CBSE Class 10 – Elements of Business Previous Paper 2023

ELEMENTS OF BUSINESS (Commerce)

Time allowed: 3 hours

Maximum Marks: 70

General Instructions:

(i) This question paper contains 30 questions. All questions are compulsory. (ii) Q. 1 to 18 carries 1 mark each. (iii) Q. 19 to 22 carries 3 marks each. (iv) Q. 23 to 26 carries 4 marks each. (v) Q. 27 to 30 carries 6 marks each.

Questions:

ABC Joint Stock Company acts like a normal person because it’s created by: (1 mark)

(a) Complicate

(b) Shareholder

(c) Control

(d) Law
- Explanation: A joint stock company (or corporation) is a legal entity formed through a legal process, typically by registering with the state or relevant authority. This legal creation gives the company a separate identity from its owners, allowing it to enter contracts, own property, and be sued, just like a person (though a legal one).
XYZ limited received finance by the issue of shares is called: (1 mark)

(a) Short term

(b) Medium term

(c) Long term

(d) Very-short period
- Explanation: Issuing shares represents raising equity capital. Equity financing is considered long-term because the company doesn’t have a fixed obligation to repay the money to shareholders like it would with debt. Shareholders invest in the company’s future and expect returns through dividends and/or an increase in the share price over time.
In Rural, backward, and hilly areas special financial assistance is provided by: (1 mark)

(a) Money lender

(b) Commercial bank

(c) Regional Rural Bank

(d) Reserve Bank
- Explanation: Regional Rural Banks (RRBs) were specifically established in India to cater to the financial needs of rural areas, particularly in less developed regions. They focus on providing credit and other banking services to farmers, small businesses, and rural artisans.
Which is commonly used by business organisation as a source of short term financing? (1 mark)

(a) Lease Financing

(b) ADR’s

(c) Trade Credit

(d) Debenture
- Explanation: Trade credit is a common form of short-term financing where businesses buy goods or services from suppliers on credit, with payment due at a later date (e.g., net 30 terms). It’s a short-term source of funds because the credit period is usually relatively short (days or weeks).
Siya wants to take a leave from office. Which method is good for talking leave in the office. (1 mark)

(a) Website

(b) Notices/Posters

(c) E-mail

(d) Business meeting
- Explanation: Email is generally the most appropriate and professional way to request leave. It provides a written record of the request, allows for clear communication of the reason and duration of the leave, and is easily accessible to the relevant manager or HR department. While a business meeting might be necessary in some complex situations, for a standard leave request, email is preferred.

6. X wants to know the number of key elements in the communication process. It’s: (1 mark)

(a) Five

(b) Six

(d) Four

Explanation: While different models exist, a common breakdown of the communication process includes these six elements:
1. Sender: The person initiating the message.
2. Message: The information being conveyed.
3. Encoding: The process of converting the message into a transmittable form (e.g., words, symbols).
4. Channel/Medium: The means by which the message travels (e.g., email, phone, face-to-face).
5. Decoding: The process of interpreting the message by the receiver.
6. Receiver: The person(s) for whom the message is intended. (Sometimes feedback is included as a 7th element)

7. Riya offering goods at a price which customers can afford to pay, is a part of: (1 mark)

(a) Selling function

(b) Marketing function

(d) Purchase function

Explanation: Setting a price that aligns with customer affordability and perceived value is a core component of the marketing mix (specifically the “Price” element). Marketing encompasses a broader range of activities than just selling, including market research, product development, pricing, promotion, and distribution.

8. A minimum of ______ directors are required in a Public Company. (1 mark)

(a) 10

(b) 3

(d) 25

Explanation: The specific number of directors required can vary by jurisdiction and company bylaws, but generally, the legal minimum for a public company is lower than for a private company. In many jurisdictions, three directors are the minimum.

The maximum number of members in a Public Limited Company can be: (1 mark)

(a) 50

(b) 100

(d) unlimited

Explanation: One of the defining characteristics of a public limited company is that it can offer its shares to the public, meaning there’s no legal limit on the number of shareholders (members).

9. Which of the following is NOT a method of sale? (1 mark)

(a) Cash basis

(b) Sale on Hire purchase basis

(d) Sale under installment system

Explanation: “Cash basis” refers to the payment terms of a sale, not the method of sale itself. The other options describe different sales methods where payment is made over time or at a later date.

Following is the best mode of purchase of goods in bulk: (1 mark)

(a) Purchase by Inspection

(b) Purchase by Sample

(c) Purchase by Description

(d) Purchase from the nearest retailers

Explanation: When purchasing goods in bulk, especially standardized items, “Purchase by Description” is often the most efficient. The buyer specifies the required characteristics (e.g., size, material, specifications) and relies on the seller to provide goods that meet those descriptions. This method is suitable when inspecting every item is impractical.

10. Making payment immediately at the time of purchase is called: (1 mark) (a) Cash purchase

(b) Credit purchase

(d) Purchase by auction

Explanation: A cash purchase is a transaction where payment is made in full at the time of purchase, as opposed to credit purchases where payment is delayed.

______ communication can be inward or outward. (1 mark)

(a) Vertical communication

(b) Horizontal communication

(c) Internal communication

(d) External communication

Explanation: Internal communication refers to communication within an organization. It can flow upwards (from employees to management), downwards (from management to employees), or horizontally (between employees at the same level).

11. Credit cards are used for the purchase of products through: (1 mark)

(a) Cash

(b) Credit

(d) Off-line shopping

Explanation: Credit cards allow you to make purchases on credit, meaning you borrow money from the card issuer to pay for the goods or services. You then repay the borrowed amount later, often with interest if not paid within a grace period.

In every purchase, the ______ pays money to the seller. (1 mark)

(a) shopkeeper

(b) buyer

(d) producer

Explanation: The fundamental principle of a purchase is the exchange of money (or equivalent) from the buyer to the seller in exchange for goods or services.

12. Receiving a sale order is an example of: (1 mark)

(a) Vertical communication

(b) Horizontal communication

(c) Internal communication

(d) External communication

Explanation: Receiving a sales order typically involves communication within the organization, from the sales team (or system) to other departments like fulfillment or inventory.

Communication from the senior to subordinate is: (1 mark)

(a) Horizontal communication

(b) Informal communication

(c) Vertical communication

(d) Verbal communication

Explanation: Communication that flows from a higher level of authority to a lower level is known as downward vertical communication.

13. There is no need for a salesman in: (1 mark)

(a) Automatic Vending Machine

(b) Internet Shopping

(d) Malls

Explanation: Automatic vending machines are designed to dispense products without the need for a salesperson to interact with the customer.

Sales Promotion can involve all of the following EXCEPT: (1 mark)

(a) Loyalty Program

(b) TV Commercials

(d) Coupons

Explanation: While coupons are a sales promotion technique, the question asks which is not typically involved. The other options are common categories or examples of sales promotion activities. Coupons themselves fall under sales promotions rather than being a category of sales promotion.

14. Which of these is a tool of sales promotion? (1 mark)

(a) Free Samples

(b) Advertisement

(d) Personal selling

Explanation: Free samples are a direct and effective sales promotion technique used to encourage trial and generate interest in a product. While advertising, publicity, and personal selling are related marketing functions, they aren’t typically categorized as tools of sales promotion in the same way that free samples, coupons, contests, etc., are.

Essential element of personal selling is: (1 mark)

(a) Cheap Product

(b) Face to Face Interaction

(d) Good behavior of Salesman

Explanation: Personal selling is distinguished by its direct, two-way communication between a salesperson and a potential customer. This face-to-face interaction is its defining feature.

15. A good salesperson should be loyal to: (1 mark)

(a) the customer

(b) the employer

(c) Both to the employer and customer

(d) Neither to employer nor to customer

Explanation: A good salesperson needs to balance loyalty. They must be loyal to their employer by representing the company and its products effectively. Simultaneously, they need to be loyal to the customer by understanding their needs and offering solutions that truly benefit them. This builds trust and long-term relationships.

A departmental store has ______ departments. (1 mark)

(a) 1

(b) 2

(d) Large numbers

Explanation: The defining characteristic of a departmental store is that it houses numerous departments, each specializing in a different category of merchandise (e.g., clothing, electronics, home goods, etc.).

16. Read the following statements: Assertion (A) and Reason (R). (1 mark)

Assertion (A): Sale of goods and commodities in small quantities directly to the consumers is Retail Trade.

Reason (R): Retail Trade does not need sales promotion techniques.

Choose one of the correct alternatives given below:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

(c) Assertion (A) is true, but Reason (R) is false.

(d) Assertion (A) is false, but Reason (R) is true.

Explanation:
- Assertion (A) is true: Retail trade indeed involves selling goods in small quantities directly to consumers for personal or household use.
- Reason (R) is false: Retail trade absolutely utilizes sales promotion techniques. In fact, sales promotions are often crucial for retailers to attract customers, drive sales, and compete effectively. Techniques like discounts, coupons, loyalty programs, and in-store displays are all common retail sales promotions.

17. Read the following statements: Assertion (A) and Reasons (R): (1 mark)

Assertion (A): If a majority of its shareholders are dead, the company has to be wound up.

Reason (R): Being a separate legal entity, the death of even all its members does not affect its life; the company is stable.

Choose one of the correct alternatives given below:

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).

(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).

(d) Assertion (A) is false, but Reason (R) is true.

Explanation:
- Assertion (A) is false: One of the key features of a corporation (or company) is its perpetual existence. The death of shareholders, even a majority or all of them, does not automatically lead to the company’s dissolution. The company continues to exist as a separate legal entity.
- Reason (R) is true: This accurately describes the concept of separate legal personality. A company is a distinct legal entity, separate from its owners (shareholders). This means the company’s existence is not dependent on the lives of its members.

18. Funds raised through loans or borrowings are: (1 mark)

(a) Borrowed funds

(b) Owner’s equity

(d) Government money

Explanation: Loans and borrowings represent debt financing, where the company raises funds by taking loans or issuing debt instruments. These are categorized as borrowed funds, as they must be repaid with interest.

Who are called the real owner of the company? (1 mark)

(a) Employees

(b) Debenture holders

(c) Shareholders

(d) Creditors

Explanation: Shareholders are the owners of a company because they hold shares of its stock, representing ownership in the company. They have certain rights and privileges, such as voting rights and the right to receive dividends.

19. (a) What is Internal Business Communication? (3 marks)

Answer: Internal business communication refers to the communication that takes place within an organization. It involves the exchange of information, ideas, and messages among individuals and groups at different levels and departments. It can flow upwards (from employees to management), downwards (from management to employees), or horizontally (between employees at the same level). Effective internal communication is essential for coordination, collaboration, decision-making, and achieving organizational goals.

(b) What is meant by vertical communication? (3 marks)

Answer: Vertical communication is a type of business communication that flows upwards or downwards within the organizational hierarchy.
- Downward communication involves the flow of information from management to employees (e.g., instructions, policies, feedback).
- Upward communication involves the flow of information from employees to management (e.g., suggestions, reports, grievances). Effective vertical communication is vital for ensuring alignment between different levels of the organization and for facilitating feedback and input.

20. V.K. Publishing house is a Private Ltd. Company. The publishing house requires huge investment for growth and to expand its publishing house all over the country. For this, the board members were thinking to convert their publishing house into a Public Company.

State any three features of a Public Company. (3 marks)

Answer: Here are three features of a Public Company:
1. Access to Capital Markets: Public companies can raise capital by issuing shares to the public through stock exchanges. This provides access to a much larger pool of funds compared to private companies, making it easier to raise significant investment for growth and expansion.
2. Limited Liability: Like private companies, public companies also offer limited liability to their shareholders. This means that the personal assets of shareholders are protected from business debts beyond their investment in the company’s shares.
3. Greater Regulatory Scrutiny: Public companies operate under stricter regulatory requirements and disclosure obligations compared to private companies. They need to adhere to rules set by regulatory bodies like the Securities and Exchange Board of India (SEBI), promoting transparency and protecting investor interests. This also enhances the company’s credibility and reputation.

21. “Sudha likes to buy rare art collection from a particular store”. In the light of the statement, explain the meaning of speciality stores. (3 marks)

Speciality stores are retail outlets that concentrate on a specific product category or a niche market segment. They offer a deep assortment within their chosen area, catering to customers with particular interests or needs. They often provide expert advice and high levels of customer service. In Sudha’s case, the store specializes in rare art collections, implying a curated selection and expertise in that field. This focus allows them to cater to collectors like Sudha who are looking for unique and valuable pieces.

22. “For the successful running of business it is necessary to know the difference between owner’s funds and borrowed funds.” State any three differences between the two. (3 marks)

Feature	Owner’s Funds	Borrowed Funds
Return	Profits, Dividends, Capital Appreciation	Interest Payments
Obligation	No fixed obligation to repay (except in liquidation)	Legal obligation to repay principal & interest
Control	Owners usually have management control	Lenders typically don’t have direct control

23. Due to traffic jam, Mr. Ramesh (CEO of XYZ Co.) could not attend the scheduled meeting at office. So he decided to take meeting by ‘Tele-conferencing’. Explain any two benefits of Tele-Conferencing. (4 marks)

Saves Time and Travel Costs: Tele-conferencing eliminates the need for physical travel, saving valuable time for participants and reducing expenses related to transportation, accommodation, and other travel-related costs. This is particularly beneficial when participants are located in different geographical areas, as it avoids lengthy and costly journeys.
Increased Flexibility and Convenience: Tele-conferencing allows meetings to be conducted from anywhere with an internet connection. This offers flexibility in scheduling and location, accommodating participants’ diverse needs and circumstances. It allows meetings to proceed even when unforeseen events, like Mr. Ramesh being stuck in traffic, occur. This flexibility can lead to better time management and improved productivity.

24. (a) Explain any four advantages of Newspaper Advertising. (4 marks)

Reach: Newspapers have a broad reach, covering diverse demographics and geographic locations, allowing advertisers to target a large audience.
Credibility: Newspapers are often considered a trustworthy source of information, lending credibility to the advertisements they carry.
Local Coverage: Newspapers are particularly effective for reaching local communities, making them suitable for businesses targeting specific geographic areas.
Timeliness: Newspapers offer flexibility in ad placement and can be used to deliver time-sensitive messages or promotions, taking advantage of current events or market trends.

(b) Explain the concept of ‘Auction Sale’. (4 marks)

An auction sale is a public sale where goods or property are sold to the highest bidder. Potential buyers compete by offering progressively higher prices. The auctioneer facilitates the process, starting with a reserve price (the minimum acceptable price) or without one. The bidding continues until a final bid is accepted, signifying the completion of the sale. This competitive bidding process is designed to achieve the best possible price for the seller, driven by market demand. Different types of auctions exist, such as English auctions (ascending bids), Dutch auctions (descending bids), and sealed-bid auctions.

25. A textile company is diversifying and starting a steel manufacturing plant. For this purpose the company needs additional capital, the company wishes to raise the required funds by issuing ‘Borrowed funds’. Explain types of borrowed funds. (4 marks)

Borrowed funds represent capital obtained from external sources with a contractual obligation to repay principal and interest. Here are some common types:

Debentures: These are long-term debt instruments issued by companies to raise funds. They can be secured (backed by assets) or unsecured.
Term Loans: These are loans from banks or financial institutions for a specific period (term). They can be short, medium, or long-term.
Bank Overdraft: This is a short-term credit facility allowing businesses to withdraw more money than they have in their account, up to a pre-agreed limit.
Public Deposits: These are funds raised directly from the public by inviting them to deposit money with the company for a specified period at a fixed rate of interest.

26. (a) State advantages of Internet shopping. (Any Four) (4 marks)

Convenience: Shop from anywhere, anytime.
Wide Variety: Access to a vast selection of products.
Price Comparison: Easy comparison of prices from different sellers.
Accessibility: Available to anyone with an internet connection.

(b) State any four limitations of Internet Shopping. (4 marks)

Lack of Touch and Feel: Cannot physically inspect products.
Shipping Time and Costs: Delivery times vary, and shipping costs can be added.
Security Concerns: Risk of online fraud and data breaches.
Returns and Customer Service: Can be cumbersome and challenging.