line. The efficiency of operations is low. Operational costs are high.

(b) Private Company means a company which by its articles of association.

  • Restricts the right of members to transfer its shares.
  • Limits the number of its members to fifty. In determining this number of 50 employee members and ex-employee members are not to be considered.
  • Prohibits any invitation to the public to subscribe to any shares in or the debentures of the company.

If a private company contravenes any of the aforesaid three provisions, it ceases to be a private company and loses all the exemptions and privileges which private company is entitled.

  • Limited liability,
  • The simple and easy formation,
  • Immediate commencement of business upon incorporation,
  • Liberal payment of remuneration and loans to directors without any restrictions,
  • Easier inter-corporate loans
  • Lesser disclosure requirements
  • Tremendous ease in operation
  • Two directors are enough
  • Two Shareholders are adequate
  • Need not declare a dividend

Question 3.
(a) Explain any four factors which determine the working capital requirement of a business. [4]
(b) What are special financial institutions? Discuss any four advantages of obtaining funds from such institutions. [6]
(a) Factors affecting Working Capital

  • Type/Nature of Business: Working capital level is generally higher in manufacturing-based versus service-based organisations.
  • Depends on the Volume of Sales: The higher the sale, the higher is the level of working capital required.
  • Seasonality: Peak seasons like festive seasons require a higher level of working capital.
  • Length of Operating And Cash Cycle: A longer operating and cash cycle increases the level of working capital.

(b) Special Financial Institutions: A wide variety of financial institutions have been set up at the national level. They cater to the diverse financial requirements of the entrepreneurs. They include all India development banks like IDBI, SIDBI, IFCI Ltd, UBI; specialised financial institutions like IVCF, ICICI Venture Funds Ltd, TFCI; investment institutions like LIC, GIC, UTI: etc.
Advantages of Special Financial Institutions are:

  • They provide finance for the growth of the industry.
  • They accelerate the growth of the industrial sector by encouraging them to have better industrial output.

Question 4.
(a) Explain the primary functions of commercial banks.
(b) What is a debenture? Explain any two advantages and any two disadvantages of debentures from the viewpoint of a company. [6]
(a) Primary Functions of Commercial Banks
1. To Receive Deposits
Receiving deposits is the most important function of commercial banks. The deposits can be accepted in the form of the following types:
(i) Saving Deposits: The people of middle and lower classes who wish to save a part of their income can invest in Saving Bank Accounts. Deposit in these accounts also earns interest at the rate announce by the RBI from time to time.

(ii) Demand Deposits: These deposits are also called current deposits. The current accounts are meant for big customers. There is no limit on the number of withdrawals, amount, etc. in the current account deposits. There is no provision of paying interest on such type of deposits. These accounts are generally opened by the businessmen.

(iii) Time Deposits: These deposits are accepted by the banks in the form of fixed deposits. These deposits are accepted for a fixed time period. The minimum time period for accepting a time deposit is 14 days. These deposits earn a higher rate of interest as compared to saving deposits. Time deposits are accepted for the maturity period of 1 year, 2 years, 3 years and so on respectively. Customers can take loan up to 75% of their deposit against the security of Fixed Deposit Receipt (FDR).

2. Sanction of Loans and Advances
The income of the banks is generated by sanctioning loans and advances to the eligible persons. The interest is charged at a higher rate. This rate of interest is generally higher than the saving deposit or fixed deposit rate allowed to the customers.
Types of Facilities under Loans and Advances
(i) Overdraft Facility: Banks allow their genuine customers to withdraw up to a certain limit in excess of the borrower’s deposits.
(ii) Advances: Banks generally provide short term and medium-term advances. Short term advances are sanctioned for a period up to 1 year. Medium-term advances are sanctioned for a period of more than 1 year but not exceeding 3 years.
(iii) Discounting Bill of Exchange: Banks provide advances against the bills of exchange even before the customer receives money from the parties. These bills are discounted by the banks and payment is made to the customer. The bill is realised by the bank when a party sends money to it.

(b) A debenture is a document issued by a company as an evidence of a debt from the company with
or without a charge on the assets of the company.

Advantages of Debentures from View Point of a Company:

  • Funds raised by the company by way of debentures are required to be repaid during the lifetime of the company at the time stipulated by the company. As such, debenture is not a source of permanent capital. It can be considered as a long term source.
  • In financial terms, debentures prove to be a cheap source of funds from the company’s point of view.

Disadvantages of Debentures from View Point of Company:
(i) By issuing the debentures, a company is under two types of risks. These are payment of the interest at a fixed rate, irrespective of the non-availability of profits and repayment of the principal amount at the pre-decided time. If earnings of the company are not stable or if the demand for the products of the company is highly elastic, debentures prove to be a very risky proposition for the company. Any adverse change in the earnings or demand may prove to be fatal for the company.

(ii) Debentures are usually a secured source for raising the long term requirement of funds and usually the security offered to the investors is the fixed assets of the company. A company which requires less investment in fixed assets, may find debentures as a wrong source of raising the long term requirement of funds as it does not have sufficient fixed assets to offer as security.

Question 5.
(a) Write short notes on [4]
(i) Managing director
(ii) Manager
(b) State any six powers of the directors of a company. [6]
(a) (i) A managing director means a director who is entrusted with substantial powers of management
which would not otherwise be exercisable by him. The “substantial powers” of management may be conferred upon him by virtue of an agreement with the company, or by a resolution of the company or the Board or by virtue of its memorandum and articles. The powers so conferred are alterable by the company.
A managing director occupies the dual capacity of being a director as well as an employee of the company. The day to day management is entrusted to the managing director who can exercise powers of management without referring to the Board.

(ii) A manager of a company is the in-charge of a team. He makes plans, directs his team, motivates them to achieve their goals. In a company, every department can have a manager, for example, Manager Marketing, Manager Accounts, etc. The duties of different managers may vary according to their assignments.

(b) The Board of Directors is entitled to exercise all such powers and do all such acts and things as the company is authorised to exercise by its Memorandum of Association and Articles of Association. In general, the Board of Directors has the power of superintendent, control and direction over the Managing Director and the Manager who are the persons entitled to manage the affairs of the company. The Board of Directors can exercise the following powers:

  1. Powers to be exercised at Board Meetings: The following powers must be exercised in a Board meeting and cannot be delegated to other managerial personnel:
    • To issue debentures;
    • To issue and allot shares;
    • To fill up casual vacancies on the board;
    • To sanction contracts in which one or more directors have an interest;
    • To make calls on shareholders in respect of money unpaid on their shares;
    • To forfeit shares;
    • To recommend dividends;
    • To decide the terms and conditions of issue of shares and debentures;
  2. Other powers:
    • To borrow money by means other than through debentures say through public deposits.
    • To invest the company’s funds properly.
    • To make loans.
    • To make contracts for the purchase and sale of the property on behalf of the company.

Question 6.
(a) Describe the importance of communication. [4]
(b) Explain any six differences between written and oral communication. [6]
(a) Importance of Communication in Business is mentioned below:

  • It can promote managerial efficiency and performance.
  • It provides a necessary basis for direction and leadership.
  • It is essential for decision-making and planning to achieve the goals.
  • It is helpful in planning and coordinating the activities of the business.
  • It plays a vital role in achieving maximum production with a minimum of cost.
  • It is the foundation for democratic management in the organisation.
  • It creates mutual trust and confidence between the management and the workers. Therefore, it is a basis of sound industrial relationships.
  • It improves the morale of workers as they can easily communicate their grievances, troubles, problems, etc. to the management.
  • It is a tool of effective control in the hands of management.
  • It creates a good image of the business in society.

(b) Difference between Written and Oral Communication:

Written CommunicationOral Communication
1. Written communication covers larger distances.1. Oral communication does not cover larger distances.
2. Speed of communication is low.2. Speed of communication is fast.
3. Proper records of communication are available.3. Record is not. available except in a few cases
4. Full secrecy cannot be maintained.4. Secrecy can be maintained.
5. Responsibility of the sender can be fixed.5. Responsibility of the sender cannot be fixed.
6. It supports legal evidence.6. It does not support legal evidence.
7. It is formal in nature.7. It is informal in nature.
8. Suitable for the lengthy message.8. Not suitable for lengthy messages.
9. Personal touch not available.9. A personal touch is visible.
10. Less suitable for group communications.10. More suitable for group communications.
11. Immediate feedback not available.11. Immediate Feedback is available.
12. It covers uniform costs irrespective of distances. An envelope costs Rs. 5 to send a message locally or nationally.12. Costs vary with an increase in distances. A local telephone call is very cheap as compared to calls made from one part of the country to the other part Same is the case while doing international calls.

Question 7.
(a) Explain any four techniques of sales promotion. [4]
(b) What is salesmanship? Explain any four qualities a good salesman should possess. [6|
(a) Techniques of Sales Promotion.
(i) Free samples: Distributing free samples is one of the most popular techniques of sales promotion. You might have received free samples of shampoo, coffee powder, etc. while purchasing various items from the market. Sometimes these free samples are also distributed by the shopkeeper even without purchasing any item from his shop. These are distributed to attract consumers to try out a new product and thereby create new customers.

(ii) Premium or Bonus offer: In such a technique, the free additional quantity of a product is given to the consumer in the same price of the product or some free related item is given. A milk shaker along with Nescafe, a toothbrush with 500 grams of toothpaste, 25% extra in a pack of one kg. are the examples of premium or bonus is given free with the purchase of a product They are effective in inducing consumers to buy a particular product.

(iii) Exchange scheme: This technique includes offering the exchange of old product for a new product at a price less than the original price of the product. This is useful for drawing attention to product improvement.

(iv) Price-off-offer: Under this offer, products are sold at a price lower than the original price. For Example-Rs. 5 off on purchase of 250 grams of Red Label Tea.

(v) Coupons: Sometimes, coupons are issued by manufacturers either in the packet of a product or through an advertisement printed in the newspaper or magazine or through the mail. These coupons can be presented to the retailer while buying the product. The holder of the coupon gets the product at a discount.

(b) Salesmanship is a personal action or effort on the part of an individual which is intended to bring about the sale of the goods for sale. More broadly speaking, salesmanship is the art of selling something to somebody, and everything which contributes to the consummation of this exchange is necessarily a part of salesmanship.
Qualities of a good salesman are:

  • He should have self-confidence.
  • He should be persuasive and not of critical temperament.
  • He should have qualities of sincerity, maturity and produce a cheerful smile.
  • He should be of an analytical mind.

Question 8.
State and explain any five principles of scientific management as laid down by Taylor. [10]
The basic principles of scientific management are as follows :
(i) Science not Rule of Thumb: Each and every job and the method of doing it should be based on scientific study and analysis rather than on trial and error. The task to be performed should be scientifically planned. The materials, equipment and working condition should be standardised. The amount of work to be done should be decided through objective study.

(ii) Harmony not Discord: There should be healthy co-operation between employer and employees. Taylor advocated a complete mental revolution on the part of both management and workers. Management should adopt an enlightened attitude and share the gains of productivity’ with workers. Workers on their part should work with discipline and loyalty.

(iii) Maximum not Restricted Output: Conflict between management and workers arises mainly on the division of surplus. Taylor suggested that the best way to resolve the conflict is to increase the size of surplus so that each side can have a larger share. Management and w orkers have a common interest in increasing productivity.

(iv) Division of Work and Responsibility: Taylor suggested separation of planning from operational work. Management should concentrate on planning the job of workers and workers should concentrate on the performance of work.

(v) Scientific Selection, Training and Development of Workers: Workers should be selected and trained to keep in view the job requirements. Each and every worker should be encouraged to develop his full potential.

Question 9.
(a) Explain the steps involved in Organising as a function of management. [4]
(b) Discuss the importance of Management for the successful functioning of an organisation. [6]
(a) Steps involved in organizing as a function of management:
1. Identification of activities: All the activities which have to be performed have to be identified first. For example, preparation of accounts, making sales, record keeping, quality’ control, inventory control, etc. All these activities have to be grouped and classified into units.

2. Departmentally organizing the activities: In this step, the manager tries to combine and group similar and related activities into units or departments.

3. Classifying the authority: Once the departments are made, the manager likes to classify the powers and its extent to the managers. This activity of giving a rank in order to the managerial positions is called hierarchy. This helps in achieving efficiency in the running of a concern. This helps in avoiding wastage of time, money, effort, in avoidance of duplication or overlapping of efforts.

4. Co-ordination between authority and responsibility: Relationships are established among various groups to enable smooth interaction toward the achievement of the organizational goal. Each individual is made aware of his authority and he/she knows who they have to take orders from and to whom they are accountable and to whom they have to report.

(b) 1. Management helps in Achieving Group Goals: It arranges the factors of production, assembles and organizes the resources, integrates the resources in an effective manner to achieve goals. It directs group efforts towards achievement of pre-determined goals.

2. Optimum Utilization of Resources: Management utilizes all the physical and human resources productively. This leads to efficacy in management. Management provides maximum utilization of scarce resources by selecting its best possible alternate use in industry from out of various uses. It makes use of experts, professional and these services leads to the use of their skills, knowledge, and proper utilization and avoids wastage.

3. Reduces Costs: Management gets maximum results through minimum input by proper planning and by using minimum input and getting maximum output. Management uses physical, human and financial resources in such a manner which results in the best combination. This helps in cost reduction.

4. Establishes Sound Organisation: To establish sound organisational structure is one of the objectives of management. Management fills up various positions with the right persons, having the right skills, training and qualification.

Question 10.
Write short notes on:
(a) Branding and labelling. [3]
(b) Turnkey Projects. [3]
(c) Role of Promoters. [4]
(a) A brand is the idea or image of a specific product or service that consumers connect with, by identifying the name, logo, slogan or design of the company who owns the idea or image. Branding is when that idea or image is marketed so that it is recognizable by more and more people, and identified with a certain service or product when there are many other companies offering the same service or product. Branding is a way to build an important company asset, which is a good reputation. Branding can build an expectation about the company services or products and can encourage the company to maintain that expectation or exceed them, bringing better products and services to the market place.

A label gives the consumer the necessary information on the product he wants to buy. It includes the name of the product, the name of the firm producing it, the price the nutritional information, the ingredients, the instructions of use (if necessary), the date of production and that of minimum durability, and other particulars.

But product labels never give the consumer the whole story of information. The consumer is told what the item is made of, but no information is given about the people who worked on it and the machinery used. Nothing is known on the conditions endured by the workers or maybe the abusive treatment, or forced contraception. So when one thinks of it, no one really knows what he is buying.
Labelling is sometimes too much complicated for certain people to understand and it that is why we need to make it more user-friendly.

(b) Turn-key refers to something that is ready for immediate use, generally used in the sale or supply of goods or services. Since full responsibility for the project rests upon the contractor, the number of interfaces is reduced to the one point of contact instead of a multitude of subcontractors. This gives the customer much greater visibility into the project process as well as leaving the task of coordinating all the subcontractors to the one responsible primary contractor.
Turnkey projects tend to have short project execution times, rapid return on investment, and minimal delays.

(c) Promoters perform the following functions:

  • Conceive a business opportunity or the idea of starting a new business.
  • Conduct a preliminary analysis of the idea to determine its profitability and feasibility.
  • Carry out a detailed investigation in order to determine the nature, scope and requirements of the proposition.
  • Appoint brokers, underwriters, solicitors and bankers for the company.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2018 Solved for Class 12

ISC Commerce Previous Year Question Paper 2018 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.

Part – I (20 Marks)
Answer all questions.

Question 1. [10 × 2]
Answer briefly each of the questions (i) to (x):
(i) Name the two dimensions of business environment.
(ii) What is meant by factoring ?
(iii) What is a debit card ?
(iv) Why is management considered to be a discipline ?
(v) Explain any two sources of external recruitment used in today’s world.
(vi) Name the four elements of directing, as a function of management.
(vii) Distinguish between achertisement and publicity.
(viii) Mention two types of markets, on the basis of the position of buyers and sellers.
(ix) The producer of Lime Fresh’ tea introduces ‘Buy one Get one’ scheme on all the products of ‘Lime Fresh’. Identify the promotional strategy’ used by the producer. State any one objective that could be met by this strategy.
(x) Expand the following terms :
(a) RTGS
(b) NEFT
(i) The two dimensions of Business Environment are :

  • Micro Environment
  • Macro Environment

(ii) Factoring implies raising finance through the sale or mortgage of book debts. The finance companies provide finance to business concerns through outright purchase of accounts receivables. The debtors of the firm make payments to it which in turn forwards them to the finance company.

(iii) A people can get a debit card by depositing money in the bank. The card holder can make immediate payment for the goods purchased or sendees availed with the help of debit card availed provided the seller has the terminal facility. Debit card can also be used to withdraw money from the ATM.

(iv) Management is considered to be a discipline because it helps to improving discipline among the employees by exercising authority, assigning responsibility and introducing procedures of evaluation and control.

(v) Two sources of external recruitment used in today ‘s world are :
Advertisement : Advertisement in newspaper, business magazines and journal is very common source for fulfilling the senior positions in an organisation. The advantages of this method is that adequate information about the organisation and the job can be given to allow self-screening by prospective candidates.

Employment Exchange : Employment exchanges register the names of job seekers and maintain records of their qualifications, experience etc. These are run by the government and act as a link between the job-seekers and employers.

(vi) The elements of directing are :

  • Supervision
  • Motivation
  • Leadership
  • Communication

(vii) The difference between Advertisement and Publicity :
ISC Commerce Question Paper 2018 Solved for Class 12 1
(viii) Primary and Secondary Market.

(ix) Sales promotion strategy is used by the producers.
Objective: It will increase the immediate sales.

(x) (a) RTGS: Real Time Gross Settlement.
(b) NEFT: National Electronic Funds Transfer.

Part – II (60 Marks)
Answer any five questions.

Question 2.
(a) Explain any three barriers to communication. [3]
(b) Explain any four features of Business Environment. [4]
(c) Discuss the need for the principles of management. [5]
(a) Three barriers to Communication are :
Semantic Barriers : These are related with the problems in the process of encoding and decoding of message into words or impressions. People interpret words and symbols in terms of their own experience and thinking. It includes faulty translations, technical jargon, unclarified assumptions etc.

Organisational Barriers : These arc related to organisation’s structure, authority, relationships, rules and regulations etc. Due to long lines of communication, flow of information gets delayed and distorted. Every layer of authority cuts off a bit of information, particularly in upward communication.

Personal Barriers: Personal factors like judgement, emotions and social values create a psychological distance between the sender and the receiver. When there is lack of mutual trust and confidence between sender and receiver of the message, communication is not effective.

(b) Business environment can be defined as the sum total of external factors that influence the functioning of a business enterprise. The main features of Business Environment arc given below:
Specific and general forces: Business environment is made up of both specific and general forces. General forces such as economic, social, political, legal conditions indirectly influence the business operations. Whereas specific forces refers to customers, competitors, investors etc. which have a direct effect on the day-to-day working of the business.

Dynamic nature: Business environment is dynamic in nature i.e., it keeps on changing. Entry of new competitors in the market, development of new technology , shifts in the preferences of consumers are examples of environmental changes.

Complexity: Business environment is complex because it consists of several interrelated elements which keeps on changing. Many forces constitutes the business environment. For example, it is difficult to know the impact of economic, social, political, technological and other forces on changes in demand for a product or service.

Uncertainty : Business environment is very uncertain as one cannot predict future events particularly changes in technology and fashion which occur fast and frequently. Its dynamic nature makes it more challenging to handle uncertainty.

(c) Principles of management are required for the following reasons :
Providing managers with useful sights into reality : With the help of principles of management, the organisation will increase the managerial efficiency by adding to their knowledge and ability to understand the various situations. These principles enables managers to solve problems in a methodical way without wasting time and effort in trial and error. It also help to improve the art of management by suggesting how things should be done to get good results.

To train managers : Principles of management provide a conceptual framework for scientific and systematic training and development of managers. It is central point of management theory . Formal methods of training managers in institutes and univ ersities are possible only when there are fundamental principles and concepts.

To evaluate managerial behaviour: Principles are help to prescribe what one should do to manage things in a given situation. These principles attempt to evaluate the behaviour of managers.

To fulfill the social goals : Management principles enable managers to make optimum use of human and material resources. The principles of management and management theory have been devised in such a way that they help in fulfilling these responsibilities. Managers coordinate efforts of the people so that individual objectives get translated into social attainments.

To improve research : Growing popularity and utility of management principles have attracted experts towards their study and analysis. It also help the managers in taking decisions based on the objective assessment of the situation, free of any bias and prejudice. It will helped in expanding the horizon of knowledge in management.

Question 3. .
(a) Discuss three advantages of ploughing hack of profit, from the company’s point of view. [3]
(b) Explain why management is considered to be a science. [4]
(c) What is labeling ? Explain four advantages of labeling. [5]
(a) Ploughing back of profits refers to the process of retaining a part of the net profit year after year and reinvesting the same in business. There are some advantages of ploughing back of profits are :
(i) The company can undertake its plans for expansion, growth and modernization without bothering about conditions in the capital market.
(ii) Ploughing back of profits add to the financial strength and creditworthiness of the company.
(iii) Reserves created by ploughing back of profits can be used to stabilize the rate of dividend on equity shares.

(b) Management is considered to be science because :
Systematic Body of Knowledge : Management is a systematized body of knowledge based on cause and effect relationship e.g., genetic principle derived by Darwin. Like all other organized activity, management has its own vocabulary of terms through which managers communicate with each other.

Observations and Experiments: The principles of management have also been developed over a period of time, on the basis of experimentation and observation. Management experts and practitioners have developed the knowledge after careful analysis, inquiry and experience. Management deals with human beings and human behavior which cannot be scientifically predicted.

Cause and Effect Relationship : Management Principles builds the cause and effect relationship between various factors. For example, dual subordination leads to confusion.

Universal Validity of Principles : The principles of science are universally applicable i.e.. these principles hold tme under each and every situation. These principles have universal validity. These principles have to be modified according to the situation.

(c) La belling refers to designing the label and putting it on the package. A label is a small slip placed on the product to denote its nature, contents, ownership, destination etc. It is a medium through which the manufacturer gives necessary information to the user or consumer.
Various advantages of labeling are:

  • A carefully designed label helps in attracting the customers and induces them to purchase the product.
  • It avoids price variations by publishing the price on the label.
  • It helps in identifying the product from among various products available in the market.
  • It is a guarantee for the standard of the product. Hence, it raises the prestige of the product and of the manufacturer.
  • It is social service to customers, who very often do not know anything about the product’s characteristics features.

Question 4.
(a) Give three points of difference between a product and a service. [3]
(b) What are the different types of short term financial assistance provided by the commercial banks to business houses ? [4[
(c) Explain any five types of debentures through which a company can collect borrowed capital from the public. [5]
(a) Difference between a product and a service :

BasisA ProductA Service
(a) StorageA product is durable and can be stored.There is simultaneous production and consumption of services.
(b)Time LagProducts can be brought in advance of need.Services cannot be brought in advance of need.
(c) TangibilityIt can be seen, touched and felt.Services cannot be seen and touched.

(b) There are different types of short term financial assistance provided by the commercial banks to business houses :
Cash Credits: It is revolving credit agreement under which a borrower is allowed to borrow upto a certain limit. Cash credit is of two types : Clean Cash Credit and Secured Cash Credit. In both types of cash credit, the borrower has to pay interest only on the amount actually utilized.

Discounting of Bills: Commercial banks provide short term finance to business concerns by discounting their bills of exchange, promissory notes and hundies. Banks pay the price lower than the face value and charge some commission.

Loan and Advances: A loan is a direct advance made in lump sum which is credited to a separate loan account in the name of the borrow er. These are usually secured by pledge of specific assets which are in the actual or constructive possession of the bank.

Bank Overdrafts: Under this arrangement, a customer having a current account with the bank is allowed to overdraw his account uto a specified amount. Interest is charged on the amount actually overdrawn and not on the amount sanctioned by the bank.

(c) Five types of debentures are :
Mortgage and Unsecured Debentures : Mortgage debentures are those debentures which are secured by either a fixed charge or a floating charge on the assets of the company. In case, the company makes a default in payment, the debentureholders can recover their dues from the mortgage property. Whereas unsecured debentures are those debentures which are not secured by a charge.

Redeemable and Irredeemable Debentures: Redeemable debentures are repayable on a predetermined date or at any time prior to their maturity at the option of the company. Irredeemable debentures are those debentures that are not repayable during the lifetime of the company and hence will be repaid only when the company is wound up.

Bearer Debentures : Bearer debentures can be transferred by mere delivery as no record of such debentures is kept in the Register of Debentureholders. Payment of interest is made on production of coupons attached to the debenture. No legal formalities are required for their transfer and no formal notice or intimation to the company is necessary.

Registered Debentures : These arc the debentures, in respect of which the names, addresses and particulars of holdings of the debentureholders are entered in a register kept by the company. Such debentures can be transferred only by transfer deed or intimation to the company and not mere delivery.

(v) Convertible and Non-Convertible Debentures: In case of convertible debentures, the debentureholders arc given the option to convert their debentures into equity shares after a specified period. Debentureholder have an option of exchanging the whole or a part of amount of their debentures for shares. In case of non-convertible debentures, these are those debentures which do not earn the right to be converted into equity shares.

Question 5.
(a) Explain the need for consumer protection. [3]
(b) ‘Planning is not a guarantee of success.’ In this context, explain the limitations of Planning. [4]
(c) Explain the following principles of management, as advocated by Henry Fayol: [5]
(i) Stability of tenure
(ii) Discipline
(iii) Unity of command
(iv) Unit}’of Direction
(v) Order
(a) Consumer protection is necessary due to following reasons :
Consumer is the purpose of business : Customer is the foundation of business and keeps it in existence. It is a consumer who not only relates to repeat sale but also provide positive feedback to other customers and thus results in an increased consumer base for business.

Business uses society’s resources : Business exercises considerable power and influence over society . It is the duty of the business to use the resources in such a way that the interests of society in general and consumers in particular are not damaged. Consumer’s protection aims at satisfying them and thus protect the long term interests of the business itself.

Ethics : Leading business houses all over the world have been founded on ethical values and they have followed high standards of ethics. To take care of consumer’s interests and to avoid any form of their exploitation is the moral duty of every business. Therefore, consumer protection is the ethical obligation of business.

(b) “Planning is not a guarantee of success.” It suffers from various limitations :
Planning may not work in dynamic environment: The environment in which a business exists is very dynamic. Changes in technology, changes in government policies, legislative enactments, industrial unrest in the country etc. are important external limitation of planning. Thus, it becomes very difficult to forecast the future when the economic policies of the gov ernment keeps on changing continuously.

Time-Consuming : Considerable time is required for collection, analysis and interpretation of information for planning. Sometimes, a lot of time is taken in formulating the plans, as a result of which very less time is left to implement these plans. Planning is not practicable during emergencies and crisis w hen on the spot decisions are necessary.

Rigidity : In an organisation, a well defined plan is drawn to achieve some specified goals within a specified period of time. Employees become more concerned with observing the programmes and procedures rather than achieving the goals. They have to strictly adhere to the formulated plans irrespectiv e of changes in the environment. Therefore, rigidity in plans may create difficulty in an organisation.

Costly Process : Planning is an expensiv e process. The cost is in terms of money, time and effort. Moreover, sometimes the cost incurred in formulating plans turn out to be higher than the benefits actually received from these plans. Management must exercise intelligent judgement to balance the expenses of preparing plans against the benefits derived from them.

(c) Stability of Tenure: According to Fayol. “Employee turnover should be minimized to maintain organisational efficiency”. Stability of tenure helps to develop loyalty and attachment on the part of employees. If an employee receives transfer order by the time he learns and gets settled in a job it will be leading to wastage of resources.

Discipline : Discipline implies obedience, respect of authority and observance of the established rules and regulations. To achieve proper discipline, skilled superiors at all levels, clear and fair agreements and judicious application of penalities etc. are required.

Unity of Command : According to this principle, an individual employee should have only one superior from whom he should receive orders and to whom he should be responsible. If a subordinate has more than one boss, dual command will undermine authority’, weaken discipline, divide loyalty and create confusion, delays etc.

Unity of Direction : According to this principle, activities having the common goal must have one head and one plan. Each group of activities with the same objective must have one plan of action and must be under the control of one superior.

Order: According to Fayol. “People and material must be in suitable places at appropriate time for maximum efficiency “.

The order can be of two types :

  1. Material Order: It implies a proper place for everything and everything in its right place.
  2. Social Order: Arrangement of people is referred to as social order.

Question 6.
(a) Explain any three types of training that can be given to an employee. [3]
(b) What is Branding ? Give any three advantages of branding to the marketers. [4]
(c) Explain the various steps involved in the process of organizing. [5]
(a) Types of training are :
Films : It helps to provide information and demonstrate skills that cannot be easily presented in lectures. Films in conjunction with conference can be a very effective method.

Vestibule Training: Employees learn their jobs on the equipment’s which they will be using while doing the actual job. This method is costly and it is used in case of sophisticated machinery and equipment.

Lectures : This method is used to convey specific information, rules and procedures. Audio-visuals are used to make lectures more interesting.

(b) Branding is the process of assigning a distinctive name or symbol to a product by which it is to be known and remembered. Branding enables a marketer to distinguish its products from its competitors’ products.
Advantages of branding are:

Product Identification : Branding helps customers in identifying the product. When a customer is satisfied with a particular brand of a product, he repeatedly purchases it. For example, a customer who is satisfied with Lux’ toilet soap need not inspect it every time he buys the product.

Product Differentiation : Branding enables a marketer to distinguish its product from its competitors’ products. This will help the firm to secure and control the market for its product.

Differential Pricing: Branding enables a firm to charge a different price for its product than that charged by its competitors. This is because when the customer becomes habitual or used to any particular brand of a product, they don’t mind paying higher price for it.

(c) The various steps involved in organizing process which are given below :
Division of Work: The first step in organizing is to divide the total work to be done into specific jobs. Division of work facilitates specialization in work and skills which is essential, as no individual can perform the entire work efficiently and effectively. While dividing work, care should be exercised to ensure that all the activities required to achieve organisational goals are identified.

(ii) Grouping Jobs or Activities : The process of grouping the activities of similar nature under same departments is called departmentalization. Work divided into jobs is combined to facilitate unify of effort. The departments so created are linked together on the basis of their interdependence. Following are the various ways of departmentalization:

  • On the basis of functions.
  • On the basis of type of products manufactured.
  • On the basis of territory.

Assigning Duties : Each group of activities is assigned to an individual best suited to perform it. In order to ensure effective performance in an organisation, it is essential that a balance is created between the nature of a job and ability of the employee responsible for that job.

Delegation of Authority: After assignment of duties, appropriate authority is delegated to each individual. A chain of command from the top manager to the individual at the lowest level is created through delegation of authority .

Establishing Reporting Relationships : It creates hierarchy management in which top management enjoys maximum authority and as one moves downward, the authority’ decreases. It establishing reporting relationship facilitates coordination amongst various departments. Interrelationships between different positions are clearly defined so that everybody knows from whom he is to take orders and to whom he can issue orders.

Question 7.
(a) Explain any three disadvantages of borrowing funds from specialized financial institutions. [3]
(b) Briefly explain any four types of working capital required by a business concern. [4]
(c) Explain Maslow’s theory. [5]
(a) The three disadvantages of borrowing funds from specialized financial institutions are :

  • Certain restrictions such as restriction on dividend payment are imposed on the powers of the borrowing company by the financial institutions.
  • The concern requiring finance from special financial institutions has to submit itself to a thorough investigation.
  • The high interest rates charged by the financial institutions which makes this form of finance very extravagant.

(b) Working capital means the capital invested in working assets or current assets such as cash, stock of goods, debtors and short term investments etc. The various types of working capital are:
Permanent Working Capital: It refers to the minimum amount of working capital required permanently to operate the minimum level of business activity. It determine the financing requirement in the case of fixed assets is simply the cost of the asset. It is of two types: Initial and Regular working capital.

Variable Working Capital : It is the difference between net working capital and permanent working capital. The amount of temporary’ working capital depends upon the extent of extra demand in season. It is of two types : seasonal and special working capital.

Gross Working Capital : Gross working capital refers to the total amount of funds invested in the current assets.
Gross Working Capital = Book value of current assets

Net Working Capital : Net working capital means the excess of current assets over current liabilities. Current assets include cash at bank, sundry’ debtors, cash in hand, bills receivable etc. Current liabilities include bills payable, sundry creditors, short term loans etc.
Net Working Capital = Current assets – Current liabilities

(c) Maslow Theory: Abraham H. Maslow, an American psychologist has developed a classification of human needs which is known as ‘Hierarchy of Needs’. Needs are those desires, wants or urges of individuals which influence their behavior.
Types of Needs:
Physiological Needs : These are the basic needs which a person is required to satisfy first of all in order to survive in life. These include the need for air. water, food, sleep, sex etc. As these needs are concerned with the sheer survival, they are at the base in the hierarchy of needs. An organisation can satisfy the physiological needs of its employees by offering good salary and comfortable working conditions.

Safety and Security Needs : These needs arise after the satisfaction of physiological needs. These includes physical safety against danger and economic security against old age, sickness etc. An employer can satisfy safety needs of his employees by offering job security, pension, gratuity, housing etc.

Social and Affiliation Needs : These are related to the natural desire to socialise or interact with others. The person needs love, affection, a sense of belonging, association, friendship with others. Once the people get their physiological and safety needs satisfied, the affiliation needs become more active.

Ego Needs : Ego needs include factors like self respect, autonomy status, recognition and attention from others. Organisation can satisfy these needs by offering challenging jobs, recognizing good performance, providing good job titles etc.

Self Actualization Needs : Self actualization needs refers to need to grow and self fulfillment. These needs arise after the satisfaction of all previous needs i.e., physiological, safety, social, ego needs. For example, A manager may provide opportunities for continuous learning, encourage creativity, grant independence and allow risk taking to help employees satisfy their self actualization needs.

Question 8.
(a) Discuss the features of good packaging. [3]
(b) Explain the advantages of equity shares, as a source of finance. [4]
(c) Discuss any five functions of marketing. [5]
(a) Packaging plays a very significant role in the marketing success or failure of many product especially for non-durable consumer products. It implies placing products in suitable packages for delivery of the product to customer or for the purpose of storage and transport.
A good package should have following features :

  • It should be convenient to handle and use. It should be easy to open and close.
  • It should be safe and should be capable of protecting the product.
  • It lends individuality and prestige to the product.
  • A good package can grab attention, describe the product and induce customers to buy it.

(b) Advantages of equity shares are:

  • Equity shares impose no burden on the company resources because the dividend is payable only at the discretion of the management.
  • The liability of equity shareholders is limited to the face value of shares subscribed by them.
  • A company with substantial equity capital commands prestige in the investment market.
  • Equity shareholders have the pre-emptive right to subscribe to new shares issued by company.
  • The face value of an equity share is generally low.
  • The value of investment in equity shares may increase manifold during boom and prosperity of the company-holders of these shares earn capital gains.
  • Equity shares do not create any charge on the assets of the company.
  • Shareholders are not required to pay income tax on dividends received from the company.

(c) According to Philip Kotler, “Marketing is a social process by which individual groups obtain what the} need and want through creating offerings and freely exchanging products and sen ices of value with others”.

The various functions of marketing are given below :
Marketing Planning and Product Development: It involves making plans for increasing production and sales, .promotion of product etc. and also laying down a course of action for achieving these objectives. It relates to the decision of quality standards to be used for shape or design of the product, packing etc. in order to make product attractive. Product planning and development involves introduction and development of new products, improvement of the existing product and dropping out unprofitable items from the product line.

Standardization and Grading: Standardization is the general term which includes the establishment of standards for products, the inspection of products in order to determine the standard to which they conform and where necessary the sorting of products into lots conforming to established standards. Grading refers to a process of classifying products into different groups on the basis of their features like size, shape, quality etc. This assures the quality, price and packaging of product to the customers.

Storage or Warehousing: Storage refers to the holding and preservation of goods from . the time of production until the time of consumption. There is a need for storage of adequate stock of goods to meet the demand in case of contingencies and to avoid unnecessary delays in delivery. Warehousing is essential for commodities like wheat, sugar, rice etc. which are produced during the particular seasons but demanded throughout the year.

Transportation : It means physical movement of goods from the place of production to the place of consumption. It serves as a link between the producers and consumers who are located at different places. A business firm analyses its transportation needs on the basis of factors like nature of the product, cost, location of the target market etc. It also removes the barrier of distance and help to stabilize prices by matching supply with demand.

Pricing: The amount of money which a customer is required to pay for purchasing the product is known as product price. It is important function in marketing because it determines the sales volumes and the amount of profits. Thus, while determining the price for a product, various factors like type of customers, their income, product demand etc. should be considered.

Question 9.
Write short notes on the following :
(a) Meaning and Elements of Product Mix.
(b) Core banking solutions.
(c) Coordination, as the essence of management.
(a) Product mix refers to the total number of products and items that a business firm offers to the market. It involves decisions concerning the quality; size, range, page. brand name, label, services. It also involves planning, developing and producing the right type of products and sendees to be marketed by the organisation. It includes :
Branding : Branding is the process of assigning a distinctive name or symbol to a product by which it is to be known and remembered.

Packaging: Packaging refers to covering, wrapping, crating, filling or compressing of goods to protect them from spoilage, breakage, leakage etc.

Labelling: Labelling refers to designing the label and putting it on the package. A label is a small slip placed on the product to denote its nature, contents, ownership, destination etc.

(b) Core Banking Solutions: Cofe banking is a banking service provided by a group of networked bank branches where customers may access their bank account and perform basic transactions from any of the member branch offices. Under this system, a customer becomes Customer of the bank’ rather than customer of a branch. Core banking functions will include transaction accounts, loans, mortgages and payments. Basically, it is the software applications for recording transactions, storing customer information, calculating interest and completing the process of passing entries in a single database. The basic goals of core banking are providing greater customer convenience and cutting down on operational expenses. CBS also known as ‘Centralized Banking Solutions’.

It provides following facilities :

  • Updating of passbook at all CBS branches.
  • Transfer of funds between the accounts in CBS.
  • Customer may access their bank account from any of the branch offices.

(c) Coordination is not a separate function but very essence of management. According to George Terry, “Coordination deals with the task of binding efforts in order to ensure successful attainment of an objective. It is accomplishment by means of planning, organizing, staffing, directing and controlling”. It is an integral part of all the functions of management and not a separate function.
Planning requires coordination for:

  • purpose and resources at hand.
  • master plan of the enterprise and the plans of different divisions.

Organizing requires coordination so that:

  • the whole work is systematically allocated and divided into different parts.
  • establishing working relationship and clearly defines the lines of communication.
  • promotes growth and diversification of an enterprise.
  • leads to specialization which brings effectiveness in administration.

Staffing requires coordination for:

  • matching the skills of workers with the jobs that should be assigned to them.
  • ensures continuous growth and expansion of the business.
  • improves job satisfaction and morale of employees.

Directing requires coordination :

  • to ensures integration of employees’ efforts towards attainment of organisational goals.
  • helps in initiating actions of people towards achieving organisational goals.
  • To cope up with the changes in the business environment, directing function guides, initiates and motivates employees.

Controlling requires coordination for:

  • proper balance between standards to be achieved and standard that have actually been achieved i.e., planned standards and actual performance.
  • to cope with complexities arising out of expansion and diversification of business activities.

ISC Class 12 Commerce Previous Year Question Papers

ISC Commerce Question Paper 2019 Solved for Class 12

ISC Commerce Previous Year Question Paper 2019 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.

Part – I (20 Marks)
Answer all questions.

Question 1. [10 × 2]
Answer briefly each of the questions (i) to (x) :
(i) What is meant by the term Business Environment ?
(ii) State any four short-term sources of finance for a Joint Stock Company.
(iii) Mention any two advantages of e-Banking to the customers.
(iv) Differentiate between Fixed Capital and Working Capital.
(v) “Management is universal’. Comment.
(vi) State any two points of difference between recruitment and selection.
(vii) Explain feedback as a part of the process of communication.
(viii) Mention any two facilitating functions of marketing.
(ix) Name two types of markets on the basis of nature of transactions.
(x) Mr. Kappa has recently purchased a refrigerator from TUTU Enterprises, paying ₹ 30.000 After using it for a day or two, he found mechanical defects in the refrigerator. Immediately, he informed the dealer about the defect but there was no response from the dealer. Mr. Kappa decided to lodge a complaint against TUTU Enterprises.
(a) Which court should Mr. Kappa approach to file a complaint ?
(b) State any one relief the concerned court may order in favour of Mr. Kappa.
(i) The business environment is a mixture of complex, dynamic and uncontrollable external factors within which a business is to be operated.

(ii) Short term sources for a Joint Stock company are :

  • Public Deposits
  • Trade Credits
  • Customer Advances
  • Factoring

(iii) e-Banking services have the following advantages :

  • Customer can do transactions 24 × 7 basis.
  • e-Banking transactions are online and almost instantaneous.
  • Customer can do transactions from anywhere: from his home or workplace using a computer or laptop or mobile, he has no need to visit his bank branch.


Fixed CapitalWorking Capital
1. Fixed capital means the investments done by the business for acquiring long term benefits.1. Working capital means the funds required for day to day operations of the business.
2. It is used to acquire non-current assets of the business.2. It is used to acquire current assets of the business.
3. This capital cannot be converted into cash immediately.3. This capital can be converted into cash immediately.

(v) Management is universal in the sense that it is a common and essential element in all enterprises. Management is universal in the following sense :

  • First, managerial skills are transferable from one person to another.
  • Secondly, management skills can be transferred from one organization to another.
  • Thirdly, managerial skills can be imported and exported from one country to another.


1. Recruitment is an activity of searching candidates and encouraging them apply for it.1. Selection refers to the process of selecting the best candidates and offering them job.
2. Inviting more and more candidates to apply for the vacant post.2. Picking up the most suitable candidate and rejecting the rest.

(vii) The observation of the receiver ‘s response is called feedback. It enables the sender to evaluate the effectiveness of the message. Without feedback, two way communications is either ineffective or incomplete. Feedback is the only way to gain receiver’s response and depending on the feedback, sender can take further steps.

(viii) Facilitating functions of marketing are :

  • Standardization and grading
  • Financing
  • Risk taking

(ix) Types of markets on the basis of transactions are :

  • Spot markets
  • Future markets

(x) (i) District Consumer Forum
(ii) Replacement of product

Part – II (60 Marks)
Answer any five questions

Question 2.
(a) Explain three important characteristics of Management. [3]
(h) Briefly explain any four external factors of Micro environment of business. [4]
(c) What is meant by barriers to communication ? Explain three suitable measures the barriers to effective communication. [5]
(a) Management is goal oriented process : Management always aims at achieving the organizational objectives. The functions and activities of manager lead to the achievement of organizational objectives.

Management is Pervasive : Management is a universal phenomenon. The use of management is not only restricted to business firms only but also it is applicable in profit¬making, non-profit-making, business or non-business organizations: even a hospital, school, club and house has to be managed properly.

Management is a continuous process : Management is a continuous process. All the functions of management are performed continuously, for example, planning organizing; staffing, directing and controlling are performed by all the managers all the time.

(b) Four external factors of micro environment of a business are :

  • Suppliers : Without a supplier, it is not possible to carry on the business.
  • Customers : Customers are another basic requirement to run a business. If no one is buying the products of your business, you will have to close its doors.
  • Marketing Intermediaries: Middlemen have a direct impact on your business operation. They could be your distributors, wholesalers and other related people.
  • Financiers : Typically, business owners take out a loan to get started and the growth of the business depends upon their ability to obtain additional loans.

(c) There may be many barriers in the process of communication. The intended communication is often disturbed and distorted leading to a condition of misunderstanding and failure of communication. The barriers to effective communication could be of many types like linguistic. psychological, emotional, physical and cultural etc.

Measures to overcome the barriers to effective communication :
Use of Simple Language : Use of simple and clear words should be emphasized. Use of ambiguous words and jargons should be avoided.

Reduction and elimination of noise levels : Noise is the main communication barrier which must be overcome on priority basis. It is essential to identify the source of noise and then eliminate that source.

Active Listening: Listen attentively and carefully. There is a difference between listening and hearing. Active listening means hearing with proper understanding of the message that is heard. By asking questions the speaker can ensure whether his/her message is understood or not by the receiver in the same terms as intended by the speaker.

Question 3.
(a) Give three differences between Shares and Debentures. [3]
(b) What is meant by supervision ? Explain three functions of a Supervisor. [4]
(c) Explain the importance of Delegation of Authority. [5]

1. The shares are owned funds of the company.1. The debentures are borrowed funds of the company.
2. Shares represent capital of the company.2. Debentures represent debt of the company.
3. The holder of shares is known as shareholder.3. The holder of debentures is known as debenture holder.
4. Shareholders get the dividend.4. Debenture holders get the interest.

(b) Supervision is defined as guiding the activities of people w’m perform the work. It includes planning, organizing, directing and controlling the work and the activities of subordinates or employees.

Functions of a supervisor :
Planning and Organizing: Basic role of a supervisor is to plan the daily work schedule of the workers by guiding them the nature of their work and also dividing the work amongst the workers according to their interests, aptitudes, skills and interests.

Leadership and Guidance : A supervisor is the leader of workers working under him. He leads the workers and influences them to work their best. He also guides the workers by fixing production targets and by providing them instructions and guidelines to achieve those targets.

Motivation : A supervisor plays an important role by providing different incentives to workers to perform better. There are different inonetan and non-monetan incentives which can inspire the workers to work better and produce better.

(c) Delegation of authority means division of authority and powers downwards to the subordinate. Delegation is about entrusting someone else to do parts of your job. Delegation of authority can be defined as subdiv ision and sub-allocation of powers to the subordinates in order to achieve effective results.

Effective management: A manager passes routine work to his subordinates. He is free to concentrate on other important matters. The main job of a manager is to get the work done effectively. By delegating the authorities and responsibilities managers can get the work done effectively and efficiently from the subordinates.

Employees’ Development: As a result of delegation employees get more opportunities to utilize their talents. It allows them to develop those skills which help them to perform complex task. Delegation helps in making better future managers by giving them chance to use their skills, gain experience of work related to higher job position.

Motivation of employees: When the manager is sharing his responsibilities and authority with the subordinates it motivates the subordinates as they develop the feeling of belongingness and trust which is shown to them by their superiors. Some employees can be motivated by such kind of non-financial incentives.

Facilitates organizational growth : When the managers are passing their responsibility and authority to the subordinates they keep in mind the qualification and capability of all the subordinates. This leads to division of work and specialization which is very important for organizational growth.

Question 4.
(a) Explain any three disadvantages of issuing equity shares, from the Company s point of view.
(b) What is meant bv NEFT ? Give any two features of NEFT. [4|
(c) Explain five factors that should be taken into consideration while determining the price of a product or service.
(a) 1. If only equity shares are issued, the company cannot take the advantage of trading on equity.

2. As equity’ capital cannot be redeemed, there is a danger of over capitalization.

3. Equity’ shareholders can put obstacles for management by manipulation and organizing themselves.

(b) NEFT stands for National Electronic Funds Transfer. This facility is provided by commercial banks to the persons requesting for sending funds from one branch of the bank to another branch of the same bank or different bank. The customer can transfer money from Rupee one to any limit at very’ nominal charges. These charges are much lesser than sending the funds through a draft.

(c) Cost of Production : Cost of production/service is the main component of price. No company can sell its product or sen ices at less than the cost of production. Before price fixation, it is necessary to compile data relating to the cost of production and keep that in mind.

Demand for Product: Intensiv e study of demand for product and sen ices in the market be undertaken before price fixation. If demand is relatively more than supply , higher price can be fixed.

Price of Competing Firms: It is necessary to take into consideration prices of the products of the competing firms before fixing the price. In case of cut-throat competition prices are required to be kept low.

Question 5.
(a) Explain any three objectives of Marketing. [ 3 ]
(b) What are Public Deposits ? Briefly explain any two merits of Public Deposits. [4 ]
(c) What is financial planning ? Explain three points of importance of financial planning for a business organisation. [ 5 ]Answer:
(a) Objectives of marketing are :
Creation of Demand : The first objective of marketing is to create demand through various means. An attempt is made to find out the preferences and tastes of the consumers. Goods and services are produced to satisfy the needs of the customers. Demand is also created by informing the customers the utility of various goods and serv ices.

Customer Satisfaction : The marketing manager must study the demands of customers before offering them any goods or services. Selling the goods or services is not that important as the satisfaction of the customers’ needs. Modern marketing is customer- oriented. It begins and ends with the customer.

Generation of profits : Marketing also targets at profits. If the firm is not earning profits, it will not be able to survive in the market. Moreover, profits are also needed for the growth and diversification of the firm.

(b) Public deposits refer to the unsecured deposits invited by companies from the public mainly to finance working capital needs. A company can invite public deposits for a period of six months to three years. Therefore, public deposits are primarily a source of short-term finance. However, the deposits can be renewed from time-to-time. Renewal facility enables companies to use public deposits as medium-term finance.

Merits of public deposits are :
Simplicity: Public deposits are a very convenient source of business finance. The company raising deposits has to simply give an advertisement and issue a receipt to each depositor

Economical: Interest paid on public deposits is lower than that paid on debentures and bank loans. Moreover, no underwriting commission, brokerage, etc. has to be paid. Interest paid on public deposits is tax deductible which reduces tax liability. Therefore, public deposits are a cheaper source of finance. .

(c) Financial planning helps you determine your short and long-term financial goals and create a
balanced plan to meet those goals.

Importance of financial planning :

  • Financial planning provides policies and procedures for the sound administration of the finance function.
  • Financial planning results in preparation of plans for the future. Thus, new projects could be undertaken smoothly.
  • Financial planning ensures required funds from various sources for the smooth conduct of business.

Question 6.
(a) Explain any three points of importance of Planning. [3]
(b) Discuss any four features of Objectives, as a type of a Plan. [4]
(c) Explain the various steps involved in the process of Controlling, as a function of Management. [5]
Answer :
(a) Importance of planning :
Increases efficiency: Planning makes optimum utilization of all available resources. It helps to reduce wastage of valuable resources and avoids their duplication. It aims to give the highest returns at the lowest possible cost. Therefore, it increases the overall efficiency.

Reduces business-related risks: There are many risks involved in a business. Planning helps to forecast these business-related risks. It also helps to take the necessary precautions to avoid these risks and prepare for future uncertainties in advance. Therefore, it reduces business risks.

Facilitates proper coordination : The plans of all departments of an organization are well coordinated with each other. Similarly, the short-term, medium-term and long-term plans of an organization are also coordinated with each other. Such proper coordination is possible only because of efficient planning.

(b) Objectives should be framed for a single activity in mind. They should be result oriented. Objectives should not be v ague and they should be quantitative and measurable. Objectives must be achievable. They should not be unrealistic.

(c) Establishment of standards: Standards are benchmarks. Through standards, we can compare output to standardization. It serves the purpose of being a threshold which has to be achieved or surpassed. The creation and the prior establishment of standards is the first step involved in the process of controlling. The standards are established in accordance to the plan that is developed for the entire organization.

Ascertainment of output : The second main step in controlling is the measurement of performance. Gauging deviations from the planned measures is easier for measurable standards of performance as they can be quantified in units, cost, money terms, etc. However, non- measurable standards of performance are difficult to locate.

Identification of deviations : After the actual output is determined, it is compared and contrasted to the established standards. This step is central to the entire process of controlling as the deviations from the plan is identified during this step. Deviations can be referred to all those factors present in the actual output that prove distinct and different from the established standard.

Question 7.
(a) Distinguish between advertising and sales promotion. [3]
(b) Explain any four rights available to a consumer under the Consumer Protection Act. 1986. [4]
(c) What is meant by promotion mix ‘? Briefly explain the elements of promotion mix. [5]

AdvertisingSales Promotion
Advertising is a technique of driving public attention towards a product or service. through paid network.The set of activities that spread a word about the product, brand or service is known as promotion.
Building brand image and boosting sales.Short term sales push.
Advertising is highly expensive.Cost effective.

(b) Rights of consumers are :
Right to Safety : The Consumer Protection Act 1986 defines this right as a protection against goods and services that are hazardous to life and property. This particularly applies to medicines, pharmaceuticals, foodstuffs and automobiles. The right requires all such products of critical nature to life and property to be carefully tested and validated before being marketed to the consumer.

Right to Information : This right mentions the need for consumers to be informed about the quality and quantity of goods being sold. They must be informed about the price of the product and have access to other information specific to the product that they wish to consume.

Right to Choose: The consumer must have the right to choose between different products at competitive prices. This av oids monopoly in the market.

Right to Seek Redressal : When a consumer feels exploited, he/she has the right to approach a consumer court to file a complaint. A consumer court is a forum that hears the complaint and provides justice to the party that has been hurt. Thus, if the consumer feels he/she has been exploited, they can approach the court using this right.

(c) Promotion mix refers to the composure of several promotional tools used by the business to create, maintain and increase the demand for goods and services.

Elements of promotion mix :
Personal selling : It is a part of the promotional mix which involv es a one to one communication between buyers and customers (either potential or already customers). As it is a one-to-one communication, it generates direct contact with prospects and customers. Even though it is considered to be one of the most expensive forms of promotion, it is also considered to be the most successful as a seller-buy er relationship can be created and developed.

Advertising: One of the key factors in the promotional mix. which contributes to brand building and also how the market perceives the company, is advertising. It is always a big part of the promotional mix because of the far and wide reach of advertising and the message that you can send to your existing and potential customers. Good adv ertising can build a solid brand for the company. On the other hand, bad advertising with a wrong message, can cause the brand or product to fail.

Direct marketing: While advertising targets a mass-audience, direct marketing targets prospects and customers. Social media marketing, Email marketing, Internet marketing are all types of direct marketing used by companies. They have become important in the promotional mix lately because people are using internet far more than they used to a decade back. Companies employ direct marketing in order to engage in one-way communication with their customers, about product announcements, special promotions order confirmations as well as customer inquiries.

Sales promotions : Sales promotions are one of the most common types of promotion used by companies. Their main purpose is to stimulate purchasing and sales. While it has the potential of increasing sales, it is also beneficial for informing prospects about new products on the market or just to recapture old or lost customers. Such examples include: coupons, product samples, etc.

Question 8.
(a) Explain three features of goods, as an element of Product Mix. [3]
(b) Discuss any four types of preference shares. [4]
(c) State and explain the principles of management as laid down by F. W. Taylor. [5]
(a) Features of Goods as an element of product mix

  • Goods are one of the elements of marketing mix or program.
  • Marketer can actualize its goals by producing, selling, improving and modifying the goods.
  • Goods include tangible and non-tangible features or benefits.
  • Goods are the medium to offer benefits and satisfaction to consumers.

(b) Types of preference shares :
Callable : The issuing company has the right to buy back these shares at a certain price on a certain date. Since the call option tends to cap the maximum price to which a preference share can appreciate (before the company buys it back), it tends to restrict stock price appreciation. Convertible : The owner of these preference shares has the option, but not the obligation, to convert the shares to a company’s common stock at some conversion ratio. This is a valuable feature w hen the market price of the common stock increases substantially, since the owners of preference shares can realize substantial gains by converting their shares.

Cumulative : If a company does not have the financial resources to pay a dividend to the owners of its preference shares, then it still has the payment liability’ and cannot pay dividends to its common shareholders for as long as that liability’ remains unpaid.

Non-cumulative : If a company does not pay a scheduled dividend, it does not have the obligation to pay the dividend at a later date. This clause is rarely used.

(c) Science, Not Rule of Thumb : In order to increase organizational efficiency, the Rule of Thumb’ method should be substituted by the methods developed through scientific analysis of work.

Rule of Thumb means decisions taken by manager as per their personal judgement’s. According to Taylor, even a small production activity can be scientifically planned. This will help in saving time as well as human energy. Decisions should be based on scientific enquiry with cause and effect relationships.

Harmony, Not Discord : Taylor emphasized that there should be complete harmony between the workers and the management since if there is any conflict between the two; it will not be beneficial either for the workers or the management Both the management and the workers should realize the importance of each other. In order to achieve this state, Taylor suggested complete mental revolution on the part of both management and workers.

It means that there should be complete change in the attitude and outlook of workers and management towards each other. It should always be kept in mind that prosperity for an employer cannot exist for a long time unless it is accompanied by the prosperity of the employees of that organization and vice versa.

Mental Revolution: The technique of Mental Revolution involves a change in the attitude of workers and management towards each other. Both should realize the importance of each other and should work with full cooperation. Management as well as the workers should aim to increase the profits of the organization.

Cooperation, Not Individualism : This principle is an extension of principle of “Harmony, not discord’ and lays stress on mutual cooperation between workers and the management. Cooperation, mutual confidence, sense of goodwill should prevail among both, managers as well as workers. The intention is to replace internal competition with cooperation.

Question 9.
Write short notes on the following :
(a) E.S.O.R [4]
(b) Features of Management as an art. [4]
(c) Channels of distribution [4]
(a) ESOP (Employee stock ownership plan) refers to an employee benefit plan which offers employees an ownership interest in the organization. Employee stock ownership plans arc issued as direct stock, profit-sharing plans or bonuses and the employer has the sole discretion in deciding who could avail of these options.

However, Employee stock ownership plans are just options that could be purchased at a specified price before the exercise date. There are defined rules and regulations laid out in the Companies Rules which employers need to follow for granting of Employee stock ownership plans to their employees.

(b) Art implies application of know ledge and skill to trying about desired results. An art may be defined as personalized application of general theoretical principles for achieving best possible results. Art has the following characters :

Practical Knowledge : Every art requires practical knowledge therefore learning of theory is not sufficient. It is very important to know practical application of theoretical principles.

Personal Skill: Although theoretical base may be same for every artist, but each one has his own sty le and approach towards his job. That is why the level of success and quality of performance differs from one person to another.

Similarly management as an art is also personalized. Every manager has his own way of managing things based on his knowledge, experience and personality that is why some managers are known as good managers.

Creativity: Every artist has an element of creativity in line. That is why he aims at producing something that has never existed before which requires combination of intelligence and imagination. Management is also creative in nature like any other art. It combines human and non-human resources in useful way so as to achieve desired results. It tries to produce sw eet music by combining chords in an efficient manner.

Perfection through practice : Practice makes a man perfect. Every artist becomes more and more proficient through constant practice. Similarly managers learn through an art of trial and error initially but application of management principles over the years makes them perfect in the job of managing.

Result-Oriented : Even art is result oriented as it seeks to achieve concrete results. In the same manner, management is also directed towards accomplishment of pre-determined goals. Managers use various resources like men. money, material, machinery’ and methods to promote growth of an organization.

(c) Direct Channels : When the producer or the manufacturer directly sells the goods to the customers without involving any middlemen, it is known as direct channel. It is the simplest and the shortest mode of distribution. Selling through Indian Post. Internet or door to door selling etc. are the examples of this channel.
Methods of Direct Channel are :

  • Door to door selling
  • Internet selling
  • Mail order selling
  • Company owned retail outlets
  • Telemarketing

Indirect Channels: When a manufacturer or a producer employs one or more middlemen to distribute goods, it is known as indirect channel.

Following are the main forms of indirect channels :
Manufacturer-Retailer-Consumer : This channel involves the use of one middleman i.e. retailer who in turn sells them to the ultimate customers. It is usually adopted for specialty goods. For example Tata sells its cars through company approved retailers.

Manufacturer-Wholesaler-Retailer-Customer : Under this channel, wholesaler and retailer act as a link between the manufacturer and the customer. This is the most commonly used channel for distributing goods like soap, rice, wheat, clothes etc.

Manufacturer-Agent-Wholesaler-Retailer-Consumer : This level comprises of three levels; middlemen (agent), wholesaler and the retailer. The manufacturers supply the goods to their agents w ho in turn supply them to wholesalers and retailers. This level is usually used when a manufacturer deals in limited products and even then wants to cover a wide market.

ISC Class 12 Commerce Previous Year Question Papers

ISC Biotechnology Question Paper 2010 Solved for Class 12

ISC Biotechnology Year Question Paper 2010 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.


Question 1.
(a) Mention any one significant difference between each of the following : [5]
(i) Aldoses and ketoses
(ii) Pluripotent and multipotent cell
(iii) Chemostat and turbidostat
(iv) Codon and anticodon
(v) Androgenesis and gynogenesis.

(b) Answer the following questions : [5]
(i) What are nonsense codons
(ii) What is a micro processor ?
(iii) What is the role of oligonucleotide primer during DNA replication
(iv) Name two unique bases found in the tRNA structure.
(v) Who is regarded as the father of tissue culture technique ?

(c) Write the full form of the following: [5]
(ii) VNTR
(iii) ARS
(iv) PEG
(v) ORF

(d) Explain briefly:
(i) Chargaff’s rule of equivalence
(ii) Database
(iii) Biolistic
(iv) Coenzyme
(v) Optical activity
(a) Difference between
(i) Aldose : Aldose has one aldehyde molecule and has a double carbon and oxygen bond.
Ketose : Ketose has one ketone molecule and has the unique double carbon to carbon bond. Ketose also has no optical properties, which is one way that is being developed to detect blood sugar concentration.

(ii) Pluripotent stem cells : These are true stem cells, with the potential to make any differentiated cell in the body.

Multipotent stem cells: These are true stem cells but can only differentiate into a limited number of types. For example, the bone marrow contains multipotent stem cells that give rise to all the cells of the blood but not to other types of cells.

(in) Chemostat :A type of cell culture; a component of medium is in a growth limiting concentration; fresh medium is added at regular intervals and equal volume of culture is withdrawn.

Thrbidostat : A type of suspension culture; when culture reaches a predetermined cell density, a volume of culture is replaced by fresh medium; works well at growth rates close to the maximum.

(iv) Codon is the triplet sequence in the messenger RNA (mRNA) transcript which specifies a corresponding amino acid (or a start or stop command).

Anticodon is the corresponding triplet sequence on the transfer RNA (tRNA) which brings in the specific amino acid to the ribosome dining translation. The anticodon is complementary to the codon, that is, if the codon is AUU, then the anticodon is UAA.

(v) Androgenesis is development of an embryo from a fertilised irradiated egg, involving only the male nucleus.

Gynogenesis is development of a fertilised egg through the action of the egg nucleus, without participation of the sperm nucleus.

(b) (i) Nonsense codons : The three codons, UAA (known as ochre), UAG (amber) and UGA (opal), that do not code for an amino acid but act as signals for the termination of protein synthesis are known as nonsense codons.

(ii) Microprocessor : A microprocessor or processor is the heart of the computer and it performs all the computational tasks, calculations and data processing etc. inside the computer. Microprocessor is the brain of the computer. In the computers, the most popular type of the processor is the Intel Pentium chip and the Pentium IV is the latest chip by Intel Corporation. The microprocessors can be classified based on the following features.

Instruction Set: It is the set of the instructions that the Microprocessor can execute.

Bandwidth : The number of bits processed by the processor in a single instruction.

Clock Speed : Clock speed is measured in the MHz and it determines that how many instructions a processor can processed.

(iii) Oligonucleotides : Oligonucleotides composed of oligodeoxyribonucleotides (DNA) are often used in the polymerase chain reaction (PCR), a procedure that can amplify almost any small piece of DNA. There, the oligonucleotide is referred to as a primer, allowing DNA polymerase to extend the oligonucleotide and replicate the complementary strand.

(iv) Two unique bases are :
1. dihydrouridine(DHU)
2. pseudouridine

(v) Gottlieb Haberiandt

(c) Full forms of the followings:
(i) National Bureau Of Plant Genetic Resources
(ii) Variable Number Tandem Repeat
(iii) Agricultural Research Service
(iv) Polyethylene Glycol
(v) Open Reading Frame

(d) (i) Chargaff’s rule of equivalence : Deoxyribonucleic Acid (DNA), the genetic material is made up of four types of organic nitrogenous bases : adenine (A), guanine (G), thymine (T) and cytosine (C). Of these, A and G are the purines and T and C are the pyrimidines. Chargaff gave the base pairing rule or the rule of base equivalence which states that only one purine can combine with one pyrimidine. That means A can combine with T and G with C. Two purines or two pyrimidines cannot combine with each other; if they do so, there will be a sudden change in the characteristic of an organism. This sudden change is called mutation.

(ii) Database : A database is an organized collection of data for one or more multiple uses. One way of classifying databases involves the type of content, for example: bibliographic, full-text, numeric and image.

Biological databases are libraries of life sciences information, collected from scientific experiments, published literature, high-throughput experiment technology, and computational analysis. They contain information from research areas including genomics, proteomics, metabolomics, microarray gene expression, and phylogenetics. Information contained in biological databases includes gene function, structure, localization (both cellular and chromosomal), clinical effects of mutations as well as similarities of biological sequences and structures.

(iii) Biolistic : The particle gene gun is part of a method called the biolistic (also known as bioballistic) method, and under certain conditions, DNA (or RNA) become “sticky,” adhering to biologically inert particles such as metal atoms (usually tungsten or gold). By accelerating this DNA-particle complex in a partial vacuum and placing the target tissue (cells/nuclei) within the acceleration path, DNA is effectively introduced for genetic recombination.

(iv) Coenzyme : A non-proteinaceous organic substance that usually contains a vitamin or mineral and combines with a specific protein, the apoenzyme, to form an active enzyme system.

(v) Optical activity : The ability of some compounds to rotate the plane of polarized light because of the asymmetry of the molecule. If the plane of light is rotated to the right, the substance is dextrorotatory and is designated by the prefix (+); if laevorotatory (rotated to the left), the prefix is (-). A mixture of the two forms is optically inactive and is termed racemic.

(Answer any five Questions)

Question 2.
(a) What are lipids ? Explain the following properties of lipids: [4]
(i) Amphipathic nature
(ii) Saponification
(iii) Hydrogenation
(b) Mention the chief characteristics of embryonic stem cells. Give any two uses of such cells. [4]
(c) Write the names of any four important centres for biotechnology in India. [2]
(a) Lipids: Lipids are a broad group of naturally-occurring molecules which includes fats, waxes, sterols, fat-soluble vitamins (such as vitamins A, D, E and K), monoglycerides, diglycerides, phospholipids, and others. The main biological functions of lipids include energy storage, as structural components of cell membranes, and as important signaling molecules. Lipids are largely hydrocarbon like, and therefore do not dissolve in water but in non-polar solvents like diethyl ether and benzene.

Properties :
Amphipathic nature : Most membrane lipids are amphipathic, having a non-polar end and a polar end. The amphiphilic nature of some lipids allows them to form structures such as vesicles, liposomes, or membranes in an aqueous environment.

Saponification : The hydrolysis of triacylglycerol in the presence of sufficient sodium hydroxide is called saponification. The fatty acids are released as sodium salts and the mixture of these salts of long-chain fatty acids is soap.

Hydrogenation : Vegetable oils (liquids) are generally less expensive to produce than animal fats (solids). Using hydrogenation, chemists can break some of the carbon-carbon double bonds and replace them with hydrogen to make them chemically identical to the triacylglycerols in animal fats. Breaking one of the three double bonds in the molecule above can make the product melt above room temperature.

(b) Embryonic stem cells : are derived from embryos. Most embryonic stem cells are derived from embryos that develop from eggs that have been fertilized in vitro. The embryos from which human embryonic stem cells are derived are typically four or five days old and are a hollow microscopic ball of cells called the blastocyst. The blastocyst includes three structures: the trophoblast, which is the layer of cells that surrounds the blastocoel, a hollow cavity inside the blastocyst; and the inner cell mass, which is a group of cells at one end of the blastocoel that develop into the embry o proper.

Chief characteristics of stem cells : Embry onic stem cells differ from other kinds of cells in the body. Embryonic stem cells have three general properties:

  1. they are capable of dividing and renewing themselves for long periods;
  2. they are unspecialized; and
  3. they can give rise to specialized cell types.

Embryonic stem cells are capable of dividing and renewing themselves for long periods. Unlike muscle cells, blood cells, or nerve cells-which do not normally replicate themselves- Embiyonic stem cells may replicate many times, or proliferate. Embryonic stem cells are unspecialized. One of the fundamental properties of a stem cell is that it does not have any tissue-specific structures that allow it to perform specialized functions. For example, a stem cell cannot work with its neighbors to pump blood through the body (like a heart muscle cell), and it cannot carry oxygen molecules through the bloodstream (like a red blood cell). Embryonic stem cells, can give rise to specialized cells, including heart muscle cells, blood cells, or nerve cells.

Uses of Embryonic stem cells: Studies of human embryonic stem cells will yield information about the complex events that occur during human development. A primary goal of this work is to identify how undifferentiated stem cells become the differentiated cells that form the tissues and organs.

Embryonic stem cells could also be used to test new drugs. For example, new medications could be tested for safety on differentiated cells generated from human pluripotent cell lines. Perhaps the most important potential application of human embryonic stem cells is the generation of cells and tissues that could be used for cell-based therapies.

(c) Important centres for Biotechnology in India :

  • Department of Biotechnology (DBT)
  • Center for Cellular & Molecular Biology (CCMB)
  • Center for Biochemical Technology (CBT)
  • National Institute of Immunology (Nil)

Question 3.
(a) How is DNA sequencing performed using Sangar’s dideoxy technique ? Give one limitation of this technique. [4]
(b) Write short notes on : [4]
(i) Shuttle vector
(ii) YAC
(iii) PCR
(iv) Electroporation
(c) Name any two industrial enzymes and give their uses. [2]
(a) DNA sequencing: is the determination of the precise sequence of nucleotides in a sample of DNA.

Sanger dideoxy method : The most popular method for DNA sequencing is called the dideoxy method or Sanger method (named after its inventor, Frederick Sanger, who was awarded the 1980 Nobel prize in chemistry).

The Procedure : The DNA to be sequenced is prepared as a single strand.
This template DNA is supplied with

a mixture of all four normal (deoxy) nucleotides in ample quantities

  • dATP
  • dGTP
  • dCTP
  • dTTP

a mixture of all four dideoxynucleotides, each present in limiting quantities and each labeled with a ” tag

  • that fluoresces a different color:
  • ddATP
  • ddGTP
  • ddcTP
  • ddTTP

DNA polymerase I

Because all four normal nucleotides are present, chain elongation proceeds normally until, by chance, DNA polymerase inserts a dideoxy nucleotide (shown as colored letters) instead of the normal deoxynucleotide (shown as vertical lines). If the ratio of normal nucleotide to the dideoxy versions is high enough, some DNA strands will succeed in adding several hundred nucleotides before insertion of the dideoxy version halts the process.

At the end of the incubation period, the fragments are separated by length from longest to shortest. The resolution is so good that a difference of one nucleotide is enough to separate that strand from the a different color when illuminated by a laser beam and an automatic scanner provides a next shorter and next longer strand. Each of the four dideoxynucleotides fluoresces
printout of the sequence.

Limitation : Limitations include non-specific binding of the primer to the DNA, affecting accurate read-out of the DNA sequence, and DNA secondary structures affecting the fidelity of the sequence.
ISC Biotechnology Question Paper 2010 Solved for Class 12 1
(b) Short notes :
Shuttle vector : A shuttle vector is a vector (usually a plasmid) constructed so that it can propagate in two different host species. Therefore, DNA inserted into a shuttle vector can be tested or manipulated in two different cell types. The main advantage of these vectors is they can be manipulated in E. coli and then used in a system which is more difficult or slower to use (e.g., yeast, other bacteria).Shuttle vectors include plasmids that can propagate in eukaryotes and prokaryotes (e.g., both Saccharomyces cerevisiae and Escherichia coli) or in different species of bacteria (e.g., both E. coli and Rhodococcus erythropolis). There are also adenovirus shuttle vectors, which can propagate in E. coli and mammals. Shuttle vectors are frequently used to quickly make multiple copies of the gene in E. coli (amplification). They can also used for in vitro experiments and modifications (e.g., mutagenesis, PCR).

YAC : A yeast artificial chromosome (short YAC) is a vector used to clone large DNA fragments (larger than 100 kb and up to 3000 kb). It is an artificially constructed chromosome and contains the telomeric, centromeric, and replication origin sequences needed for replication and preservation in yeast cells. Built using an initial circular plasmid, they are linearised by using restriction enzymes, and then DNA ligase can add a sequence or gene of interest within the linear molecule by the use of cohesive ends. They were first described in 1983 by Murray and Szostak.

PCR : Polymerase chain reaction (PCR) is a technique to amplify a single or few copies of a piece of DNA across several orders of magnitude, generating thousands to millions of copies of a particular DNA sequence. The method relies on thermal cycling, consisting of cycles of repeated heating and cooling of the reaction for DNA melting and enzymatic replication of the DNA. Primers (short DNA fragments) containing sequences complementary to the target region along with a DNA polymerase (after which the method is named) are key components to enable selective and repeated amplification. As PCR progresses, the DNA generated is itself used as a template for replication, setting in motion a chain reaction in which the DNA template is exponentially amplified. PCR can be extensively modified to perform a wide array of genetic manipulations.

Electroporation : Electroporation, or electropermeabilization, is a significant increase in the electrical conductivity and permeability of the cell plasma membrane caused by an externally applied electrical field. It is usually used in molecular biology as a way of introducing some substance into a cell, such as loading it with a molecular probe, a drug that can change the cell’s function, or a piece of coding DNA.

Electroporation is a dynamic phenomenon that depends on the local transmembrane voltage at each cell membrane point. It is generally accepted that for a given pulse duration and shape, a specific transmembrane voltage threshold exists for the manifestation of the electroporation phenomenon (from 0.5 V to 1 v). This leads to the definition of an electric field magnitude threshold for electroporation (Eth). That is, only the cells within areas where E Eth are electroporated. If a second threshold (Eth) is reached or surpassed, electroporation will compromise the viability of the cells, i.e.. irreversible electroporation.

(c) Two industrial enzymes with uses :
Amylases (from fungi and plants) : Production of sugars from starch, such as in making high-fructose com syrup.
Rennin (derived from the stomachs of young ruminant animals) : Manufacture of cheese, used to hydrolyze protein.

Question 4.
(a) Explain any one biochemical technique based on each of the following principles : [4]
(i) Sedimentation coefficient
(ii) Polarity
(b) What are the steps involved in the construction of an rDNA molecule for the purpose of gene cloning ? [4]
(c) How is distant hybridization technique useful in plant tissue culture ? [2]
(a) Biochemical techniques based on
(i) Sedimentation coefficient : The sedimentation coefficient s of a particle is used to characterize its behaviour in sedimentation processes, notably centrifugation. It is defined as the ratio of a particle’s sedimentation velocity to the acceleration that is applied to it (causing the sedimentation).

Sedimentation: In a sedimentation experiment, the applied force accelerates the particles to a terminal velocity vterm at which the applied force is exactly canceled by an opposing drag force. For small enough particles (low Reynolds number), the drag force varies linearly with the terminal velocity, i.e., Fdrag = fvterm (Stokes flow) where f depends only on the properties of the particle and the surrounding fluid. Similarly, the applied force generally varies linearly with some coupling constant (denoted here as q) that depends only on the properties of the particle, Fapp = qEapp Hence, it is generally possible to define a sedimentation coefficient Sdef = q/f that depends only on the properties of the particle and the surrounding fluid. Thus, measuring s can reveal underlying properties of the particle.

Rate zonal centrifugation : This is a type of density gradient centrifugation. The sample is applied in a thin zone at the top of the centrifuge tube. Under centrifugal force, the particles will sediment through the gradient in separate zones based on their sedimentation coefficient or‘S’value.

(ii) Technique used to separate biomolecules based on polarity :
Ion-exchange chromatography: It is defined as the reversible exchange of ions in solution with ions electrostatically bound to some sort of insoluble support medium. Separation is obtained since different molecules have different degree of interaction with the ion- exchanger due to difference in their charges, charge densities and distribution of charge on their surfaces. These interactions can be controlled by varying conditions such as ionic strength and PH.

An ion-exchanger consists of an insoluble matrix to which charged groups have been covalently bound. Ion exchange separations are carried out mainly in columns packed with an ion-exchanger. There are two types of ion-exchanger, namely cation and anion exchangers. Cation exchangers possess negatively charged groups and these will attract positively charged cations. Anion exchangers have positively charged groups that will attract negatively charged anions. After the ion exchange the molecules can be eluted from the matrix by selective desorption. The selective desorption can be achieved by changes in PH and /or ionic concentration or by affinity elution, in which case an ion that has greater affinity for the exchange than has the bound ion is introduced into the system.

(b) Recombinant DNA (rDNA) : It is a form of DNA that does not exist naturally, which is created by combining DNA sequences that would not normally occur together. In terms of genetic modification, recombinant DNA is introduced through the addition of relevant DNA into an existing organismal DNA, such as the plasmids of bacteria, to code for or alter different traits for a specific purpose, such as antibiotic resistance. Recombinant DNA is DNA that has been created artificially. DNA from two or more sources is incorporated into a single recombinant molecule.
ISC Biotechnology Question Paper 2010 Solved for Class 12 2

  • Treat DNA from both sources with the same restriction endonuclease (BamHI in this case).
  • BamHI cuts the same site on both molecules
  • 5′ GGATCC 3′
  • 3’CCTAGG5′
  • The ends of the cut have an overhanging piece of single-stranded DNA.
  • These are called “sticky ends” because they are able to base pair with any DNA molecule containing the complementary sticky end.
  • In this case, both DNA preparations have complementary sticky ends and thus can pair with each other when mixed.
  • DNA ligase covalently links the two into a molecule of recombinant DNA.

To be useful, the recombinant molecule must be replicated many times to provide material for analysis, sequencing, etc., Producing many identical copies of the same recombinant molecule is called cloning. Cloning can be done in vitro, by a process called the polymerase chain reaction (PCR). Here, however, we shall examine how cloning is done in vivo. Cloning in vivo can be done in :

  • unicellular microbes like E. coli
  • unicellular Eukaryotas like yeast and
  • Mammalian cells grown in tissue culture.

In every case, the recombinant DNA must be taken up by the cell in a form in which it can be replicated and expressed. This is achieved by incorporating the DNA in a vector. A number of viruses (both bacterial and of mammalian cells) can serve as vectors. But here let us examine an example of cloning using E. coli as the host and a plasmid as the vector.

(c) Distant hybridization : It implies crosses of species, subspecies, breeds and strains for the purpose of obtaining marketable hybrids of the first generation.

Importance of distant hybridization:

  • Distant hybridization is a combination of valuable features of parental forms in hybrids without noticeable increase in viability and, with intermediate growth rate.
  • They comprise both heterosis hybrids and hybrid forms with a favorable combination of parental features.
  •  Abortion of embryos at one or the other stage of development is a characteristic feature of distant hybridization, e.g., the crossing of two species or varieties often fails when using distant parents who do not share many chromosomes. Embryo rescue is the process when plant breeders rescue inherently weak, immature or hybrid embryos to prevent degeneration. Common in lily, hybridizing to create new interspecific hybrids between the various lily groups (such as Asiatic, Oriental, Trumpet, etc ).

Question 5.
(a) Discuss the Cell Culture technology under the following headings [4]
(i) Different types of nutrient media used.
(ii) Sterilization of instruments and transfer area.
(b) What is a DNA library ? How is a genomic DNA library formed ? [4]
(c) Give two applications of somatic hybridization. [2]
Answer: .
(a) (i) Nutrient media : It is a source of amino acids and nitrogen (e.g., beef, yeast extract). This is an undefined medium because the amino acid source contains a variety of compounds with the exact composition being unknown. Nutrient media contain all the elements that most bacteria need for growth and are non-selective, so they are used for the general cultivation and maintenance of bacteria kept in laboratory culture collections. An undefined medium (also known as a basal or complex medium) is a medium that contains :

  • a carbon source such as glucose for bacterial growth
  • water
  • various salts needed for bacterial growth

Defined media (also known as chemically defined media or synthetic media)

  • all the chemicals used are known
  • does not contain any yeast, animal or plant tissue

Differential medium

  • some sort of indicator, typically a dye, is added, that allows for the differentiation of particular chemical reactions occurring during growth.

(ii) Sterlization of instruments : The metallic instruments (e.g., forceps, scalpels,needles,spatula etc.) are flame sterilized i.e., dipping them in 75% ethanol followed by flaming and cooling. It is called incineration.

Sterlization of transfer area : Floor and walls of culture room are first washed with detergent and then 2% sodium hypochlorite or 95% ethanol. Larger surface area is sterilized by exposure to UV light.

(b) DNA Library: DNA library is a collection of DNA fragments of one organism, each carried by a plasmid or virus and cloned in an appropriate host. A DNA probe is used to locate a specific DNA sequence in the library. A collection representing the entire genome is called a genomic (DNA) library. An assortment of DNA copies of messenger RNA produced by a cell is known as a complimentary DNA (cDNA) library.

Construction of Genomic Library: The process of subdividing genomic DNA into clonable elements and inserting them into host cells is called creating a library.

A complete library, by definition, contains the entire genomic DNA of the source organism and is called as genomic library. A genomic library is a set of cloned fragments of genomic DNA. The process of creating a genomic library includes four steps :

In the first step the high molecular weight genomic DNA is separated and subjected to restriction enzyme digestion by using two compatible restriction enzymes.

In the second step, the fragments are then fractionated or separated by using agarose gel electrophoresis to obtain fragments of required size.

These fragments are then subjected to alkaline phosphatase treatment to remove the phosphate. In the third step, the dephosphorylated insert is ligated into vector which could be a plasmid, phage or cosmid, depending upon the interest of the researcher.

In the last step, the recombinant vector is introduced into the host by electroporation and amplified in host. In principle, all the DNA from the source organism is inserted into the host, but this is not fully possible as some DNA sequences escape the cloning procedure. Genomic library is a source of genes, and DNA sequences. A genomic library is a set of cloned fragments of genomic DNA. Prior information about the genome is not required for library construction for most organisms. In principle, the genomic DNA, after the isolation, is subjected to RE enzyme for digestion to generate inserts.

(c) Application of Somatic Hybridization :

  • Somatic cell fusion appears to be the only means through which two different parental genomes can be recombined among plants that cannot reproduce sexually (asexual or sterile).
  • Protoplasts of sexually sterile (haploid, triploid, and aneuploid) plants can be fused to produce fertile diploids and polyploids.
  • Somatic cell fusion overcomes sexual incompatibility barriers. In some cases somatic hybrids between two incompatible plants have also found application in industry or agriculture.
  • Somatic cell fusion is useful in the study of cytoplasmic genes and their activities and this information can be applied in plant-breeding experiments.

Question 6.
(a) Explain the post-transcriptional changes in mRNA and tRNA of a eukaryotic cell. [4]
(b) Classify proteins on the basis of their functions. Also give an example of each type. [4]
(c) Mention any two significant applications of bioinformatics. [2]
(a) Post-transcriptional changes in mRN A and tRNA
RNA transcripts in eukaryotes are modified, or processed, before leaving the nucleus to yield functional mRNA.

Eukaryotic RNA transcripts can be processed in two ways:

  1. Covalent alteration of both the 3′ and 5′ ends.
  2. Removal of intervening sequences.

The pre-mRNA (primary transcript that will be processed to functional mRNA) molecule undergoes three main modifications. These modifications are 5′ capping, 3′ polyadenylation, and RNA splicing, which occur in the cell nucleus before the RNA is translated.

Capping of the pre-mRNA involves the addition of 7-methylguanosine (m7G) to the 5′ end. In order to achieve this, the terminal 5′ phosphate requires removal, which is done by the aid of a phosphatase enzyme. The enzyme guanosyl transferase then catalyses the reaction which produces the diphosphate 5′ end. The diphosphate 5′ prime end then attacks the a phosphorus atom of a GTP molecule in order to add the guanine residue in a 5’5′ triphosphate link. The enzyme S-adenosyl methionine then methylates the guanine ring at the N-7 position.

This type of cap, with just the (m7G) in position is called a cap 0 structure. The ribose of the adjacent nucleotide may also be methylated to give a cap 1. Methylation of nucleotides downstream of the RNA molecule produce cap 2, cap 3 structures and so on. In these cases the methyl groups are added to the 2′ OH groups of the ribose sugar. The cap protects the 5′ end of the primary RNA transcript from attack by ribonucleases that have specificity to the 3’5′ phosphodiester bonds.

Cleavage and Polyadenylation :
The pre-mRNA processing at the 3′ end of the RNA molecule involves cleavage of its 3′ end and then the addition of about 200 adenine residues to form a poly(A) tail. The cleavage and adenylation reactions occur if a polyadenylation signal sequence (5′- AAU AAA-3′) is located near the 3′ end of the pre-mRNA molecule, which is followed by another sequence, which is usually (5′-CA-3′). Poly(A) polymerase then adds about 200 adenine units to the new 3′ end of the RNA molecule using ATP as a precursor. As the poly(A) tails is synthesised, it binds multiple copies of poly(A) binding protein, which protects the 3’end from ribonuclease digestion.

mRNA Splicing:
RNA splicing is the process by which introns, regions of RNA that do not code for protein, are removed from the pre-mRNA and the remaining exons connected to re-form a single continuous molecule. Although most RNA splicing occurs after the complete synthesis and end-capping of the pre-mRNA, transcripts with many exons can be spliced co-transcriptionally. The splicing reaction is catalyzed by a large protein complex called the spliceosome assembled from proteins and small nuclear RNA molecules that recognize splice sites in the pre-mRNA sequence.RNA

tRNA Splicing:
tRNA splicing is another rare form of splicing that usually occurs in tRNA. The splicing reaction involves a different biochemistry than the spliceomsomal and self-splicing pathways. Ribonucleases cleave the RNA and ligases join the exons together. This form of splicing does also not require any RNA components for catalysis. In biochemistry, a ligase is an enzyme that can catalyse the joining of two molecules (ligation or glue together) by forming a new chemical bond, with concomitant hydrolysis of ATP or other similar molecules.
ISC Biotechnology Question Paper 2010 Solved for Class 12 3
Most of higher eukaryotic genes coding for mRNA, tRNA and some coding for rRNA are interrupted by unrelated regions called introns. The other parts of the genes are called exons. Exons contain information that appears in the functional mRNA.
Genes for mRNA have 0 to 60 introns.
Genes for tRNA have 0 to 1 intron.

(b) Classification of proteins based on their functions
Proteins are responsible for many different functions in the living cell. Classification of proteins on the basis of functions is as follows :

Enzymes : Proteins that catalyze chemical and biochemical reactions within living cell and outside. This group of proteins probably is the biggest and most important group of the proteins. Enzymes are responsible for all metabolic reactions in the living cells. Well known and very interesting examples are : DNA and RNA-polymerases, dehydrogenases etc.

Hormones: Proteins that are responsible for the regulation of many processes in organisms. Hormones are usually quite small and can be classifies as peptides. Most known protein hormones are : insulin, growth factor, lipotropin, prolactin etc. Many protein hormones are predecessor of peptide hormones, such as endorfme, enkephalin etc. It is possible to increase this group of proteins by adding of all protein venoms.

Transport proteins : These proteins are transporting or store some other chemical compounds and ions. Some of them are well known : cytochrome C-electron transport; haemoglobin and myoglobin – oxygen transport; albumin – fatty acid transport in the blood stream etc. It is possible to classify trans membrane protein channels as transport proteins as well.

Immunoglobulin or Antibodies : Proteins that are involved in the immune response of the organism to neutralize large foreign molecules, which can be a part of an infection. Sometimes antibodies can act as enzymes. Sometimes this group of proteins is considered as a bigger group of protective proteins with adding such proteins as lymphocyte antigen¬recognizing receptors, antiviral agents such as interferon, tumor necrosis factor (TNF). Probably the clotting of blood proteins, such as fibrin and thrombin should be classified as protective proteins as well.

Structural proteins : These proteins are maintaining structures of other biological components, like cells and tissues. Collagen, elastin, a-keratin, sklerotin, fibroin – these proteins are involved into formation of the whole organism body. Bacterial proteoglycans and virus coating proteins also belongs to this group of proteins. Currently we do not know about other functions of these proteins.

Motor proteins : These proteins can convert chemical energy into mechanical energy. Actin and myosin are responsible for muscular motion. Sometimes it is difficult to make a strict separation between structural and motion proteins.

Receptors : These proteins are responsible for signal detection and translation into other type of signals. Sometimes these proteins are active only in complex with low molecular weight compounds. Very well known member of this protein family idopsin/rhodopsin – light detecting protein. Many receptors are transmembrane proteins.

Signalling proteins: This group of proteins is involved into signalling translation process. Usually they significantly change conformation in presence of some signalling molecules. These proteins can act as enzymes. Other proteins, usually small, can interact with receptors. Classical example of this group of proteins is GTPases.

Storage proteins: These proteins contain energy, which can be released during metabolism processes in the organism. Egg ovalbumin and milk casein are such proteins. Almost all proteins can be digested and used as a source of energy and building material by other organisms.

(c) Two significant functions of Bioinformatics :
The biological information hidden in DNA / RNA and protein sequences are processed into genes and proteins and a relationship is established between a gene and protein by bioinformatics tools.

Using bioinformatics tools such as Genmark (for bacteria) and GenScan (for eukaryotes) gene prediction is carried out in organisms. GenScan can identify introns, exons, promoter sites and polyA signals and other gene identification algorithms.

Question 7.
(a) Discuss the applications of plant tissue culture emphasizing its role in obtaining :
(i) Stress-tolerant plants
(ii) Biodegradable plastic
(b) Briefly explain the principle and application of the technique – Southern blotting similar technique for protein identification.
(c) What is DNA Micro-array technology’ ?
(a) (i) Stress-tolerant plants : Plant tissue culture develop ways of making plants better suited to site-related, environmental challenges like drought, salinity or extreme temperatures. With agriculture being relegated to marginal land and with the prospect of climate change induced drought, these traits are considered crucial ways of securing the world’s food supply.

Researchers have been able to identify several plant genes that are involved with stress tolerance. Some of these genes code for antioxidants, enzymes that modify lipids in the cell membrane, stress-response transcription factors, proteins that maintain ion homeostasis, heat shock proteins, or enzymes that synthesis important stress-response compounds. Some of these factors have been used to produce transgenic plants with increased stress tolerance.

Drought tolerance : Water is crucial for all living things. Plants use water as a solvent, a transport medium, an evaporative coolant, physical support, and as a major ingredient for photosynthesis. Without sufficient water, agriculture is impossible. Therefore, drought tolerance is an extremely important agricultural trait.

One way of engineering drought tolerance is by taking genes from plants that are naturally drought tolerant and introducing them to crops. The ressurection plant (.Xerophyta viscosa), a native of dry regions of southernmost Africa, possesses a gene for a unique protein in its cell membrane. Experiments have shown that plants given this gene are less prone to stress from drought and excess salinity.

Some genes have been found that control the production of the thin, protective cuticle found on leaves. If crops can be grown with a thickened waxy cuticle, they could be better equipped for dealing with dryness.

Salt tolerance : Irrigation has enabled the transformation of arid regions into some of the world’s most productive agricultural areas. Excess salinity, however, is becoming a major problem for agriculture in dry parts of the world. In several cases, scientists have used biotechnology to develop plants with enhanced tolerance to salty conditions.

Researchers have noticed that plants with high tolerance to salt stress possess naturally high levels of a substance called glycine betaine. Further, plants with intermediate levels of salinity tolerance have intermediate levels, and plants with poor tolerance to salinity have little or none at all. Genetically modified tomatoes with enhanced glycinebetaine production have increased tolerance to salty conditions.

Another approach to engineering salt tolerance uses a protein that takes excess sodium and diverts it into a cellular compartment where it does not harm the cell. In the lab, this strategy was used to create test plants that were able to flower and produce seeds under extreme salt levels. Commercially available crops with such a modification are still several years away.

(ii) Biodegradable Plastics : PTC is currently employed in the synthesis of plastic which is biodegradable i.e., unlike other plastics; this plastic can be broken down into simpler substances by microorganisms.

The biodegradable plastic is made from lactic acid which is produced at the time of bacterial fermentation of plant materials like discarded stalks of com. In the process, molecules of lactic Acid are chemically grouped to form the biodegradable plastic. In fact, the biodegradable plastic is a material which has most of the properties of plastic except the property of being non – biodegradable. The biodegradable plastic polyhydroxyalkanates for e.g., polyhydroxylbutyrate (PHB) are obtained commercially by fermentation with bacterium Alcaligenes eutrophus. The genetically engineered Arabidopsis plants produced polyhydroxylbutyrate (PHB) globules in their chloroplasts without effecting plant growth and development. The large scale of polyhydroxylbutyrate (PHB) can be extracted from leaves as well as from transgenic plants.

(b) Principle of Southern blotting: In this technique, DNA is usually converted into conveniently sized fragments by restriction digestion. The fragments are then separated by migration through an agarose gel, and transferred to a nylon or nitrocellulose membrane by capillary action. The DNA of interest can be identified by hybridization to radioactive or chemiluminescent probes and visualized by autoradiography or staining.

Application of Southern blotting:

  • Southern blots can easily provide a physical map of restriction sites within a gene located normally on a chromosomes.
  • Southern blots reveal the number of copies of the gene in a genome.
  • The degree of similarity of the gene when compared with other complementary genes. Western blotting is the technique for protein identification.

ISC Biotechnology Question Paper 2010 Solved for Class 12 4
(c) DNA microarray : A DNA microarray is a multiplex technology used in molecular biology and in medicine. It consists of an arrayed series of thousands of microscopic spots of DNA oligonucleotides, each containing picomoles (10-12 moles) of a specific DNA sequence, known as probes. This can be a short section of a gene or other DNA element that are used to hybridize a cDNA or cRNA sample (called target) under high-stringenev conditions. Probe- target hybridization is usually detected and quantified by detection of fluorophore-, silver-, or chemiluminescence-labeled targets to determine relative abundance of nucleic acid sequences in the target. Since an array can contain tens of thousands of probes, a microarray experiment can accomplish many genetic tests in parallel. Therefore arrays have dramatically accelerated many types of investigations.

Question 8.
(a) Give four differences between an inducible and a repressible operon. [4]
(b) Discuss the impact of the following factors on enzyme activity’: [4]
(i) Substrate concentration
(ii) Temperature
(iii) Presence of a competitive inhibitor
(iv) Enzyme concentration
(c) Name any two disaccharides and give their structural units.
(a) Differences between Inducible and Repressible Operon

Inducible OperonRepressible Operon
1.     It involves the switching on of an operon which normally remains turned off.1. It involves turning off of an operon which normally remains switched on.
2.     It is switched on in response to a new substrate which is to be handled and metabolised.2. Repressible operon is stopped by increased formation or availability of a metabolite.
3.     It is generally connected with a catabolic pathway.3. It is mostly connected with an anabolic pathway.
4.     The regulator gene of an operon produces a repressor that blocks the operator gene.4. The regulator gene of an operon, produces a part of the repressor called aporepressor. The same cannot block the operator gene.
5. It involves the removal of the repressor of an operon by the inducer metabolite5. It involves the blocking of the operator gene of operon through a complex repressor that is formed by union of aporepressor formed by regulator gene and corepressor which is actually a product of anabolic pathway
6. In this inducer is substrate, hormone or its by product.6. In this repressor is a compound formed by an aporepressor and a corepressor which is commonly an end product of metabolic pathway.
7. It brings about transcription and translation.7. Repression stops transcription and translation.

 (b) Factors Affecting Enzyme Activity:
(i) Substrate concentration: It depends on the type of enzyme reaction. For a competitive enzyme reaction, the increase in substrate concentration can have an inverse effect on the activity, but for a normal enzyme reaction, as long as the substrate concentration isn’t saturated, in general it will increase activity. At lower concentrations, the active sites on most of the enzyme molecules are not filled because there is not much substrate. Higher concentrations cause more collisions between the molecules. With more molecules and collisions, enzymes are more likely to encounter molecules of reactant.

The maximum velocity’ of a reaction is reached when the active sites are almost continuously filled. Increased substrate concentration after this point will not increase the rate. Reaction rate therefore increases as substrate concentration is increased but it levels off.
ISC Biotechnology Question Paper 2010 Solved for Class 12 5
(ii) Temperature : Higher temperature generally causes more collisions among the molecules and therefore increases the rate of a reaction. More collisions increase the likelihood that substrate will collide with the active site of the enzyme, thus increasing the rate of an enzyme-catalyzed reaction. Above a certain temperature, activity begins to decline because the enzyme begins to denature. The rate of chemical reactions therefore increases with temperature but then decreases as enzymes denature.
ISC Biotechnology Question Paper 2010 Solved for Class 12 6
(iii) Presence of Competitive inhibitor: A competitive inhibitor is any compound which closely resembles the chemical structure and molecular geometry of the substrate. The inhibitor competes for the same active site as the substrate molecule. The inhibitor may interact with the enzyme at the active site, but no reaction takes place. The inhibitor is “stuck” on the enzyme and prevents any substrate molecules from reacting with the enzyme. However, a competitive inhibition is usually reversible if sufficient substrate molecules are available to ultimately displace the inhibitor. Therefore, the amount of enzyme inhibition depends upon the inhibitor concentration, substrate concentration, and the relative affinities of the inhibitor and substrate for the active site.

(iv) Enzyme Concentration: If there is insufficient enzyme present, the reaction will not proceed as fast as it otherwise would because all of the active sites are occupied with the reaction. Additional active sites could speed up the reaction. As the amount of enzyme is increased, the rate of reaction increases. This is so because when more enzyme molecules are present, more substrate molecules can be acted upon at the same time. This means that the total substrate molecules are broken down quickly. If there are more enzyme molecules than are needed, adding additional enzyme will not increase the rate. Reaction rate therefore increases as enzyme concentration increases but then it levels off.
ISC Biotechnology Question Paper 2010 Solved for Class 12 7
(c) Disaccharides with their structural units

Disaccharide BondUnit 1Unit 2Linkage
Sucrose (table sugar, cane sugar)glucosefructoseα (1 → 2)
Lactose (milk sugar)galactoseglucoseβ (1 → 4)
Maltoseglucoseglucoseα (1 → 4)

Question 9.
(a) Explain the following methods of selection of recombinant cell : [4]
(i) Insertional inactivation
(ii) Blue-white selection
(b) Differentiate between : [4]
(i) Local and global sequence alignment
(ii) RAM and ROM
(c) Name any two protein databases and two genomic databases. [2]
(a) (i) Insertional inactivation: Harder problem to solve is to determine w hich of the transformed colonies comprise cells that contain recombinant DNA molecules, and which contain self-ligated vector molecules. Insertional inactivation is the inactivation of a gene by inserting a fragment of DNA into the middle of its coding sequence. Any future products from the inactivated gene will not work because of the extra codes added to it. Recombinants can therefore be identified because the characteristic coded by the inactivated gene is no longer visible.

pBR322 contains genes which code for ampicillin resistance and tetracycline resistance. BamHI cuts in the middle of the gene which codes for tetracycline resistance. If a gene is inserted here, the plasmid loses it ability to code for tetracycline resistance. Thus the plasmid containing the recombinant gene is resistant to ampicillin but sensitive to tetracycline. To screen, we use replica plates.

The pUC8. plasmid is ampicillin resistant and contains a gene lac Z’ which partially codes for β galactosidase. To make the plasmid capable of coding for the whole protein, we add the missing DNA along with the recombinant gene. The host which contains the plasmid pUC8 is resistant to ampicillin and is also capable of producing p galactosidase.

(ii) The blue-white screen is a molecular technique that allows for the detection of successful ligations in vector-based gene cloning. DNA of interest is ligated into a vector. The vector is then transformed into competent cell (bacteria). In this method a reporter gene lac Z is inserted in the vector. The lac Z encodes for the enzyme b- galactosidase which breaks a synthetic substrate X-gal (5-bromo-4-chloro-indolyl-b-D-galacto-pyranoside) into insoluble blue colored product. The competent cells are grown in the presence of X-gal. If the ligation was successful, the bacterial colony will be white because b- galactosidase is not synthesized due to the inactivation of lac Z; if not, the colony will be blue. This technique allows for the quick and easy detection of successful ligation, without the need to individually test each colony. An example of such a vector is the artificially reconstructed plasmid pUC19.

(b) (i) Global Vs local alignments : Illustration of global and local alignments demonstrating the ‘gappy’ quality of global alignments that can occur if sequences are insufficiently similar
ISC Biotechnology Question Paper 2010 Solved for Class 12 8
Global alignments, which attempt to align every residue in every sequence, are most useful when the sequences in the query7 set are similar and of roughly equal size (This . does not mean global alignments cannot end in gaps). A general global alignment technique is the Needleman-Wunsch algorithm, which is based on dynamic programming. Local alignments are more useful for dissimilar sequences that are suspected to contain regions of similarity or similar sequence motifs within their larger sequence context. The Smith-Waterman algorithm is a general local alignment method also based on dynamic programming. With sufficiently similar sequences, there is no difference between local and global alignments.

(ii) ROM :

  • ROM is a Read only Memory.
  • The contents of Rom can only be read.
  • One cannot modify or write the contents of ROM.
  • It is transistor based.
  • It is non volatile.
  • It is costly.
  • Information stored in ROM is very important for computer system to work properly.


  • RAM stands for Random Access Memory.
  • It is a read/write memory.
  • It is capacitive based.
  • It is volatile.
  • It is cheaper than ROM.
  • Information stored in RAM is mainly user based and has little or no link with the internal working of computer.

(c) Protein Databases :

UniProtThe Universal Protein Resource for protein sequences and is the central hub for the collection of functional information on proteins, with accurate, consistent, and rich annotation, the amino acid sequence, protein name or description, taxonomic data and citation information.
PANDITPANDIT – Protein and Associated Nucleotide Domains with Inferred Trees. PANDIT is a collection of multiple sequence alignments and phylogenetic trees covering many common protein domains.

Genome Databases :
Saccharomyces Genome Database (SGD) : Is a scientific database of the molecular biolog) and genetics of the yeast Saccharomyces cerevisiae, which is commonly known as baker s or budding yeast.

The Integrated Microbial Genomes (IMG): Serves as a community resource for comparative analysis and annotation of all publicly available genomes from three domains of bioinformatics

ISC Class 12 Biotechnology Previous Year Question Papers

ISC Accounts Question Paper 2015 Solved for Class 12

ISC Accounts Previous Year Question Paper 2015 Solved for Class 12

Maximum Marks: 80
Time allowed: Three hours

  • Candidates are allowed additional 15 minutes for only reading the paper. They must NOT start writing during this time.
  • Answer Question 1 (Compulsory) from Part I and five questions from Part II, choosing two questions from Section A, two questions from Section B and one question from either Section A or Section B.
  • The intended marks for questions or parts of questions are given in brackets [ ].
  • Transactions should be recorded in the answer book.
  • All calculations should be shown clearly.
  • All working, including rough work, should be done on the same page as, and adjacent to the rest of the answer.

Section – A
Part – I (12 Marks)
(Answer all questions)

Question 1.
Answer the following questions very briefly and to the point: [6 x 2]
(i) What is meant by an operating cycle ?
(ii) State one difference between partner’s loan account and partner’s capital account.
(iii) Give the adjusting entry and the closing entry for recording commission allowed to a partner, when the firm follows the fixed capital method. ,
(iv) How will the firm record the payment of realization expenses which were to be borne by a partner, but paid by the firm on his behalf ?
(v) Give the accounting treatment in the books of a co-venturer under the Memorandum Joint | Venture Method, when he takes over the unsold stock.
(vi) What is the minimum price at which a company can reissue its forfeited shares which were originally issued at par ?
(i) The operating cycle is the average period of time required for a business to make an initial outlay . of cash to produce goods, sell the goods, and receive cash from customers in exchange for the goods.

(ii) Partner’s capital account is his contribution (equity) towards partnership. It is initial and, subsequent contributions by partner to the partnership, in the form of either cash or the market value of other types of assets.

While running a business, one or more of the owners or partners will lend the business money to keep it afloat during a rough time or to increase cash flow and fund growth. This is treated as Partner’s loan account. Interest may also be paid on this account as per the agreement of partnership contract.

(iii) Commission allowed to” a partner is recorded in the newly opened Current Accounts. Commission Account Dr. To Partner’s Current Account

(iv) When the actual expenses are paid by the firm on behalf of a partner the following entry will be recorded:
Partner’s capital A/c Dr
To Bank A/c

(v) Goods Sent on Joint Venturer A/c Dc
To Joint Venture with …. A/c

(vi) When the forfeited shares are reissued at a discount, the amount of discount should not exceed the amount credited to Share Forfeited Account. If the discount allowed on reissue of shares is less than the forfeited amount, there will be some balance left in the Forfeited Account, which should be transferred to capital reserve, because it is a profit of capital nature.

Part – II (48 Marks)
(Answer any four)

Question 2. [12]
From the given trail Balance, prepare the Balance Sheet of Moonlight Limited as at 31st March, 2014.
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Question 3. [12]
Amit and Sumit entered into a joint venture to construct a shopping mall. They agreed to share the profits and losses in the ratio 5:3.
The contract price was agreed upon at ₹ 50.00,000, payable as ₹ 10,00,000 in cash and 40,00,000 in the form of shares of ₹ 10 each.
A Joint Bank Account was opened in which the co-ventures, Amit and Sumit, deposited their contributions of ₹ 25.00.000 and ₹ 10.00,000, respectively.
Amit also contributed bricks worth ₹ 4,80,000.
Sumit too contributed iron worth ₹ 55,000 and timber worth ₹ 3,25,000.
They acquired cement for ₹ 11,00,000 and plant for ₹ 15,40,000, from the funds of the venture.
Construction expenses amounted to ₹ 8,25,000.
The contract was completed and the contract price was received.
Amit took over the plant at ₹ 5,25,000.
The co-venturers sold the shares in the open market at a profit of 10%.
You are required to prepare:
(i) Joint Bank Account
(ii) Joint Venture Account
(iii) Co-venturers’Accounts.
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Question 4.
Gautam and Rahul are partners in a firm, sharing profits and losses in the ratio of 2 : 3. Their Balance Sheet as at 31sl March, 2014, was as follows : [12]
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Karim was to be taken as a partner with effect from 1st April. 2014. on the following terms :
(a) The new profit sharing ratio of Gautam. Rahul and Karim would be 5 : 3 : 2.
(b) Provision for Doubtful Debts would be raised to 20% of debtors.
(c) Karim would bring in cash, his share of capital of ₹ 40,000 and his share of goodwill valued at ₹ 10,000.
(d) Gautam would take over the furniture at ₹ 22,000.
You are required to:
(i) Pass journal entries at the time of Karim’s admission.
(ii) Prepare the Balance Sheet of the reconstituted firm.
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ISC Accounts Question Paper 2015 Solved for Class 12 10

Question 5.
Ram, Krishna and Mohan are partners in a firm, sharing profits and losses m the ratio of 3 : 5 : 2. On 31st March, 2014, their Balance Sheet was as under :
ISC Accounts Question Paper 2015 Solved for Class 12 11
Krishna died on 30th September, 2014. An agreement was reached amongst Ram. Mohan and Krishna’s legal representative that:
(a) Goodwill to be valued at 2 years purchase of the average profits of the previous three years,
which were:
ISC Accounts Question Paper 2015 Solved for Class 12 12
(b) Trade marks to be revalued at ₹ 19.200; plant at 80% of its book value and land building at ₹ 57,600.
(c) Krishna’s share of profit to the date of his death to be calculated on the basis of previous year’s profit.
(d) Interest on capital to be provided @ 10% per annum.
(e) ₹ 60,080 to be paid in cash to Krishna’s legal representative and balance to be transferred to the legal representative’s loan account.
You are required to prepare:
(i) Revaluation Account
(ii) Krishna’s Capital Account
(iii) Krishna’s Legal Representative’Account
ISC Accounts Question Paper 2015 Solved for Class 12 13
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Question 6. [12]
Pluto Ltd. issued 20,000 Equity shares of ₹ 10 each, payable as follows :
On Application — ₹ 4
On Allotment — ₹ 1
On 1st Call — ₹ 3
On 2nd and Final Call — ₹ 2
Applications were received for 30,000 shares and prorata allotment was made to all the applicants. Excess money received on application was utilized towards allotment and subsequent calls.One shareholder holding 100 shares did not pay the final call and his shares’were forfeited. Of the forfeited shares, the company reissued 70 shares as fully paid up at ₹ 12 per share.
You are required to pass journal entries in the books of the company for the year ending 31st March, 2014.
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Question 7. [10]
(a) The partnership agreement of Rohit, Ali and Sneh provides that:
1. Profits will be shared by them in the ratio of 2 : 2 : 1.
2. Interest on capital to be allowed at rate of 6% per annum.
3. Interest on drawings to be charged at the rate of 3% per annum.
4. Ali to be given a salary of ₹ 500 per month.
5. Ali’s guarantee to the firm that the firm would earn a net profit of at least ? 80,000 per annum and any shortfall in these profits would be personally met by him.
The capitals of the partners on 1st April, 2013, were :
Rohit: ₹ 1,20,000;
Ah: ₹ 1,00,000;
Sneh: ₹ 1,00,000.
During the financial year 2013-14, all the three partners withdrew ₹ 1,000 each at the beginning of every month.
The net profit of the firm for the year 2013-14 was ₹ 70,000.
You are required to prepare for the year 2013-13;
(i) Profit and Loss Appropriation Account
(ii) Partner’s Capital Accounts.
(b) Veera and Sia are partners, sharing profits in the ratio of 3 : 2. Profit for the year 2013-14, amounting to ₹ 18,000 was distributed wrongly in the ratio of 2 : 3.
You are required to rectify the error by passing an adjusting journal entry.
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ISC Accounts Question Paper 2015 Solved for Class 12 24

Question 8. [12]
On 1st April, 2013, Sunshine Ltd. issued ₹ 10,00,000, 15% Debentures of ₹ 100 each at 8% discount payable :
₹ 40 on application.
The balance on allotment.
These debentures were to be redeemed at a premium of 5% after five years. All the debentures were subscribed for by the public.
Interest on these debentures was to be paid half-yearly which was duly paid by the company.
You are required to:
(i) Pass journal entries in the first year of debenture issue (including entries for debenture interest)
(ii) Prepare the 15% Debenture Account for the year ending 31st March,2014.
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Section – B
(Answer any two questions)

Question 9. [10]
You are required to prepare a Cash-Flow Statement (as per AS-3) for the year 2013-14 from the following Balance Sheets.
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Additional Information:
During the year 2013-14 :
(i) Building costing ₹ 75,000 was purchased.
(ii) An old building, the book value of which was ₹ 63,000, was sold at a loss of ₹ 5,000.
(iii) Tax provided during the year was ₹ 80,000.
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Questions 10,
(a) Give any two objectives of preparing Common Size Statements. [2]
(b) From the following data, prepare a Comparative Statement of Profit and Loss of Simon Ltd. [4]
Particulars — 31.03.2014 — 31.03.2013
(i) Reyenue from Operations — ₹ 15,00,000 — ₹ 12,00,000
(ii) Other Income — ₹ 30,000 — ₹ 20,000
(iii) Cost of Materials consumed — ₹ 7.00.000 — ₹ 5,50.000
(c) From the following data, prepare Common Size Balance Sheet of Mini Lid. [4]
Particulars — 31.03.2014 — 31.03.2013
(i) Share Capital — ₹ 1,50,000 — ₹ 1,20,000
(ii) Reserves and Surplus — ₹ 30,000 — ₹ 30,000
(iii) Trade Payables — ₹ 20.000 — ₹ 40,000
(iv) Fixed Tangible Assets — ₹ 2,00,000 — ₹ 1,90,000
(a) Objectives of preparing common size statements.

  • Common size statement is a financial tool for studying key changes and trends in financial position.
  • Comparison of company’s position with the related industry as a whole is possible with the help of common size statement.

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ISC Accounts Question Paper 2015 Solved for Class 12 33

Question 11.
(a) From the following information calculate (up to two decimal places): [6]
(i) Gross Profit Ratio
(ii) Inventory Turnover Ratio
(iii) Net Profit Ratio
Cash Revenue from Operations — ₹ 70,000
Net Purchases — ₹ 2,97,000
Credit Revenue from Operations — ₹ 2,80,000
Closing Inventory — ₹ 80,000
Opening Inventory — ₹ 60,000
Carriage inward — ₹ 3,000
Selling expenses — ₹ 5,000
Administrative expenses — ₹ 40,000
Loss on sale of fixed asset — ₹ 10,000
Dividend received — ₹ 7,000
(b) The Current Ratio of a company is 2 : 1. State whether the following will increase, reduce or not change the ratio . [2]
(i) Bills Payable ? 5,000 discharged.
(ii) Purchase of inventory ₹ 20,000 on credit.
(c) Give the formulae for calculating : [2]
(i) Earning per share
(ii) Trade Payables Turnover Ratio
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ISC Class 12 Accounts Previous Year Question Papers