SET A

INDIAN SCHOOL MUSCAT

HALF YEARLY EXAMINATION 2023
BUSINESS STUDIES (054)
CLASS: XI Max. Marks: 80

MARKING SCHEME
SET [Link] VALUE POINTS MARKS
SPLIT UP
A 1. (D) Assembly Industry 1

2. (B) President of the India 1

3. (C) Principle of Indemnity 1

4. (D) iii and iv 1

5. (D) DTH services 1

6. (C) Indemnity Contract 1

7. (A) Wholesale Trade 1

8. (B) Departmental Undertaking 1

9. (C) Memorandum of Association 1

10. (A) Contribution 1

11. (B) Profession 1

12. (C) The Assertion is correct but Reason is incorrect 1

13. (C) Common Seal 1

14. (B) Both A and R are true, but R is not the correct explanation of A 1

15. (B) Joint Hindu family 1

16. (A) Utmost good faith 1

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17. (C) Decentralised control 1

18. (D) Registered Post 1

19. (B) Joint Venture 1

20. (D) Limited Liability Partnership 1

21. (A) Activities that help in the smooth flow of trade are called auxiliaries to
trade.
(B) The different auxiliaries to trade that are being used by Mr. Liyaquat in
his business are:
(a) Transport "He procures ....... railways, roadways and airways."
(b) Warehousing - "He also owns ...... the stocks."
(c) Insurance "He has also taken an insurance policy.... Rs.15 crores for his
business."
(d) Banking and Finance- "Moreover, he has taken a loan of 3,00,000 ....
financial needs of his business." 1+½+½+½+
(e) Advertising - "He has placed information ...... to popularise them." ½=3
22. Yes, they can admit Ryan as a partner to the partnership firm's advantages
with the permission of the partners. A minor is a person who is under the
age of eighteen. Because a minor is incapable of forming a legally binding
contract. He is unable to become a partner in a firm. A minor can, however,
be added to the advantages of an established partnership business with the
agreement of all other partners. It's unrealistic to expect him to absorb the
losses. His responsibility will be limited to the amount of money he has put
into the business. He will be unable to engage fully in the running of the
company.
Or
The differences between memorandum and articles of association are as
follows:

Basis of
Memorandum of association Article of association
difference

Validity Acts beyond the memorandum Acts which are beyond

of association are invalid and articles can be ratified

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 cannot be ratified even by a by the members,
unanimous vote of the provided they do not
members. violate even the
memorandum.

It is not compulsory for

Necessity Every company has to file a
a public limited
memorandum of association.
company to file AOA.

Articles define the

Memorandum of association
Relationsh relationship of the
define the relationship of the
ip members and the
company with outsiders.
company.
3
23. Yes, it is right to call business as an institution that provides goods and
services for earning profit because of certain characteristics of business.
The characteristics of business are as follows:
1. Sale or exchange of goods and services for the satisfaction of
human needs: Business involves sale or exchange of goods and
services. The production of goods or services for self- consumption
is not business.
2. Deals in goods or services on a regular basis: Another important
feature of business is that it must sell or exchange goods or services
on a regular basis.
3. Profit motive: The main purpose of business is to earn profit. If the
profit motive is missing in a transaction, then it cannot be
considered as business transaction.
4. Risk: Another important feature of business is the presence of risk
factor in the transaction. (Any three) 3
24. The registration of a partnership firm is optional. However, it is preferable
to have a formal agreement to avoid problems between partners. The
following are the implications of a firm's failure to register:
I. A partner in an unregistered firm cannot sue the firm or other partners;
II. The firm cannot sue third parties; and

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 III. The firm cannot bring a case against the partners.
Or
The documents needed for registration for incorporation.
 Memorandum of Association: The Memorandum of Association is
duly stamped, signed, and witnessed. In the case of a public
business, it must be signed by at least seven members. For a private
business, however, two members' signatures are sufficient.
 Articles of Association: As with the Memorandum, the Articles of
Association must be legally stamped and witnessed. This is also a
very important document for the company that describes the way
through which the objectives of MOA could be achieved.
 Prospectus: If a company wants to raise money from the public,
prospectus is also needed.
 Director’s Approval, List of Directors, Registrar's Letter,
Statutory Declaration, Documentary Evidence, Registered
Office. (Any three or any other relevant points) 3
25.  Savings Account: Savings deposit account is meant for individuals
who want to save some amount of money out of their incomes. In this
account, customers can deposit money as per their ease and they can
also withdraw money by means of a cheque or a withdrawal slip as and
when they need it. The amount deposited in a savings account bank is
referred to as the demand liability of bank.
 Current Account: Such accounts are opened by businessmen by
making an initial deposit of ₹ 5,000 in the bank. There are no
restrictions on the amount deposited or the number of withdrawals
made. Therefore, it is also referred to as a running and active account.
 Recurring Deposit Account: In such accounts, the account holder is
required to deposit a specified sum of money every month. They are
also termed as cumulative time deposits. The period of account may
range from 12 months to 10 years.
 Fixed Deposit Account: In such accounts, a lump-sum amount is
deposited for a specified time period which can range from fifteen days
to five years. This deposit is repayable after the expiry of this fixed
period. Fixed deposits are also called time deposits or long-term

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 deposits.
 Multiple Option Deposit Account: It is a combination of savings
account and fixed deposit account. In this account, the depositor can
enjoy the liquidity of saving account and rate of interest of fixed
deposit account. In this account, the depositor gives standing
instruction to the bank to convert the balance in his savings account
into a fixed deposit, if it crosses a given threshold limit. (Any four)
or
The various types of bank accounts being used by Saiyam and his family
members are
a) Saiyam - Current Account.
“Saiyam being a business man has chosen the type of account in which
deposits are the most liquid and there are no limits for number of
transactions or the amounts of transactions in a day.”
b) Saiyam's mother - Saving Account.
“His mother has opened a type of account where she can conveniently
deposit the money she saves. These accounts provide cheque facility and
offer lot of flexibility for deposits and withdrawal of funds from the
account."
c) Samik - Recurring Account.
“Saiyam’s younger brother Samik has opened a special kind of account
wherein he will deposit Rs.1000 every month for the next two years.”
 Savings Account: Savings deposit account is meant for individuals
who want to save some amount of money out of their incomes. In this
account, customers can deposit money as per their ease and they can
also withdraw money by means of a cheque or a withdrawal slip as and
when they need it. The amount deposited in a savings account bank is
referred to as the demand liability of bank.
 Current Account: Such accounts are opened by businessmen by
making an initial deposit of ₹ 5,000 in the bank. There are no
restrictions on the amount deposited or the number of withdrawals
made. Therefore, it is also referred to as a running and active account.
 Recurring Deposit Account: In such accounts, the account holder is
required to deposit a specified sum of money every month. They are

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 also termed as cumulative time deposits. The period of account may
range from 12 months to 10 years. (Explain any one) 1+1+1+1=4
26. A cooperative organisation is "an association of persons, usually of limited
means, who have voluntarily joined together to achieve a common
economic end, through the formation of a democratically controlled
business organisation, making equitable contributions to the capital required
and accepting a fair share of risks and benefits of the undertaking ".
Features of Cooperative Societies
The main features of cooperative societies are listed below:
1. Voluntary Membership: A cooperative society is a voluntary association
of persons, which means that no individual can be forced to be a member of
a cooperative organisation. Any person having a common interest is free to
join a cooperative society and can also leave any time by giving a prior
notice. There is no compulsion to remain a member. The membership of
cooperative society is open to all, irrespective of caste, religion, colour and
gender.
2. Legal Status: It is mandatory for a cooperative society to get itself
registered with the Registrar of Cooperative Societies under the Cooperative
Societies Act, 1912. After registration, the cooperative society gets a
separate legal entity, different from its members. The society can buy and
sell property and make contracts in its own name. It can sue others and be
sued in its own name. The insolvency, incapacity and death of any member
does not affect the existence of cooperative society.
3. Limited Liability: The liability of the members of the cooperative society
is limited to the extent of the amount of capital contributed by them. This
defines the maximum risk that a member can be asked to bear.
4. Control: In a cooperative society, the principle of one member one vote' is
adhered. Management and control of a cooperative society lies with a
managing committee which is elected by members of the society. Each
member has one vote irrespective of capital contributed by him. The
management of a cooperative society is democratic and all members have
an equal voice in its management due to equal voting rights. Members are
allowed to give their suggestions and put their problems.
5. Service Motive: The main purpose of cooperative society is to provide

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 service to its members. Surplus, if generated as a result of its operations, is
distributed as dividend among the members according to the bye-laws of the
society. (Any three) 1+1+1+1=4
Or
A nominal partner can be two types:
Partner by Estoppel: A person who is not a partner in a firm, but through
his/her words (spoken or written) or conduct or behaviour represents
himself/herself as a partner is called partner by estoppel. Though such a
partner neither participates in the management of the firm nor contributes
capital, even then in the eyes of the third party he is known as partner of
that firm and such a partner becomes liable to those parties who advances
money to the firm on the basis of such representation. For example,
Lakshay is not a partner but he tells Shenoy that he is a partner in a firm
called Gurpreet Enterprises. On this impression, Shenoy sells goods worth
Rs. 2,40,000 to Gurpreet Enterprises. Later on, the firm fails to pay the
amount. Shenoy can recover the amount from Lakshay. Here, Lakshay is
partner by estoppel.
Partner by Holding Out: A person who is not a partner in the firm but
knowingly allows himself/herself to be represented as a partner in a firm, is
called partner by holding out. Such a person becomes liable to third parties
for the repayment of debts, extended to the firm due to such representation.
In order to avoid this liability, such a person should immediately issue a
denial, clarifying his position to the third party, that he is not a partner in the
firm. If he does not do so, he will be liable to the third party for repayment
of any debts taken by the partnership firm. For example, Gurpreet tells
Shenoy in the presence of Lakshay that Lakshay is a partner in the firm of
Gurpreet Enterprises. Lakshay shows no objection to the statement of
Gurpreet. Later on, Shenoy gives a loan of Rs. 2,50,000 to Gurpreet
Enterprises on the basis of the impression that Lakshay is a partner in the
firm. The firm is unable to repay the loan to Shenoy, Lakshay is liable to
pay Rs. 50,000 to Shenoy. Here, Lakshay is a partner by holding out. 2+2= 4
27. (A) Type of Partnership: The type of partnership in the above case is a
Public-Private Partnership (PPP).
(B) Features of the Public-Private Partnership:

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 Collaboration between Sectors, Shared Risk and Responsibility, Resource
Pooling, Efficiency and Innovation, Infrastructure Development,
Government Objectives, Contractual Arrangements, Long-Term Nature,
Flexibility, Regulatory Framework (Any three or other relevant points) 1+1+1+1=4
28. (A) Sole Proprietor
(B) Yes, due to feature of Unlimited Liability. (Explain) 1+1+2=4
29. The following are the types of manufacturing industry:
(i) Analytical industry: This industry includes activities which are
involved in analysing and separating basic materials into a number of
products, for example, processing crude oil to produce petrol, diesel, etc.
(ii) Synthetic industry: In this industry, two or more materials are mixed
together to create a new product. For example, producing soap, biscuits, etc.
(iii) Processing industry: In this industry, raw materials are processed to
produce finished goods through a series of manufacturing operations. For
example, sugar from sugarcane, textile products, etc.
(iv) Assembling industry: In this industry, the finished product is produced
by assembling the various parts or components. For example, radio, car,
T.V., etc. 1+1+1+1=4
30. Aadhar enabled payment system (AEPS)- Aadhaar Enabled Payment
System allows people to carry out financial transactions on a Micro-ATM
by furnishing just their Aadhaar number and verifying it with the help of
their fingerprint/iris scan. People do not have to mention their bank account
details to carry out these transactions. With the help of this payment system,
people can send funds from one bank account to another simply through
their Aadhaar numbers.
Points of sale- It is the time and place where a retail transaction is
completed. At the point of sale, the merchant calculates the amount owed
by the customer, prepares an invoice for the customer and indicates the
options for the customer to make payment. It is also the point at which a
customer makes a payment to the merchant in exchange for goods or after
provision of a service.
Mobile Wallets -You can use mobile wallets directly on your smartphone
for shopping online, making payments to merchants, sending money to
friends & family, examples: Paytm, Google pay Jio Money etc.

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 Prepaid cards: Prepaid cards are simply a plastic alternative to carrying
money around and are often called everyday cards. Gift cards, meal card,
multi wallet card etc. are some of the examples. 1+1+1+1=4
31. (A) Public sector enterprise: Statutory Corporation
(B) Two examples of another Statutory Corporation in India are:
Oil and Natural Gas Corporation (ONGC), Bharat Heavy Electricals
Limited (BHEL) (Any other relevant examples)
(C) Limitations of Statutory Corporation:
Autonomy only on paper: Although statutory corporations are
autonomous, the working of these corporations are hampered by
interference from ministers, political parties that impacts their autonomy.
Lacks Initiative: These corporations lack any profit motive and therefore
the employees and management are not interested in taking any initiative
for generating profit. (Any other relevant points)
(D) Advantages of Statutory Corporation:

Quick decision making: Statutory corporations have significantly less file

work and formalities as compared to other forms of organisations which
results in quick decision making.

Efficient Staff: The employees of the statutory corporation are provided

fair wages, facilities and proper working conditions along with
developmental programs. All these contribute towards making employees
motivated to perform more efficiently. (Any other relevant points) 1+½+½+1+1

Or +1+1=6

Type of Public Enterprise:

The type of public enterprise highlighted above is a Government Company.
Minimum Investment by Government:
In a government company, the government must hold at least 51% of the
total paid-up share capital.
Merits of Government Companies:
State Control: Government companies allow the government to maintain
control over strategic industries and key sectors of the economy, ensuring
that important decisions are aligned with national objectives.
Social Welfare: Government companies often prioritize public welfare over
profit maximization. They can provide essential goods and services at
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 affordable prices, especially in sectors where private companies might not
be motivated to operate due to low profitability.
(Any other relevant points)
Demerits of Government Companies:
Bureaucracy and Inefficiency: Similar to other forms of public
enterprises, government companies can suffer from bureaucratic red tape
and inefficiencies due to government regulations and interference.
Lack of Innovation and Competition: Government companies might face
challenges in keeping up with technological advancements and market
competition, as they might not always operate with the same level of 1+1+1+1+1+
innovation and competitiveness as private sector counterparts. 1=6
32. Mr. Naresh bought a fire insurance for his warehouse by giving false
information about the goods stored in the warehouse.
Utmost good faith: A contract of insurance is a contract of uberrimae fidei
i.e., a contract found on utmost good faith. Both the insurer and the insured
should display good faith towards each other in regard to the contract. It is
the duty of the insured to voluntarily make full, accurate disclosure of all
facts, material to the risk being proposed and the insurer to make clear all
the terms and conditions in the insurance contract.
It is not the warehouse that is insured, but it is the pecuniary interest of
the insured in them, which is insured
Insurable Interest: Insurable interest means some pecuniary interest in the
subject matter of the insurance contract. The insured must have an interest
in the preservation of the thing or life insured, so that he/she will not suffer
financially on the happening of the event against which he/she is insured. In
case of insurance of property, insurable interest of the insured in the subject
matter of the insurance must exist at the time of happening of the event. In
order to name insurable interest however, it is not necessary that one should
be the owner of the property. For example, a trustee holding property on
behalf of others has an insurable interest in the property
He thought that in the event of loss, the insurer will compensate him
and put him in the in the same position that he occupied immediately
before the happening of the event insured against
Indemnity: According to it, the insurer undertakes to put the insured, in the

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event of loss, in the same position that he occupied immediately before the
happening of the event insured against. In other words, the insurer
undertakes to compensate the insured for the loss caused to him/her due to
damage or destruction of property insured. The compensation payable and
the loss suffered are to be measured in terms of money. The principle of
indemnity is not applicable to life insurance
Since the warehouse was insured, he did not take adequate steps to
minimize loss when the ware house caught fire during last summer
Mitigation: This principle states that it is the duty of the insured to take
reasonable steps to minimise the loss or damage to the insured property.
Suppose goods kept in a store house catch fire then the owner of the goods
should try to recover the goods and save them from fire to minimise the loss
or damage. The insured must behave with great prudence and not be
careless just because there is an insurance cover. If reasonable care is not
taken like any prudent person, then the claim from the insurance company
may be lost.
He took double insurance therefore it is the right of an insurer who has
paid claim under an insurance, to call upon other liable insurers to
contribute for the loss payment.
Contribution: As per this principle it is the right of an insurer who has paid
claim under an insurance, to call upon other liable insurers to contribute for
the loss of payment. It implies, that in case of double insurance, the insurers
are to share the losses in proportion to the amount assured by each of them.
In case there is a loss, when there is more than one policy on the same
property, the insured will have no right to recover more than the full amount
of his actual loss. If the full amount is recovered from one insurer the right
to obtain further payment from the other insurer will cease. (Any four)
Or
(A) No, the company will not be reimbursed if the surveyor discovers the
true cause of the fire, and the contract will be voided.
(B) There are three elements to fire insurance:
 Insurable Interest: The insured must have an insurable interest in
the insurance's subject matter. The insurance contract is void if there
is no insurable interest.

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  Utmost Good Faith: When providing information to the insurance
company about the subject matter of the policy, the insured should
be accurate and honest.
 Indemnity: The contract for fire insurance is a rigorous indemnity
contract. In the case of a loss, the insured can sue the insurer for the
full amount of the loss. This is subject to the maximum amount of
insurance coverage for the subject matter.
(C) When attempting to arrange money from a false claim, the principle of
utmost good faith is disregarded. Insurance contracts demand that both
parties operate in the best interests of the other. This means that both parties
must provide all relevant information honestly and completely. This
maintains impartiality while also assisting insurance firms in appropriately
pricing premiums for applicants. If an applicant makes a major fact
deception that the insurance company relies on, the policy might be deemed
null and void. Hence, the values disregarded are trust, honesty and
transparency. 6
33. (A) Promoter: Mr. Mohan
(B) Position of Promoter: A firm's promoters have a fiduciary relationship
with the company, which they must not abuse. They can only make a profit
if it is publicly revealed; they cannot make any hidden gains. In the event
of non-disclosure, the company has the right to cancel the contract &
reclaim the money paid to the promoters. It can also sue for damages or
losses incurred because of material information not being disclosed.
Promoters do not have the legal right to claim expenses incurred in the
company's promotion. The company, on the other hand may choose to
reimburse them for their pre-incorporation costs. The corporation may also
pay the promoters a lump-sum payment or a commission on the purchase
price of property obtained through them or on the shares sold as
compensation for their efforts. The corporation may also provide them stock
or debentures or give them the opportunity to buy the securities later.
(C) Functions of Promoter:
1. Identification of business opportunity: The opportunity could be in the
form of developing a new product or service, making a product available
through a new channel, or any other investment opportunity. The technical

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and economic feasibility of the opportunity is next assessed.
2. Feasibility studies: Converting all potential business ideas into actual
projects may not be viable or lucrative. As a result, the promoters do
extensive feasibility assessments. The feasibility studies listed below may
be carried out:
○ Technical feasibility: An excellent idea may be technically impossible to
implement. It could be due to a lack of readily available raw materials like
material, labour, location, infrastructure or technology.
○ Financial viability: Every company activity necessitates the use of
capital. The promoters must calculate the amount of money needed to
pursue the recognised business idea. If money cannot be secured, the project
must be abandoned.
○ Economic feasibility: The project might be technically and financially
possible, but it may have a slim possibility of being profitable. Hence this
step focuses on the cost-benefit analysis of the company to find out its
future viability.
3. Name approval: The promoters must choose a name for the company
and file an application for approval to the registrar of companies in the state
where the firm's registered office will be located. If the proposed name has
been rejected, an alternate name may be accepted. In the application to the
Registrar of Companies, three names are submitted in priority order.
4. Fixing up Signatories to the Memorandum of Association: The
members who will sign the proposed company's Memorandum of
Association must be decided by the promoters. Those who sign the
memorandum are also the company's first directors. Their signed consent to
serve as Directors and to purchase the company's qualification shares is
required.
5. Appointment of professionals: The promoters select specialists such as
mercantile bankers, auditors, and others to assist them in preparing the
essential documents that must be filed with the Registrar of Companies.
6. Preparation of necessary documents: The promoter takes measures to
prepare necessary legal documents that must be submitted to the Registrar
of Companies for the company to be registered under the law. The
Memorandum of Association, Articles of Association, and Consent of

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 Directors are the documents required. (Any three or any relevant points) 1+2+3=6

34. (A) Business Risk

(B) Speculative Risk
(C) Causes of Business Risk:
i. Natural causes: Natural causes of business risk include natural
calamities like earthquake, tsunami, tornado, famine, floods and
drought, etc. Humans and businesses do not have a control over the
natural causes and there certainly isn’t any kind of preparation that
can be undertaken for such a business risk.
ii. Human Causes: The human causes of business risk are due to the
loss of business that arises from changes in customer preferences,
employee mindset, agitation by workers, negligence by employees,
strikes and lockouts.
iii. Economic Causes: Economic causes of business risk arise from
changes in the different economic factors such as increasing
competition, changing market conditions, increase in price of raw
materials, production cost and wages.
iv. Other Causes: There may be physical causes and political causes.
Physical causes include technical or mechanical causes which affect
the working of the assets of business. For example, breakdown of
cooling machine results in damage of perishable goods such as milk
and ice cream. Political causes include changes in government
policies regarding taxation, excise duty, licensing. foreign trade, etc.
and fall of the government, civil war, changes in laws may lead to 1+1+1+1+1+
huge loss in business. 1=6

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 SET B

INDIAN SCHOOL MUSCAT

HALF YEARLY EXAMINATION 2023
BUSINESS STUDIES (054)
CLASS: XI Max. Marks: 80

MARKING SCHEME
SET [Link] VALUE POINTS MARKS
SPLIT UP
B 1. (C) Principle of Indemnity 1

2. (A) Joint stock company, Partnership 1

3. (D) Assembly Industry 1

4. (B) President of the India 1

5. (C) Wholesale Trade 1

6. (B) Departmental Undertaking 1

7. (D) DTH services 1

8. (C) Indemnity Contract 1

9. (A) Contribution 1

10. (C) Memorandum of Association 1

11. (D) Perpetual Succession 1

12. (A) Both Assertion and Reason are correct and the Reason is a correct 1
explanation of the Assertion
13. (B) Profession 1

14. (B) Joint Hindu Family 1

15. (A) Both A and R are true. R is the correct explanation of A 1

16. (C) Decentralised control 1

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17. (A) Utmost good faith 1

18. (D) Particular Partnership 1

19. (B) Joint Venture 1

20. (D) Registered Post 1

21. Yes, it is right to call business as an institution that provides goods and
services for earning profit because of certain characteristics of business.
The characteristics of business are as follows:
1. Sale or exchange of goods and services for the satisfaction of human
needs: Business involves sale or exchange of goods and services.
The production of goods or services for self- consumption is not
business.
2. Deals in goods or services on a regular basis: Another important
feature of business is that it must sell or exchange goods or services
on a regular basis.
3. Profit motive: The main purpose of business is to earn profit. If the
profit motive is missing in a transaction, then it cannot be
considered as business transaction.
4. Risk: Another important feature of business is the presence of risk
factor in the transaction. (Any three) 3
22. Yes, they can admit Ryan as a partner to the partnership firm's advantages
with the permission of the partners. A minor is a person who is under the
age of eighteen. Because a minor is incapable of forming a legally binding
contract. He is unable to become a partner in a firm. A minor can, however,
be added to the advantages of an established partnership business with the
agreement of all other partners. It's unrealistic to expect him to absorb the
losses. His responsibility will be limited to the amount of money he has put
into the business. He will be unable to engage fully in the running of the
company.
Or
The differences between memorandum and articles of association are as
follows:

Basis of Memorandum of association Article of association

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 difference

Articles of association
Memorandum of association
indicate how the
defines the objects for which
Objectives objectives specified in
rules of the internal company
MOA are to be
are formed.
achieved.

This is a subsidiary
This is the main document of document and is
the company and it is subordinate to both the
Position
subordinate to the Companies memorandum of
Act. association and the
Companies Act.

Articles define the

Memorandum of association
relationship of the
Relationship define the relationship of the
members and the
company with outsiders.
company.
3
23. (A) Activities that help in the smooth flow of trade are called auxiliaries to
trade.
(B) The different auxiliaries to trade that are being used by Mr. Liyaquat in
his business are:
(a) Transport "He procures ....... railways, roadways and airways."
(b) Warehousing - "He also owns ...... the stocks."
(c) Insurance "He has also taken an insurance policy.... Rs.15 crores for his
business."
(d) Banking and Finance- "Moreover, he has taken a loan of 3,00,000 ....
financial needs of his business."
(e) Advertising - "He has placed information ...... to popularise them." 1+½+½+½+
½=3
24. The registration of a partnership firm is optional. However, it is preferable
to have a formal agreement to avoid problems between partners. The
following are the implications of a firm's failure to register:
I. A partner in an unregistered firm cannot sue the firm or other partners;

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 II. The firm cannot sue third parties; and
III. The firm cannot bring a case against the partners.
Or
The documents needed for registration for incorporation.
 Memorandum of Association: The Memorandum of Association is
duly stamped, signed, and witnessed. In the case of a public
business, it must be signed by at least seven members. For a private
business, however, two members' signatures are sufficient.
 Articles of Association: As with the Memorandum, the Articles of
Association must be legally stamped and witnessed. This is also a
very important document for the company that describes the way
through which the objectives of MOA could be achieved.
 Prospectus: If a company wants to raise money from the public,
prospectus is also needed.
 Director’s Approval, List of Directors, Registrar's Letter,
Statutory Declaration, Documentary Evidence, Registered
Office. (Any three or any other relevant points) 3
25. (A) Type of Partnership: The type of partnership in the above case is a
Public-Private Partnership (PPP).
(B) Features of the Public-Private Partnership:
Collaboration between Sectors, Shared Risk and Responsibility, Resource
Pooling, Efficiency and Innovation, Infrastructure Development,
Government Objectives, Contractual Arrangements, Long-Term Nature,
Flexibility, Regulatory Framework. (Any three or other relevant points) 1+1+1+1=4
26.  Savings Account: Savings deposit account is meant for individuals
who want to save some amount of money out of their incomes. In this
account, customers can deposit money as per their ease and they can
also withdraw money by means of a cheque or a withdrawal slip as and
when they need it. The amount deposited in a savings account bank is
referred to as the demand liability of bank.
 Current Account: Such accounts are opened by businessmen by
making an initial deposit of ₹ 5,000 in the bank. There are no
restrictions on the amount deposited or the number of withdrawals
made. Therefore, it is also referred to as a running and active account.

Page 4 of 13
 Recurring Deposit Account: In such accounts, the account holder is
required to deposit a specified sum of money every month. They are
also termed as cumulative time deposits. The period of account may
range from 12 months to 10 years.
 Fixed Deposit Account: In such accounts, a lump-sum amount is
deposited for a specified time period which can range from fifteen days
to five years. This deposit is repayable after the expiry of this fixed
period. Fixed deposits are also called time deposits or long-term
deposits.
 Multiple Option Deposit Account: It is a combination of savings
account and fixed deposit account. In this account, the depositor can
enjoy the liquidity of saving account and rate of interest of fixed
deposit account. In this account, the depositor gives standing
instruction to the bank to convert the balance in his savings account
into a fixed deposit, if it crosses a given threshold limit. (Any four)
or
The various types of bank accounts being used by Saiyam and his family
members are
a) Saiyam - Current Account.
“Saiyam being a business man has chosen the type of account in which
deposits are the most liquid and there are no limits for number of
transactions or the amounts of transactions in a day.”
b) Saiyam's mother - Saving Account.
“His mother has opened a type of account where she can conveniently
deposit the money she saves. These accounts provide cheque facility and
offer lot of flexibility for deposits and withdrawal of funds from the
account."
c) Samik - Recurring Account.
“Saiyam’s younger brother Samik has opened a special kind of account
wherein he will deposit Rs.1000 every month for the next two years.”
 Savings Account: Savings deposit account is meant for individuals
who want to save some amount of money out of their incomes. In this
account, customers can deposit money as per their ease and they can
also withdraw money by means of a cheque or a withdrawal slip as and

Page 5 of 13
 when they need it. The amount deposited in a savings account bank is
referred to as the demand liability of bank.
 Current Account: Such accounts are opened by businessmen by
making an initial deposit of ₹ 5,000 in the bank. There are no
restrictions on the amount deposited or the number of withdrawals
made. Therefore, it is also referred to as a running and active account.
 Recurring Deposit Account: In such accounts, the account holder is
required to deposit a specified sum of money every month. They are
also termed as cumulative time deposits. The period of account may
range from 12 months to 10 years. (Any One) 1+1+1+1=4
27. A cooperative organisation is "an association of persons, usually of limited
means, who have voluntarily joined together to achieve a common
economic end, through the formation of a democratically controlled
business organisation, making equitable contributions to the capital required
and accepting a fair share of risks and benefits of the undertaking ".
Features of Cooperative Societies
The main features of cooperative societies are listed below:
1. Voluntary Membership: A cooperative society is a voluntary association
of persons, which means that no individual can be forced to be a member of
a cooperative organisation. Any person having a common interest is free to
join a cooperative society and can also leave any time by giving a prior
notice. There is no compulsion to remain a member. The membership of
cooperative society is open to all, irrespective of caste, religion, colour and
gender.
2. Legal Status: It is mandatory for a cooperative society to get itself
registered with the Registrar of Cooperative Societies under the Cooperative
Societies Act, 1912. After registration, the cooperative society gets a
separate legal entity, different from its members. The society can buy and
sell property and make contracts in its own name. It can sue others and be
sued in its own name. The insolvency, incapacity and death of any member
does not affect the existence of cooperative society.
3. Limited Liability: The liability of the members of the cooperative society
is limited to the extent of the amount of capital contributed by them. This
defines the maximum risk that a member can be asked to bear.

Page 6 of 13
4. Control: In a cooperative society, the principle of one member one vote' is
adhered. Management and control of a cooperative society lies with a
managing committee which is elected by members of the society. Each
member has one vote irrespective of capital contributed by him. The
management of a cooperative society is democratic and all members have
an equal voice in its management due to equal voting rights. Members are
allowed to give their suggestions and put their problems.
5. Service Motive: The main purpose of cooperative society is to provide
service to its members. Surplus, if generated as a result of its operations, is
distributed as dividend among the members according to the bye-laws of the
society. (Any three) 1+1+1+=4
Or
A nominal partner can be two types:
Partner by Estoppel: A person who is not a partner in a firm, but through
his/her words (spoken or written) or conduct or behaviour represents
himself/herself as a partner is called partner by estoppel. Though such a
partner neither participates in the management of the firm nor contributes
capital, even then in the eyes of the third party he is known as partner of
that firm and such a partner becomes liable to those parties who advances
money to the firm on the basis of such representation. For example,
Lakshay is not a partner but he tells Shenoy that he is a partner in a firm
called Gurpreet Enterprises. On this impression, Shenoy sells goods worth
Rs. 2,40,000 to Gurpreet Enterprises. Later on, the firm fails to pay the
amount. Shenoy can recover the amount from Lakshay. Here, Lakshay is
partner by estoppel.
Partner by Holding Out: A person who is not a partner in the firm but
knowingly allows himself/herself to be represented as a partner in a firm, is
called partner by holding out. Such a person becomes liable to third parties
for the repayment of debts, extended to the firm due to such representation.
In order to avoid this liability, such a person should immediately issue a
denial, clarifying his position to the third party, that he is not a partner in the
firm. If he does not do so, he will be liable to the third party for repayment
of any debts taken by the partnership firm. For example, Gurpreet tells
Shenoy in the presence of Lakshay that Lakshay is a partner in the firm of

Page 7 of 13
 Gurpreet Enterprises. Lakshay shows no objection to the statement of
Gurpreet. Later on, Shenoy gives a loan of 2,50,000 to Gurpreet Enterprises
on the basis of the impression that Lakshay is a partner in the firm. The firm
is unable to repay the loan to Shenoy, Lakshay is liable to pay 50,000 to
Shenoy. Here, Lakshay is a partner by holding out. 1+1+1+1=4
28. Profit plays an important role in the business because:
(i) For long-term survival: Profits alone help a business to continue to
exist for a long time. It has been observed that for achieving other economic
as well as social objectives, profit must be earned. The business in which
the profit is meagre or no profit is earned closes down quickly.
(ii) For rapid growth: Profit provides a sound financial structure for the
growth and expansion of the business.
(iii) Increases the efficiency of business: It acts as an incentive, motivating
workers to contribute their maximum worth to the enterprise. Profit
increases with the increase in efficiency and improved performance of the
organisation.
(iv) For building reputation and recognition: If the business earns
adequate profits, it will pay fair and competitive wages to its employees,
dividends at competitive rates to shareholders, etc. In other words, all the
parties can be satisfied. This helps the business to earn reputation and
goodwill in the society. (Any other relevant points)
1+1+1+1=4
Q.29 (A) The sole proprietor has unlimited liability. Apart from business assets
of Rs. 50,000, his personal assets worth Rs. 30,000 also should be utilized
to pay off the debt.
(B) Both Anthony and Akbar will have unlimited liability. After selling
business assets worth Rs. 50,000, they will still be liable to bring in Rs.
30,000 from their personal assets. BOTH ARE INDIVIDUALLY AND
JOINTLY LIABLE. 2+2=4
30. Aadhar enabled payment system (AEPS)- Aadhaar Enabled Payment
System allows people to carry out financial transactions on a Micro-ATM
by furnishing just their Aadhaar number and verifying it with the help of
their fingerprint/iris scan. People do not have to mention their bank account
details to carry out these transactions. With the help of this payment system,
people can send funds from one bank account to another simply through

Page 8 of 13
 their Aadhaar numbers.
Points of sale- It is the time and place where a retail transaction is
completed. At the point of sale, the merchant calculates the amount owed
by the customer, prepares an invoice for the customer and indicates the
options for the customer to make payment. It is also the point at which a
customer makes a payment to the merchant in exchange for goods or after
provision of a service.
Mobile Wallets -You can use mobile wallets directly on your smartphone
for shopping online, making payments to merchants, sending money to
friends & family, examples: Paytm, Google pay Jio Money etc.
Prepaid cards: Prepaid cards are simply a plastic alternative to carrying
money around and are often called everyday cards. Gift cards, meal card,
multi wallet card etc. are some of the examples. 4
31. (A) Public sector enterprise: Statutory Corporation
(B) Two examples of another Statutory Corporation in India are:
Oil and Natural Gas Corporation (ONGC), Bharat Heavy Electricals
Limited (BHEL) (Any other relevant examples)
(C) Limitations of Statutory Corporation:
Autonomy only on paper: Although statutory corporations are
autonomous, the working of these corporations are hampered by
interference from ministers, political parties that impacts their autonomy.
Lacks Initiative: These corporations lack any profit motive and therefore
the employees and management are not interested in taking any initiative
for generating profit. (Any other relevant points)
(D) Advantages of Statutory Corporation:

Quick decision making: Statutory corporations have significantly less file

work and formalities as compared to other forms of organisations which
results in quick decision making.

Efficient Staff: The employees of the statutory corporation are provided

fair wages, facilities and proper working conditions along with
developmental programs. All these contribute towards making employees
motivated to perform more efficiently. (Any other relevant points)

Or
Type of Public Enterprise:
Page 9 of 13
 The type of public enterprise highlighted above is a Government Company.
Minimum Investment by Government:
In a government company, the government must hold at least 51% of the
total paid-up share capital.
Merits of Government Companies:
State Control: Government companies allow the government to maintain
control over strategic industries and key sectors of the economy, ensuring
that important decisions are aligned with national objectives.
Social Welfare: Government companies often prioritize public welfare over
profit maximization. They can provide essential goods and services at
affordable prices, especially in sectors where private companies might not
be motivated to operate due to low profitability.
(Any other relevant points)
Demerits of Government Companies:
Bureaucracy and Inefficiency: Similar to other forms of public
enterprises, government companies can suffer from bureaucratic red tape
and inefficiencies due to government regulations and interference.
Lack of Innovation and Competition: Government companies might face
challenges in keeping up with technological advancements and market
competition, as they might not always operate with the same level of
innovation and competitiveness as private sector counterparts. 6
32. Mr. Naresh bought a fire insurance for his warehouse by giving false
information about the goods stored in the warehouse.
Utmost good faith: A contract of insurance is a contract of uberrimae fidei
i.e., a contract found on utmost good faith. Both the insurer and the insured
should display good faith towards each other in regard to the contract. It is
the duty of the insured to voluntarily make full, accurate disclosure of all
facts, material to the risk being proposed and the insurer to make clear all
the terms and conditions in the insurance contract.
It is not the warehouse that is insured, but it is the pecuniary interest of
the insured in them, which is insured
Insurable Interest: Insurable interest means some pecuniary interest in the
subject matter of the insurance contract. The insured must have an interest
in the preservation of the thing or life insured, so that he/she will not suffer

Page 10 of 13
financially on the happening of the event against which he/she is insured. In
case of insurance of property, insurable interest of the insured in the subject
matter of the insurance must exist at the time of happening of the event. In
order to name insurable interest however, it is not necessary that one should
be the owner of the property. For example, a trustee holding property on
behalf of others has an insurable interest in the property
He thought that in the event of loss, the insurer will compensate him
and put him in the in the same position that he occupied immediately
before the happening of the event insured against
Indemnity: According to it, the insurer undertakes to put the insured, in the
event of loss, in the same position that he occupied immediately before the
happening of the event insured against. In other words, the insurer
undertakes to compensate the insured for the loss caused to him/her due to
damage or destruction of property insured. The compensation payable and
the loss suffered are to be measured in terms of money. The principle of
indemnity is not applicable to life insurance
Since the warehouse was insured, he did not take adequate steps to
minimize loss when the ware house caught fire during last summer
Mitigation: This principle states that it is the duty of the insured to take
reasonable steps to minimise the loss or damage to the insured property.
Suppose goods kept in a store house catch fire then the owner of the goods
should try to recover the goods and save them from fire to minimise the loss
or damage. The insured must behave with great prudence and not be
careless just because there is an insurance cover. If reasonable care is not
taken like any prudent person, then the claim from the insurance company
may be lost.
He took double insurance therefore it is the right of an insurer who has
paid claim under an insurance, to call upon other liable insurers to
contribute for the loss payment.
Contribution: As per this principle it is the right of an insurer who has paid
claim under an insurance, to call upon other liable insurers to contribute for
the loss of payment. It implies, that in case of double insurance, the insurers
are to share the losses in proportion to the amount assured by each of them.
In case there is a loss, when there is more than one policy on the same

Page 11 of 13
 property, the insured will have no right to recover more than the full amount
of his actual loss. If the full amount is recovered from one insurer the right
to obtain further payment from the other insurer will cease. (Any four)
Or
(A) No, the company will not be reimbursed if the surveyor discovers the
true cause of the fire, and the contract will be voided.
(B) There are three aspects to fire insurance:
 Insurable Interest: The insured must have an insurable interest in
the insurance's subject matter. The insurance contract is void if there
is no insurable interest.
 Utmost Good Faith: When providing information to the insurance
company about the subject matter of the policy, the insured should
be accurate and honest.
 Indemnity: The contract for fire insurance is a rigorous indemnity
contract. In the case of a loss, the insured can sue the insurer for the
full amount of the loss. This is subject to the maximum amount of
insurance coverage for the subject matter.
(C) When attempting to arrange money from a false claim, the principle of
utmost good faith is disregarded. Insurance contracts demand that both
parties operate in the best interests of the other. This means that both parties
must provide all relevant information honestly and completely. This
maintains impartiality while also assisting insurance firms in appropriately
pricing premiums for applicants. If an applicant makes a major fact
deception that the insurance company relies on, the policy might be deemed
null and void. Hence, the values disregarded are trust, honesty and
transparency.
6
33. (A) Pure Risk: Pure risks involve only the chance of loss or no loss but
they never bring any profit. Earthquake, flood, theft, fire etc. are all
examples of pure risks.
(B) Speculative Risk: Speculative risks involve both the possibility of loss
as well as the possibility of profit. They arise due to price fluctuations,
changes in taste and fashion of consumers, changes in demand, etc.
1 mark for
Speculative risks can be minimised and avoided.
heading +1
(C) Natural causes: Natural causes of business risk include natural

Page 12 of 13
 calamities like earthquake, tsunami, tornado, famine, floods and drought, mark for
etc. Humans and businesses do not have a control over the natural causes each
and there certainly isn’t any kind of preparation that can be undertaken for explanation=
6
such a business risk.
34. (A) ABC National Bank
(B)
1. Identification of business opportunity:
The opportunity could be in the form of developing a new product or
service, making a product available through a new channel, or any other
investment opportunity. The technical and economic feasibility of the
opportunity is next assessed.
2. Feasibility studies:
Converting all potential business ideas into actual projects may not be
viable or lucrative. As a result, the promoters do extensive feasibility
assessments. The feasibility studies listed below may be carried out:
○ Technical feasibility: An excellent idea may be technically impossible to
implement. It could be due to a lack of readily available raw materials like
material, labour, location, infrastructure or technology.
○ Financial viability: Every company activity necessitates the use of
capital. The promoters must calculate the amount of money needed to
pursue the recognised business idea. If money cannot be secured, the project
must be abandoned.
○ Economic feasibility: The project might be technically and financially
possible, but it may have a slim possibility of being profitable. Hence this
step focuses on the cost-benefit analysis of the company to find out its
½ mark for
future viability.
heading + ½
(C)
mark for
i. Fixing up Signatories to the Memorandum of Association
each
ii. Appointment of Professionals
explanation=
iii. Preparation of Necessary Documents
6

Page 13 of 13
 SET C

INDIAN SCHOOL MUSCAT

HALF YEARLY EXAMINATION 2023
BUSINESS STUDIES (054)
CLASS: XI Max. Marks: 80

MARKING SCHEME
SET [Link] VALUE POINTS MARKS
SPLIT UP
C 1. (B) President of the India 1

2. (D) Assembly Industry 1

3. (D) DTH services 1

4. (B) Departmental Undertaking 1

5. (C) Principle of Indemnity 1

6. (C) Memorandum of Association 1

7. (D) Perpetual Succession 1

8. (A) Joint stock company, Partnership 1

9. (C) Indemnity Contract 1

10. (A) Contribution 1

11. (B) Profession 1

12. (A) Both Assertion and Reason are correct and the Reason is a correct
explanation of the Assertion.
1
13. (A) Wholesale Trade 1

14. (A) Both A and R are true. R is the correct explanation of A 1

15. (C) Sole proprietorship 1

16. (A) Utmost good faith 1

Page 1 of 15
17. (C) Decentralised control 1

18. (D) Registered Post 1

19. (B) Joint Venture 1

20. (D) Particular Partnership 1

21. (A) Activities that help in the smooth flow of trade are called auxiliaries to
trade.
(B) The different auxiliaries to trade that are being used by Mr. Liyaquat in
his business are:
(a) Transport "He procures ....... railways, roadways and airways."
(b) Warehousing - "He also owns ...... the stocks."
(c) Insurance "He has also taken an insurance policy.... Rs.15 crores for his
business."
(d) Banking and Finance- "Moreover, he has taken a loan of 3,00,000 ....
financial needs of his business."
1+½+½+½+
(e) Advertising - "He has placed information ...... to popularise them." ½=3
22. Yes, they can admit Ryan as a partner to the partnership firm's advantages
with the permission of the partners. A minor is a person who is under the
age of eighteen. Because a minor is incapable of forming a legally binding
contract. He is unable to become a partner in a firm. A minor can, however,
be added to the advantages of an established partnership business with the
agreement of all other partners. It's unrealistic to expect him to absorb the
losses. His responsibility will be limited to the amount of money he has put
into the business. He will be unable to engage fully in the running of the
company.
Or
The differences between memorandum and articles of association are as
follows:

Basis of
Memorandum of association Article of association
difference

Memorandum of association Articles of association

Objectives
defines the objects for which indicate how the

Page 2 of 15
 rules of the internal company objectives specified in
are formed. MOA are to be
achieved.

This is a subsidiary
This is the main document of document and is
the company and it is subordinate to both the
Position
subordinate to the Companies memorandum of
Act. association and the
Companies Act.

Articles define the

Memorandum of association
relationship of the
Relationship define the relationship of the
members and the
company with outsiders.
company. 3

23. The characteristics of business are as follows:

(A) Production or procurement of goods and services: The business firm
either manufactures goods or acquires them from manufacturers, before
they are offered to people for consumption. A business firm is said to be
manufacturing firm when it produces goods and services itself whereas
if it buying goods from producers for the purpose of sale, then it is
called a trading firm. The goods may be consumable or capital.
Consumable goods are meant for direct consumption by the final
consumers like milk, sugar, note book, clothes, shoes, butter, bread etc.
Capital goods are those goods which are used for the production of
consumer goods such as machinery, plant, materials etc. Services such
as banking, electricity, insurance, transportation, etc.
(B) Profit Earning: The main objective of business is to earn adequate
profit and obtain wealth. Earning sufficient profits is indispensable for
the survival of the business. Profit helps businessman in earning his
livelihood and also in survival, growth and expansion of business. A
businessman always tries to maximise revenues by making optimum
use of resources, lowering costs and increasing the sales level.
However, profit is not the sole criterion of business. The modern

Page 3 of 15
 concept of business is founded on the goal of profits through service."
(C) Element of Risk: The risk element always exists in every business. In
each business activity. some amount of risk is always present. Risk
might occur by various factors such as fire, strikes, theft, change in
fashion or taste of consumer, non-availability of raw material,
breakdown of machinery, increase in the level of competition, power
failure, hailstorm, change in government policies, bad labour-
management relations, natural calamities like flood, earthquake, etc.
Though. businessmen can take measures through insurance, but loss ½+½+½+½+
½+½=3
cannot completely be eliminated.
24. The registration of a partnership firm is optional. However, it is preferable
to have a formal agreement to avoid problems between partners. The
following are the implications of a firm's failure to register:
I. A partner in an unregistered firm cannot sue the firm or other partners;
II. The firm cannot sue third parties; and
III. The firm cannot bring a case against the partners.
Or
The documents needed for registration for incorporation.
 Memorandum of Association: The Memorandum of Association is
duly stamped, signed, and witnessed. In the case of a public
business, it must be signed by at least seven members. For a private
business, however, two members' signatures are sufficient.
 Articles of Association: As with the Memorandum, the Articles of
Association must be legally stamped and witnessed. This is also a
very important document for the company that describes the way
through which the objectives of MOA could be achieved.
 Prospectus: If a company wants to raise money from the public,
prospectus is also needed.
Director’s Approval, List of Directors, Registrar's Letter, Statutory
Declaration, Documentary Evidence, Registered Office.
(Any three or any other relevant points) 3
25.  Savings Account: Savings deposit account is meant for individuals
who want to save some amount of money out of their incomes. In this
account, customers can deposit money as per their ease and they can

Page 4 of 15
 also withdraw money by means of a cheque or a withdrawal slip as and
when they need it. The amount deposited in a savings account bank is
referred to as the demand liability of bank.
 Current Account: Such accounts are opened by businessmen by
making an initial deposit of ₹ 5,000 in the bank. There are no
restrictions on the amount deposited or the number of withdrawals
made. Therefore, it is also referred to as a running and active account.
 Recurring Deposit Account: In such accounts, the account holder is
required to deposit a specified sum of money every month. They are
also termed as cumulative time deposits. The period of account may
range from 12 months to 10 years.
 Fixed Deposit Account: In such accounts, a lump-sum amount is
deposited for a specified time period which can range from fifteen days
to five years. This deposit is repayable after the expiry of this fixed
period. Fixed deposits are also called time deposits or long-term
deposits.
 Multiple Option Deposit Account: It is a combination of savings
account and fixed deposit account. In this account, the depositor can
enjoy the liquidity of saving account and rate of interest of fixed
deposit account. In this account, the depositor gives standing
instruction to the bank to convert the balance in his savings account
into a fixed deposit, if it crosses a given threshold limit. (Any four)
or
The various types of bank accounts being used by Saiyam and his family
members are
a) Saiyam - Current Account.
“Saiyam being a business man has chosen the type of account in which
deposits are the most liquid and there are no limits for number of
transactions or the amounts of transactions in a day.”
b) Saiyam's mother - Saving Account.
“His mother has opened a type of account where she can conveniently
deposit the money she saves. These accounts provide cheque facility and
offer lot of flexibility for deposits and withdrawal of funds from the
account."

Page 5 of 15
 c) Samik - Recurring Account.
“Saiyam’s younger brother Samik has opened a special kind of account
wherein he will deposit Rs.1000 every month for the next two years.”
 Savings Account: Savings deposit account is meant for individuals
who want to save some amount of money out of their incomes. In this
account, customers can deposit money as per their ease and they can
also withdraw money by means of a cheque or a withdrawal slip as and
when they need it. The amount deposited in a savings account bank is
referred to as the demand liability of bank.
 Current Account: Such accounts are opened by businessmen by
making an initial deposit of ₹ 5,000 in the bank. There are no
restrictions on the amount deposited or the number of withdrawals
made. Therefore, it is also referred to as a running and active account.
 Recurring Deposit Account: In such accounts, the account holder is
required to deposit a specified sum of money every month. They are
also termed as cumulative time deposits. The period of account may
range from 12 months to 10 years. (Any One) 1+1+1+1=4
26. A cooperative organisation is "an association of persons, usually of limited
means, who have voluntarily joined together to achieve a common
economic end, through the formation of a democratically controlled
business organisation, making equitable contributions to the capital required
and accepting a fair share of risks and benefits of the undertaking ".
Features of Cooperative Societies
The main features of cooperative societies are listed below:
1. Voluntary Membership: A cooperative society is a voluntary association
of persons, which means that no individual can be forced to be a member of
a cooperative organisation. Any person having a common interest is free to
join a cooperative society and can also leave any time by giving a prior
notice. There is no compulsion to remain a member. The membership of
cooperative society is open to all, irrespective of caste, religion, colour and
gender.
2. Legal Status: It is mandatory for a cooperative society to get itself
registered with the Registrar of Cooperative Societies under the Cooperative
Societies Act, 1912. After registration, the cooperative society gets a

Page 6 of 15
 separate legal entity, different from its members. The society can buy and
sell property and make contracts in its own name. It can sue others and be
sued in its own name. The insolvency, incapacity and death of any member
does not affect the existence of cooperative society.
3. Limited Liability: The liability of the members of the cooperative society
is limited to the extent of the amount of capital contributed by them. This
defines the maximum risk that a member can be asked to bear.
4. Control: In a cooperative society, the principle of one member one vote' is
adhered. Management and control of a cooperative society lies with a
managing committee which is elected by members of the society. Each
member has one vote irrespective of capital contributed by him. The
management of a cooperative society is democratic and all members have
an equal voice in its management due to equal voting rights. Members are
allowed to give their suggestions and put their problems.
5. Service Motive: The main purpose of cooperative society is to provide
service to its members. Surplus, if generated as a result of its operations, is
distributed as dividend among the members according to the bye-laws of the
society. (Any three)
Or
A nominal partner can be two types:
Partner by Estoppel: A person who is not a partner in a firm, but through
his/her words (spoken or written) or conduct or behaviour represents
himself/herself as a partner is called partner by estoppel. Though such a
partner neither participates in the management of the firm nor contributes
capital, even then in the eyes of the third party he is known as partner of
that firm and such a partner becomes liable to those parties who advances
money to the firm on the basis of such representation. For example,
Lakshay is not a partner but he tells Shenoy that he is a partner in a firm
called Gurpreet Enterprises. On this impression, Shenoy sells goods worth
Rs. 2,40,000 to Gurpreet Enterprises. Later on, the firm fails to pay the
amount. Shenoy can recover the amount from Lakshay. Here, Lakshay is
partner by estoppel.
Partner by Holding Out: A person who is not a partner in the firm but
knowingly allows himself/herself to be represented as a partner in a firm, is

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 called partner by holding out. Such a person becomes liable to third parties
for the repayment of debts, extended to the firm due to such representation.
In order to avoid this liability, such a person should immediately issue a
denial, clarifying his position to the third party, that he is not a partner in the
firm. If he does not do so, he will be liable to the third party for repayment
of any debts taken by the partnership firm. For example, Gurpreet tells
Shenoy in the presence of Lakshay that Lakshay is a partner in the firm of
Gurpreet Enterprises. Lakshay shows no objection to the statement of
Gurpreet. Later on, Shenoy gives a loan of Rs. 2,50,000 to Gurpreet
Enterprises on the basis of the impression that Lakshay is a partner in the
firm. The firm is unable to repay the loan to Shenoy, Lakshay is liable to
pay Rs. 50,000 to Shenoy. Here, Lakshay is a partner by holding out.
1+1+1+1=4
27. (A) Type of Partnership: The type of partnership in the above case is a
Public-Private Partnership (PPP).
(B) Features of the Public-Private Partnership:
Collaboration between Sectors, Shared Risk and Responsibility, Resource
Pooling, Efficiency and Innovation, Infrastructure Development,
Government Objectives, Contractual Arrangements, Long-Term Nature,
Flexibility, Regulatory Framework (Any three or other relevant points) 1+1+1+1=4
28. Sole Proprietorship: Sole trader is a type of business unit where a person is
solely responsible for providing the capital, for bearing the risk of the
enterprise and for the management of business.
Features:
Formation and Closure, Sole risk bearer, One man control, No separate
Entity, Lack of business Continuity, Unlimited liability
(Explain any three or any other relevant point) 1+1+1+1=4
29. The following are the types of manufacturing industry:
(i) Analytical industry: This industry includes activities which are
involved in analysing and separating basic materials into a number of
products, for example, processing crude oil to produce petrol, diesel, etc.
(ii) Synthetic industry: In this industry, two or more materials are mixed
together to create a new product. For example, producing soap, biscuits, etc.
(iii) Processing industry: In this industry, raw materials are processed to
produce finished goods through a series of manufacturing operations. For

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 example, sugar from sugarcane, textile products, etc.
(iv) Assembling industry: In this industry, the finished product is produced
by assembling the various parts or components. For example, radio, car,
T.V., etc.
1+1+1+1=4
30. Aadhar enabled payment system (AEPS)- Aadhaar Enabled Payment
System allows people to carry out financial transactions on a Micro-ATM
by furnishing just their Aadhaar number and verifying it with the help of
their fingerprint/iris scan. People do not have to mention their bank account
details to carry out these transactions. With the help of this payment system,
people can send funds from one bank account to another simply through
their Aadhaar numbers.
Points of sale- It is the time and place where a retail transaction is
completed. At the point of sale, the merchant calculates the amount owed
by the customer, prepares an invoice for the customer and indicates the
options for the customer to make payment. It is also the point at which a
customer makes a payment to the merchant in exchange for goods or after
provision of a service.
Mobile Wallets -You can use mobile wallets directly on your smartphone
for shopping online, making payments to merchants, sending money to
friends & family, examples: Paytm, Google pay Jio Money etc.
Prepaid cards: Prepaid cards are simply a plastic alternative to carrying
money around and are often called everyday cards. Gift cards, meal card,
multi wallet card etc. are some of the examples. 4
31. (A) Public sector enterprise: Statutory Corporation
(B) Two examples of another Statutory Corporation in India are:
Oil and Natural Gas Corporation (ONGC), Bharat Heavy Electricals
Limited (BHEL) (Any other relevant examples)
(C) Limitations of Statutory Corporation:
Autonomy only on paper: Although statutory corporations are
autonomous, the working of these corporations are hampered by
interference from ministers, political parties that impacts their autonomy.
Lacks Initiative: These corporations lack any profit motive and therefore
the employees and management are not interested in taking any initiative
for generating profit. (Any other relevant points)

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 (D) Advantages of Statutory Corporation:

Quick decision making: Statutory corporations have significantly less file

work and formalities as compared to other forms of organisations which
results in quick decision making.

Efficient Staff: The employees of the statutory corporation are provided

fair wages, facilities and proper working conditions along with
developmental programs. All these contribute towards making employees
motivated to perform more efficiently. (Any other relevant points)

Or
Type of Public Enterprise:
The type of public enterprise highlighted above is a Government Company.
Minimum Investment by Government:
In a government company, the government must hold at least 51% of the
total paid-up share capital.
Merits of Government Companies:
State Control: Government companies allow the government to maintain
control over strategic industries and key sectors of the economy, ensuring
that important decisions are aligned with national objectives.
Social Welfare: Government companies often prioritize public welfare over
profit maximization. They can provide essential goods and services at
affordable prices, especially in sectors where private companies might not
be motivated to operate due to low profitability.
(Any other relevant points)
Demerits of Government Companies:
Bureaucracy and Inefficiency: Similar to other forms of public
enterprises, government companies can suffer from bureaucratic red tape
and inefficiencies due to government regulations and interference.
Lack of Innovation and Competition: Government companies might face
challenges in keeping up with technological advancements and market
competition, as they might not always operate with the same level of
innovation and competitiveness as private sector counterparts. 6

32. Mr. Naresh bought a fire insurance for his warehouse by giving false
information about the goods stored in the warehouse.
Utmost good faith: A contract of insurance is a contract of uberrimae fidei
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i.e., a contract found on utmost good faith. Both the insurer and the insured
should display good faith towards each other in regard to the contract. It is
the duty of the insured to voluntarily make full, accurate disclosure of all
facts, material to the risk being proposed and the insurer to make clear all
the terms and conditions in the insurance contract.
It is not the warehouse that is insured, but it is the pecuniary interest of
the insured in them, which is insured
Insurable Interest: Insurable interest means some pecuniary interest in the
subject matter of the insurance contract. The insured must have an interest
in the preservation of the thing or life insured, so that he/she will not suffer
financially on the happening of the event against which he/she is insured. In
case of insurance of property, insurable interest of the insured in the subject
matter of the insurance must exist at the time of happening of the event. In
order to name insurable interest however, it is not necessary that one should
be the owner of the property. For example, a trustee holding property on
behalf of others has an insurable interest in the property
He thought that in the event of loss, the insurer will compensate him
and put him in the in the same position that he occupied immediately
before the happening of the event insured against
Indemnity: According to it, the insurer undertakes to put the insured, in the
event of loss, in the same position that he occupied immediately before the
happening of the event insured against. In other words, the insurer
undertakes to compensate the insured for the loss caused to him/her due to
damage or destruction of property insured. The compensation payable and
the loss suffered are to be measured in terms of money. The principle of
indemnity is not applicable to life insurance
Since the warehouse was insured, he did not take adequate steps to
minimize loss when the ware house caught fire during last summer
Mitigation: This principle states that it is the duty of the insured to take
reasonable steps to minimise the loss or damage to the insured property.
Suppose goods kept in a store house catch fire then the owner of the goods
should try to recover the goods and save them from fire to minimise the loss
or damage. The insured must behave with great prudence and not be
careless just because there is an insurance cover. If reasonable care is not

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taken like any prudent person, then the claim from the insurance company
may be lost.
He took double insurance therefore it is the right of an insurer who has
paid claim under an insurance, to call upon other liable insurers to
contribute for the loss payment.
Contribution: As per this principle it is the right of an insurer who has paid
claim under an insurance, to call upon other liable insurers to contribute for
the loss of payment. It implies, that in case of double insurance, the insurers
are to share the losses in proportion to the amount assured by each of them.
In case there is a loss, when there is more than one policy on the same
property, the insured will have no right to recover more than the full amount
of his actual loss. If the full amount is recovered from one insurer the right
to obtain further payment from the other insurer will cease. (Any four)
Or
(A) No, the company will not be reimbursed if the surveyor discovers the
true cause of the fire, and the contract will be voided.
(B) There are three aspects to fire insurance:
 Insurable Interest: The insured must have an insurable interest in
the insurance's subject matter. The insurance contract is void if there
is no insurable interest.
 Utmost Good Faith: When providing information to the insurance
company about the subject matter of the policy, the insured should
be accurate and honest.
 Indemnity: The contract for fire insurance is a rigorous indemnity
contract. In the case of a loss, the insured can sue the insurer for the
full amount of the loss. This is subject to the maximum amount of
insurance coverage for the subject matter.
(C) When attempting to arrange money from a false claim, the principle of
utmost good faith is disregarded. Insurance contracts demand that both
parties operate in the best interests of the other. This means that both parties
must provide all relevant information honestly and completely. This
maintains impartiality while also assisting insurance firms in appropriately
pricing premiums for applicants. If an applicant makes a major fact
deception that the insurance company relies on, the policy might be deemed

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 null and void. Hence, the values disregarded are trust, honesty and
transparency.
6
33. (A) Business Risk
(B) Speculative Risk
(C) Causes of Business Risk:
i. Natural causes: Natural causes of business risk include natural
calamities like earthquake, tsunami, tornado, famine, floods and
drought, etc. Humans and businesses do not have a control over the
natural causes and there certainly isn’t any kind of preparation that
can be undertaken for such a business risk.
ii. Human Causes: The human causes of business risk are due to the
loss of business that arises from changes in customer preferences,
employee mindset, agitation by workers, negligence by employees,
strikes and lockouts.
iii. Economic Causes: Economic causes of business risk arise from
changes in the different economic factors such as increasing
competition, changing market conditions, increase in price of raw
materials, production cost and wages.
iv. Other Causes: There may be physical causes and political causes.
Physical causes include technical or mechanical causes which affect
the working of the assets of business. For example, breakdown of
cooling machine results in damage of perishable goods such as milk
and ice cream. Political causes include changes in government
policies regarding taxation, excise duty, licensing. foreign trade, etc.
and fall of the government, civil war, changes in laws may lead to
1+1+1+1+1+
huge loss in business.
1=6
34. (A) Promoter: Mr. Mohan
(B) Position of Promoter: A firm's promoters have a fiduciary relationship
with the company, which they must not abuse. They can only make a profit
if it is publicly revealed; they cannot make any hidden gains. In the event
of non-disclosure, the company has the right to cancel the contract &
reclaim the money paid to the promoters. It can also sue for damages or
losses incurred because of material information not being disclosed.
Promoters do not have the legal right to claim expenses incurred in the

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company's promotion. The company, on the other hand may choose to
reimburse them for their pre-incorporation costs. The corporation may also
pay the promoters a lump-sum payment or a commission on the purchase
price of property obtained through them or on the shares sold as
compensation for their efforts. The corporation may also provide them stock
or debentures or give them the opportunity to buy the securities later.
(C) Functions of Promoter:
1. Identification of business opportunity: The opportunity could be in the
form of developing a new product or service, making a product available
through a new channel, or any other investment opportunity. The technical
and economic feasibility of the opportunity is next assessed.
2. Feasibility studies: Converting all potential business ideas into actual
projects may not be viable or lucrative. As a result, the promoters do
extensive feasibility assessments. The feasibility studies listed below may
be carried out:
○ Technical feasibility: An excellent idea may be technically impossible to
implement. It could be due to a lack of readily available raw materials like
material, labour, location, infrastructure or technology.
○ Financial viability: Every company activity necessitates the use of
capital. The promoters must calculate the amount of money needed to
pursue the recognised business idea. If money cannot be secured, the project
must be abandoned.
○ Economic feasibility: The project might be technically and financially
possible, but it may have a slim possibility of being profitable. Hence this
step focuses on the cost-benefit analysis of the company to find out its
future viability.
3. Name approval: The promoters must choose a name for the company
and file an application for approval to the registrar of companies in the state
where the firm's registered office will be located. If the proposed name has
been rejected, an alternate name may be accepted. In the application to the
Registrar of Companies, three names are submitted in priority order.
4. Fixing up Signatories to the Memorandum of Association: The
members who will sign the proposed company's Memorandum of
Association must be decided by the promoters. Those who sign the

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memorandum are also the company's first directors. Their signed consent to
serve as Directors and to purchase the company's qualification shares is
required.
5. Appointment of professionals: The promoters select specialists such as
mercantile bankers, auditors, and others to assist them in preparing the
essential documents that must be filed with the Registrar of Companies.
6. Preparation of necessary documents: The promoter takes measures to
prepare necessary legal documents that must be submitted to the Registrar
of Companies for the company to be registered under the law. The
Memorandum of Association, Articles of Association, and Consent of
Directors are the documents required. (Any three or any relevant points) 1+2+3=6

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