SECTION-A

Note:

• Answer any two of the following questions in not exceeding 40 lines, each question carries 10 marks:

Question 1:

What are the differences between Money Market and Capital Market?

Answer:

The Money Market and the Capital Market are both segments of the financial market, but they deal with different types of financial instruments and serve different purposes. Here are some key differences:

Question 2:

What is Stock Exchange? Explain its functions.

Answer:

A stock exchange is a regulated market where securities like stocks, bonds, and other financial instruments are bought and sold. It provides a platform for companies to raise capital by issuing shares to the public and for investors to trade securities.

Functions of a Stock Exchange:

1. Facilitates Capital Formation: Companies can raise capital by issuing shares to the public through the stock exchange.
2. Provides Liquidity: Stock exchanges provide a platform for investors to buy and sell securities easily, ensuring liquidity in the market.
3. Price Discovery: Stock exchanges help determine the fair market price of securities through the interaction of buyers and sellers.
4. Mobilizes Savings: Stock exchanges encourage savings and investment by providing a platform for investors to invest their savings in securities.
5. Spreads Risk: By allowing investors to diversify their investments across different securities, stock exchanges help spread risk.
6. Corporate Governance: Stock exchanges promote corporate governance by setting listing requirements and encouraging companies to maintain high standards of corporate transparency and accountability.

Question 3:

Discuss the Secondary functions of Banks.

Answer:

While primary functions of banks include accepting deposits and lending money, they also perform several secondary functions that contribute to the overall economic development:

1. Agency Functions: Banks act as agents for their customers by collecting and paying bills, issuing letters of credit, and providing safe deposit boxes.
2. Transfer of Funds: Banks facilitate the transfer of funds between individuals and businesses through various channels like electronic fund transfers and wire transfers.
3. Exchange Functions: Banks provide foreign exchange services, enabling customers to convert currencies for international transactions.
4. Trustee Functions: Banks can act as trustees for wills, estates, and other legal documents.
5. Providing Financial Advice: Banks offer financial advice to customers on various matters like investment options, insurance, and retirement planning.
6. Promoting Economic Growth: Banks play a crucial role in promoting economic growth by providing credit to businesses, facilitating trade, and supporting infrastructure development.

Question 4:

Define entrepreneur and explain its characteristics.

Answer:

An entrepreneur is an individual who identifies a business opportunity, organizes and manages the resources required to start and run a business, and assumes the risks associated with the venture.

Characteristics of an Entrepreneur:

1. Innovation and Creativity: Entrepreneurs are innovative and creative thinkers who come up with new ideas and solutions.
2. Risk-Taking: Entrepreneurs are willing to take calculated risks to pursue their business goals.
3. Proactive and Self-Reliant: They are proactive in identifying opportunities and taking initiative. They are self-reliant and capable of working independently.
4. Leadership and Management Skills: Entrepreneurs possess strong leadership and management skills to lead and motivate teams.
5. Goal-Oriented: They are focused on achieving their business goals and are driven to succeed.
6. Adaptability: Entrepreneurs are adaptable and flexible, able to adjust to changing market conditions and overcome challenges.
7. Passion and Persistence: They are passionate about their business ideas and are persistent in overcoming obstacles.

Question 5:

What are the principles of Management?

Answer:

The principles of management are fundamental guidelines that help managers effectively organize and lead their teams. While there are various interpretations and frameworks, some of the key principles include:

• Planning: Defining goals, objectives, and strategies for achieving them.
• Organizing: Structuring the organization, allocating resources, and assigning responsibilities.
• Staffing: Recruiting, selecting, training, and developing employees.
• Directing: Leading, motivating, and guiding employees towards achieving organizational goals.
• Controlling: Monitoring performance, comparing it with standards, and taking corrective action.
• Coordination: Ensuring all departments and individuals work together towards common goals.
• Communication: Effective exchange of information between all levels of the organization.
• Decision-making: Making informed choices to address challenges and opportunities.
• Innovation: Encouraging creativity and adapting to change.
• Leadership: Inspiring and motivating employees to achieve organizational goals.

SECTION-B

Note:

• Answer any four of the following questions in not exceeding 20 lines each.
• 4 x 5 = 20

Question 6:

What are the differences between Primary Market and Secondary Market?

Answer:

The primary market and secondary market are distinct segments of the financial markets, each serving a different function in the trading of securities. Here are the key differences:

Question 7:

What are the various types of Retail Loans? Explain.

Answer:

Retail loans are loans granted to individuals for personal or household purposes. Some common types of retail loans include:

• Personal Loans: Unsecured loans granted for personal expenses like travel, education, medical emergencies, etc.
• Home Loans: Loans granted for purchasing or constructing a home.
• Auto Loans: Loans granted for purchasing a vehicle.
• Education Loans: Loans granted for financing education expenses.
• Consumer Durable Loans: Loans granted for purchasing consumer durables like electronics, furniture, etc.
• Credit Card Loans: Loans extended through credit cards to make purchases on credit.

Question 8:

Explain the powers and functions of IRDA.

Answer:

IRDA stands for Insurance Regulatory and Development Authority of India. It is the statutory body responsible for regulating and developing the insurance industry in India.

Powers and Functions of IRDA:

• Licensing and Registration: Issuing licenses and registering insurance companies and intermediaries.
• Product Approval: Approving insurance products offered by insurers.
• Protection of Policyholder Interests: Ensuring fair treatment and protection of the interests of policyholders.
• Promoting Insurance Awareness: Creating awareness among the public about insurance products and services.
• Monitoring and Supervising Insurance Companies: Monitoring the financial health and solvency of insurance companies.
• Investigating Complaints: Investigating complaints from policyholders against insurance companies.
• Developing Regulations: Formulating and implementing regulations for the insurance industry.

Question 9:

What are the special provisions enacted by the Telangana state for the MSMEs?

Answer:

The Telangana government has implemented several initiatives to support and promote Micro, Small, and Medium Enterprises (MSMEs). Some of the key provisions include:

• TS-iPASS: A single-window clearance system to facilitate the establishment and expansion of MSMEs.
• Financial Assistance: Providing subsidized loans, grants, and subsidies to MSMEs through various schemes.
• Skill Development: Offering training programs and skill development initiatives to enhance the skills of MSMEs.
• Infrastructure Development: Providing access to industrial parks, incubation centers, and other infrastructure facilities.
• Market Access: Connecting MSMEs with markets and providing support for marketing and branding.
• Reservation in Government Tenders: Setting aside a certain percentage of government tenders for MSMEs.

Question 10:

Discuss the benefits of International Trade.

Answer:

International trade offers numerous benefits to countries and their economies. Some of the key benefits include:

• Increased Economic Growth: International trade leads to increased production, employment, and economic growth by expanding markets for domestic goods and services.
• Wider Variety of Goods and Services: Consumers have access to a wider variety of goods and services from around the world, improving their standard of living.
• Lower Prices: Competition from foreign producers can help to keep prices of goods and services competitive.
• Technological Advancement: International trade facilitates the transfer of technology and knowledge between countries.
• Resource Utilization: Countries can specialize in the production of goods and services in which they have a comparative advantage, leading to efficient resource utilization.
• Economic Development: International trade promotes economic development by attracting foreign investment and promoting industrialization.

Question 11:

Define Trade. Explain its features.

Answer:

Trade is the exchange of goods and services between individuals, businesses, or countries. It involves the buying and selling of goods and services for a mutually agreed upon value.

Features of Trade:

• Exchange of Goods and Services: Trade involves the exchange of goods and services between two or more parties.
• Mutual Benefit: Trade is expected to be mutually beneficial to both the buyer and the seller.
• Involves Value: Trade involves the exchange of goods and services for a value, usually in the form of money.
• Can be Domestic or International: Trade can occur within a country (domestic trade) or between countries (international trade).
• Driven by Demand and Supply: The demand and supply of goods and services play a crucial role in determining the volume and value of trade.

Question 12:

Explain any five characteristics of Management.

Answer:

Management is the process of planning, organizing, leading, and controlling the activities of an organization to achieve its ¹ goals. Some key characteristics of management include: 

• Goal-Oriented: Management is focused on achieving specific organizational goals and objectives.
• Dynamic and Flexible: Management processes need to be dynamic and flexible to adapt to changing business environments and challenges.
• Multidisciplinary: Management involves the application of knowledge and skills from various disciplines like economics, psychology, sociology, and technology.
• Continuous Process: Management is a continuous and ongoing process, involving constant monitoring, evaluation, and improvement.
• Intangible Asset: Management itself is an intangible asset that contributes to the success of an organization.

Question 13:

Explain different types of life policies.

Answer:

Life insurance policies provide financial protection to individuals and their families in the event of death or other life events. Some common types of life insurance policies include:

• Term Life Insurance: Provides coverage for a specific term (e.g., 10, 20, or 30 years). It pays a death benefit to the beneficiary if the insured dies within the policy term.
• Whole Life Insurance: Provides lifelong coverage and builds cash value over time. The cash value can be borrowed against or used to pay premiums.
• Endowment Life Insurance: Provides both life insurance coverage and a savings component. It pays a lump sum to the insured if they survive the policy term or to the beneficiary if the insured dies.
• Universal Life Insurance: Provides flexible premiums and death benefits. It combines features of term life and whole life insurance.
• Variable Life Insurance: Allows the policyholder to invest the cash value in a variety of investment options, which can lead to higher returns but also carries higher risk.

Question 14:

Write about POSDCORB.

Answer:

POSDCORB is an acronym that stands for Planning, Organizing, Staffing, Directing, Coordinating, Reporting, and Budgeting. It was developed by Luther Gulick and Lyndall Urwick in the 1930s as a framework for describing the functions of management. It provides a comprehensive overview of the key activities involved in managing an organization.

SECTION-C

Note:

• Answer any five of the following questions in not exceeding 5 lines each.
• 5 x 2 = 10

Question 15:

What is Capital Market?

Answer:

The Capital Market deals with long-term financial instruments (maturity more than one year), such as stocks, bonds, and debentures. It facilitates long-term investment and financing.

Question 16:

What is Mutual Fund?

Answer:

A Mutual Fund is an investment vehicle that pools money from multiple investors to invest in a diversified portfolio of securities, such as stocks, bonds, or money market instruments.  

 

Question 17:

What do you mean by Bull Speculator?

Answer:

A Bull Speculator is an investor who anticipates a rise in the price of a particular security (like stocks) and buys it with the expectation of selling it at a higher price in the future to make a profit.

Question 18:

What is Savings Deposits Account?

Answer:

A Savings Deposits Account is a basic bank account that allows customers to deposit and withdraw funds easily. It typically earns a low interest rate and is used for everyday banking needs.

Question 19:

Write about Endowment Policy.

Answer:

An Endowment Policy is a life insurance policy that provides both life insurance coverage and a savings component. It pays a lump sum to the insured if they survive the policy term or to the beneficiary if the insured dies.

Question 20:

What is Time Policy?

Answer:

A Time Policy is an insurance policy that covers a specific period, such as one year or a few years. It provides coverage for potential losses or damages that may occur during that specified period.

Question 21:

What do you mean by Innovation?

Answer:

Innovation refers to the creation of new ideas, products, services, or processes that are novel and useful. It involves introducing something new or making significant improvements to existing things.

Question 22:

Write about Drone Entrepreneurs.

Answer:

Drone Entrepreneurs are individuals who start and run businesses related to drones. This can include manufacturing drones, developing drone applications, providing drone-based services like aerial photography, delivery, and inspections, or conducting drone-related research and development.

Question 23:

What do you mean by Multiple Shops?

Answer:

Multiple Shops refer to a retail business strategy where a company operates multiple stores or outlets at different locations. This allows them to reach a wider customer base, increase brand visibility, and improve market share.

Question 24:

Write any two differences between Internal Trade and International Trade.

Answer:

1. Scope: Internal trade refers to the exchange of goods and services within the boundaries of a country. International trade involves the exchange of goods and services between countries.
2. Regulations: Internal trade is generally subject to fewer regulations and restrictions compared to international trade, which is governed by international trade agreements and regulations.

Question 25:

What is Planning?

Answer:

Planning is the process of defining goals, objectives, and strategies for achieving them. It involves setting targets, identifying resources, and developing a roadmap to achieve the desired outcomes.

SECTION-D

26.Question:

Ravi and Kiran are partners sharing profits and losses in the ratio of 3:2 respectively. Their Balance Sheet as on 31st March, 2020 was as follows:

On 1st April, 2020, they decided to admit Mr. Bharath for 1/5th share in profits. The terms of admission are:

(a) He has to bring ₹ 20,000 towards capital and ₹ 10,000 towards goodwill in cash.

(b) Furniture is to be depreciated by ₹ 1,000.

(c) Create a provision of ₹ 1,500 for Bad debts on debtors.

(d) Appreciate the value of Buildings by ₹ 5,000.

Required:

Prepare necessary ledger accounts and opening Balance Sheet of the new firm.

Solution:

1. Journal Entries:

a) Admission of Bharath:

b) Depreciation on Furniture:

c) Provision for Bad Debts:

d) Appreciation of Buildings:

2. Ledger Accounts:

• Cash:

  • Opening Balance: 5,000
  • Bharath’s Capital: 30,000
  • Closing Balance: 35,000

• Goodwill:

  • Bharath’s Capital: 10,000
  • Closing Balance: 10,000

• Furniture:

  • Opening Balance: 10,000
  • Depreciation: 1,000
  • Closing Balance: 9,000

• Buildings:

  • Opening Balance: 35,000
  • Appreciation: 5,000
  • Closing Balance: 40,000

• Debtors:

  • Opening Balance: 25,000
  • Provision for Bad Debts: 1,500
  • Closing Balance: 23,500

• Provision for Bad Debts:

  • Profit and Loss Adjustment Account: 1,500
  • Closing Balance: 1,500

• Profit and Loss Adjustment Account:

  • Depreciation on Furniture: 1,000
  • Provision for Bad Debts: 1,500
  • Appreciation of Buildings: 5,000
  • Closing Balance: 4,500 (to be transferred to partners’ capital accounts)

• Partners’ Capital Accounts:

  • Ravi: Opening Balance 30,000, Goodwill 6,000, Profit and Loss Adjustment Account 1,500, Closing Balance 37,500
  • Kiran: Opening Balance 20,000, Goodwill 4,000, Profit and Loss Adjustment Account 1,000, Closing Balance 25,000
  • Bharath: Opening Balance 20,000, Closing Balance 20,000

3. Opening Balance Sheet of the New Firm:

Note: The profit and loss adjustment account balance is transferred to the partners’ capital accounts in their profit-sharing ratio (3:2:1).