Class Test: Chapter 9,10,11,12

Subject: [Link]
Class:XII

Section-A

Q1. Rizul Bhattacharya, after leaving his job, wanted to start a Private Limited Company with his son. 1
His son was keen that the company may start manufacturing mobile-phones with some unique
features. Rizul Bhattacharya felt that mobile phones are prone to quick obsolescence and a heavy
fixed capital investment would be required regularly in this business. Therefore, he convinced his
son to start a furniture business.
Identify the factor affecting fixed capital requirements which made Rizul Bhattacharya choose the
furniture business over mobile phones.

Q2. Yash had severe pain in his throat, so he called up the doctor and asked for telephonic advice. The 1
doctor prescribed him a sachet of Throat Reliever Hot Sip. He asked his servant to get a sachet
from a local chemist with a cash memo. After consuming the sachet, he started feeling more ill, so
he picked up the empty sachet and started reading the label. To his utter dismay, the sachet had
already expired last month. Which of the following remedies is not available to him any longer as
a consumer?
(a) To withdraw the hazardous goods from sale
(b) To replace the defective product with a new one
(c) To refund the price paid for the product
(d) To pay a reasonable amount of compensation for any loss suffered by the consumer due to the
negligence of the opposite party

Q3. In case an aggrieved consumer is not satisfied with the decision of the National Commission, he 1
can make a further appeal in _____.
(a) State Commission
(b) District Forum
(c) Supreme Court of India
(d) All of the above

Q4. The inability of a business to meet its fixed financial obligations, like payment of interest, is 1
known as
(a) Business risk

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 (b) Financial risk
(c) Long-term risk
(d) Market risk

Q5. Kapil Limited is a company dealing in ready-to-eat food products. Over the years, the earning 1
potential of the company has gone up and it enjoys a good reputation. The Financial Manager is
confident of the fact that not just the earnings of the current year, but of our future years are likely
to be high. Identify the related factor of dividend decision being described in the given lines.
(a) Earnings
(b) Stability of earnings
(c) Stability of dividend
(d) Growth prospects

Q6. Gamble Limited is a company dealing in healthcare products. The company is earning high profits 1
but is short on cash, so it has decided to declare less dividends in the current financial year.
Identify the factor related to dividend decision being described in the above lines.
(a) Preference of shareholders
(b) Earning
(c) Cash flow position
(d) Contractual constraints

Q7. Suman bought a box of cheese of a reputed brand from a local shopkeeper. On opening the box 1
she found a piece of stone in the cheese. She reported the matter to the shopkeeper who forwarded
her complaint to the concerned company. Within a week the representative of the company visited
Soman’s residence with an apology and as a replacement offered her a new cheese pack with four
other varieties of cheese as compensation for the inconvenience to her.
Identify the consumer right which Suman exercised.

Q8. Himanshu purchased a new car from ‘Galaxy Motors’ for Rs.25 lakhs. He was offered free 1
insurance for the first year and three free servicing to be availed after the car had covered 5,000
km, 10,000 km and 15,000 km respectively. When Himanshu took the car for the first free
servicing, he was told that the car was not new and first service had already been availed on this
car. He felt cheated and filed a complaint in the State Commission. Being not satisfied with the
decision of the State Commission, after two months he decided to file an appeal against it.
Can Himanshu appeal against the decision of the State Commission? Give reason in support of
your answer.

Section-B

Q9. A company wanted to raise funds so it reached out to facilities and institutional arrangements 3
through which long term funds (debt + equity) were raised and invested. A lot of thinking was
done whether the company should have gone for debt or equity. Finally, it decided to go for
equity. The owner of the company decided to follow the guidelines of SEBI.
[Link] concept of financial market is highlighted in the starting of the case?
[Link] two objectives of SEBI.

Q10. Ramnath Ltd. is dealing in import of organic food items in bulk. The company sells the items in 3
smaller quantities in attractive packages. Performance of the company has been up to the
expectations in the past. Keeping up with the latest packaging technology, the company decided to

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 upgrade its machinery. For this, the Finance Manager of the company, Mr. Vikrant Dhull,
estimated the amount of funds required and the timings. This will help the company in linking the
investment and the financing decisions on a continuous basis.
Therefore, Mr. Vikrant Dhull began with the preparation of a sales forecast for the next four years.
He also collected the relevant data about the profit estimates in the coming years. By doing this,
he wanted to be sure about the availability of funds from the internal sources. For the remaining
funds he is trying to find alternative sources.
Identify the financial concept discussed in the above paragraph. Also, state any two points of
importance of the financial concept, so identified.

Q11. Abhishek Ltd’ is manufacturing cotton clothes. It has been consistently earning good profits for 3
many years. This year too, it has been able to generate enough profits. There is availability of
enough cash in the company and good prospects for growth in future. It is a well managed
organisation and believes in quality, equal employment opportunities and good remuneration
practices. It has many shareholders who prefer to receive a regular income from their investments.
It has taken a loan of Rs. 50 lakhs from ICICI Bank and is bound by certain restrictions on the
payment of dividend according to the terms of the loan agreement.
The above discussion about the company leads to various factors which decide how much of the
profits should be retained and how much has to be distributed by the company.
Quoting the lines from the above discussion, identify and explain any three such factors.

Section-C

Q12. Ginika, Tanish and Rohit were friends from college days and now they are doing different 4
kinds of business. They regularly meet and discuss their business ideas and exchange
notes on customer satisfaction, marketing efforts, product designing, selling techniques,
social concerns etc.
In one of such meetings, Ginika drew the attention of Tanish and Rohit towards the
exploitation of consumers. She said that most of the sellers were exploiting the consumers
in various ways’ and were not paying attention towards the social, ethical and ecological
aspects of marketing, whereas she was not doing so.
Tanish said that they were under pressure to satisfy the consumers, but stated that the
consumers would not buy or not buy enough unless they were adequately convinced and
motivated for the same.
Rohit stressed that a company cannot achieve its objectives without understanding the
needs of the customers. It was the duty of the businessmen to keep consumer satisfaction
in mind because business is run by the resources made available to them by the society. He
further stated that he himself was taking into consideration the needs of the customers.
Identify the various types of thinking that guided Ginika, Tanish and Rohit in the
marketing efforts of their business.

Q13. “Time Line” watch manufacturing company is a renowned company marketing watches. It 4
performs various activities like, market analysis, product designing or merchandising,
packaging, warehousing, branding, pricing, promotion and selling. The company
maintains good customer relations through various follow up activities. This helps the
company in procuring repeat sales orders.

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 [Link] the concept related to the activities mentioned in the above paragraph.
[Link] any two features of the concept identified in part (1)

Q14. A company was marketing water purifiers which were very popular due to their quality 4
and after sales services provided to the customers. The company was a leading company in
the market and earning huge profits. Because of huge profits, the company ignored the
after sales services. As a result, its relations with customers got spoiled and the image of
the company was damaged in the public. The top management became concerned when
the profits for the current quarter fell steeply. On analysis, it was revealed that ignoring the
after sales services was its reason. Therefore, the company took all possible measures to
protect and promote its favourable image in the eyes of the public. As a result, the
goodwill of the company improved in the society.
[Link] and state the communication tool used by the marketer in the above case to
improve its image.
[Link] explain role of the tool as identified in part (1)

Section-D

Q15. Identify the type of function of SEBI in the following cases: 6

[Link] was unwilling to buy shares in the stock market as he was told by someone that stock
market is a place where various malpractices take place. He decides to discuss the matter with his
friend who explains to him how SEBI takes care of the interests of the investors.

[Link] wants to become a stock broker. When he approaches people and asks them to get started
as investors through him they ask for a certificate which the SEBI must have given him. He
becomes aware of the fact that in order to function as a stock broker he will have to get registered
with SEBI.

[Link] Steels already has issued shares in the stock market and is a well known name among the
people. Recently it issued shares but had to go through the proper audition process and thorough
inspection about the various requirements to be fulfilled as an issuer.

[Link] some people were caught in some of the malpractices like insider trading. The SEBI
has decided to take strict action and cancel their candidature. Further penalties are also to be
imposed on them.

5.A magazine has published a report on how SEBI is serious about training the intermediaries and
deciding their code of conduct. A lot of research has been going on in various related areas and
the information of use is being published so that various participants can get useful results from it.

[Link] workshops are being organized to create awareness among the investors. The programme
will not stop here. There is going to be a proper education of the investors. After the workshop is
over a test will be conducted to check the knowledge and applicative ability of the investors.

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Q16. Amazing Duniya’ is a tourist agency. It also has a group of hotels. The company offers new types 5
of schemes to potential customers. Amit was offered a scheme of staying in a hotel for 6 days and
5 nights for free. However when he reached the destination he was told that every room of the
hotel was booked. He told them that he was told earlier that his room was booked. He even
showed them the confirmation he received in his mail.
[Link] Amit file a complaint against the tourist agency?
[Link] he get relief in this case?
[Link] the relief he will get.
[Link] consumer right has been violated in this case?

Q17. Differentiate between capital market and Money Market. 6

Q18. Arun is a successful businessman in the paper industry. During his recent visit to his 6
friend’s place in Mysore, he was fascinated by the exclusive variety of incense sticks
available there. His friend tells him that Mysore region is known as a pioneer in the
activity of Agarbatti manufacturing because it has a natural reserve of forest products
especially Sandalwood to provide for the base material used in production. Moreover, the
suppliers of other types of raw material needed for production follow a liberal credit
policy and the time required to manufacture incense sticks is relatively less. Considering
the various factors, Arun decides to venture into this line of business by setting up a
manufacturing unit in Mysore.
In context of the above case:
[Link] and explain the type of financial decision taken by Arun.
[Link] the three factors mentioned in the paragraph which are likely to affect the
working capital requirements of his business.

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