PSBB LEARNING LEADERSHIP ACADEMY, BANGALORE

AN ISO CERTIFIED SCHOOL QUARTERLY EXAMINATION 2025-2026

ANSWER KEY-BUSINESS STUDIES(054)
STANDARD - XII

Date:17.09.2025 Marks:80
No.of printed pages: 11 Time: 3 Hrs.

1. (d) favourable financial leverage, as return on investment is higher than cost of debt.
2. (b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct
explanation of Assertion (A)
3. (d) labelling
4. (a) Competitive spirit among the existing staff
5. (c)Training and development, performance appraisal, promotion and career planning,
compensation
6. (c) A-iii, B-i, C-ii
7. (c) Both the statements are true
8. (b) Effective but not efficient
9. (D) Societal Marketing concept
10. (c) A customer may seek to satisfy functional, promotional and technological benefits
from the purchase of a product.
11. (b) Packaging
12. (d) It increases the role of the subordinates in the organisation by giving them more
autonomy.
13. (a) Statement I is true and Statement II is false.
14. (d) Gathering and Analysing market information
15. (c) Such employees are not likely to be good employees as their background is not
sufficiently known.
16. (b) Financing decision
17. (b) Both the statements are false. The objective of financial management is not to
maximize the wealth of directors, but to maximize the wealth of shareholders or
owners of the company.So, Statement I is false. The financing
decision is affected by the extent of retained earnings. If a company has sufficient
retained earnings, it may not need to raise funds externally. So, Statement II is also
false.
18. (c) Functional
19. (a) Publicity
20. (c) Gang boss

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21. (A) Explain any 3 features of management.
1. Goal-Oriented Process
Management unites the efforts of individuals in the organization to achieve specific
objectives. These goals may be economic (like profit), social (like customer
satisfaction), or personal (like employee development).

2. Pervasive
Management is required in all types of organizations—whether economic, social, or
political—and at all levels (top, middle, and lower).

3. Multidimensional
Management is not limited to one activity. It includes:
 Work management (tasks and operations),
 People management (employees and teams),
 Operations management (resources and processes).

4. Continuous Process
Management is an ongoing process. It is not a one-time activity but a series of
continuous, interrelated functions like planning, organizing, staffing, directing, and
controlling.

5. Group Activity
Management involves coordinating a group of people. It is a team effort where
individuals work together to achieve common goals.

6. Dynamic Function
Management adapts to changes in the business environment such as economic shifts,
technological advancements, and social trends.

7. Intangible Force
Management cannot be seen but its presence is felt through the results it produces—
like improved productivity, employee satisfaction, and goal achievement
(OR)
21.(B) Any 3 objectives of management
1. Organizational Objectives
These are the goals related to the survival, growth, and profitability of the business.
 Survival: Ensuring the business continues to exist by earning enough revenue to cover
costs.
 Growth: Expanding the business in terms of sales, market share, or capital
investment.
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  Profit: Generating sufficient profits to cover risks and sustain operations.

2. Social Objectives
These refer to the organization’s responsibility towards society.
 Providing quality products at reasonable prices.
 Avoiding unfair trade practices.
 Generating employment opportunities.
 Protecting the environment and conserving natural resources.

3. Personal Objectives
These relate to the goals of employees and individuals within the organization.
 Fair remuneration and incentives.
 Good working conditions.
 Opportunities for personal growth and development.
 Recognition of efforts and contributions.

22. Concept: Staffing: “Staffing is the process of acquiring, developing, and retaining the
right people in the organization.”
By implementing training and career development, the HR manager is addressing
the development and retention aspects of staffing. staffing function, which involves:
 Recruitment
 Selection
 Training and development
 Performance appraisal
 Compensation
 Promotion and career planning (1+1+1=3 Marks)

23. (A) Any three principles of Management

a) Science, Not Rule of Thumb
Decisions should be based on scientific analysis rather than intuition or guesswork.
This involves studying tasks and determining the most efficient way to perform them.
b) Harmony, Not Discord
There should be harmonious relations between management and workers. Conflicts
should be resolved through mutual understanding and cooperation.
c) Cooperation, Not Individualism
Managers and workers should work together with mutual trust. Incentives and open
communication help build cooperation.

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d) Development of Each and Every Person to His or Her Greatest Efficiency and
Prosperity
Employees should be scientifically selected and trained to perform tasks efficiently.
This benefits both the organization and the individual.
(OR)

Fayol’s 14 Principles of Management (ANY THREE-with explanation)

1. Division of Work
Work should be divided among individuals and departments to improve efficiency
and specialization.
2. Authority and Responsibility
Managers must have the authority to give orders and the responsibility to ensure tasks
are completed.
3. Discipline
Employees must obey and respect the rules and agreements governing the
organization.
4. Unity of Command
Each employee should receive orders from only one superior to avoid confusion and
conflict.
5. Unity of Direction
All activities with the same objective should be directed by one manager using one
plan.
6. Subordination of Individual Interest to General Interest
The interests of the organization should take precedence over individual interests.
7. Remuneration
Employees should be fairly compensated for their services.
8. Centralization and Decentralization
The degree of centralization or decentralization depends on the situation and
organization’s needs.
9. Scalar Chain
A clear line of authority should run from top management to the lowest ranks (chain
of command).
10. Order
There should be a place for everything and everyone, and everything and everyone
should be in their place.
11. Equity
Managers should be kind and fair to their subordinates.
12. Stability of Tenure of Personnel
Job security and stability promote efficiency and loyalty.

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 13. Initiative
Employees should be encouraged to take initiative and contribute ideas.
14. Esprit de Corps
Promoting team spirit will build harmony and unity within the organization

24. (A) Three points of significance of decentralization.

i. Reduces the burden on top management – Routine decisions are handled at
lower levels, allowing top management to focus on strategic issues.
ii. Facilitates quick decision-making – Local managers can take decisions without
waiting for approval from the head office.
iii. Develops managerial talent – It provides opportunities for lower-level managers
to take responsibility and grow.
(OR)
24.(B) three limitations of formal organisation.
i. Lack of initiative – Employees may feel discouraged from taking initiative due to
rigid rules.
ii. Delay in action – Following the chain of command can slow down decision-making.
iii. Ignores social needs – It does not consider informal relationships and emotional
needs of employees
4 Marks
25. (A) a. Customer Support Services
Customer support services refer to the post-sale services provided to customers to
ensure satisfaction and build long-term relationships. These services include:
After-sales service (e.g., installation, maintenance, repairs)
Handling customer complaints
Providing warranties and guarantees
Technical support and helplines
Significance:
Enhances customer satisfaction and loyalty
Builds brand reputation
Encourages repeat purchases and referrals

b. Packaging and Labelling

Packaging refers to designing and producing the container or wrapper of a product.
Labelling involves creating and attaching a label that provides information about the
product.
Functions of Packaging:
Protects the product from damage
Facilitates easy handling and transportation

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 Acts as a promotional tool
Differentiates the product from competitors
Functions of Labelling:
Provides essential information (ingredients, usage, expiry date)
Helps in product identification
Assists in legal compliance
Enhances brand recognition
(OR)

25.(B) a. Personal Selling – Features

1. Personal Contact:
It involves direct interaction between the sales representative and the potential
customer. This allows for personalized communication and immediate feedback.
2. Two-Way Communication:
Personal selling facilitates dialogue. The salesperson can understand customer needs
and respond accordingly, making it more effective in building relationships.

b. Advertising – Features
1. Mass Communication:
Advertising reaches a large audience simultaneously through various media like TV,
newspapers, internet, etc.
2. Impersonal Form of Promotion:
Unlike personal selling, advertising does not involve direct contact with customers. It
is a one-way communication method aimed at informing or persuading.

26. a) Taxation Policy

The tax rate on dividends affects how much profit a company chooses to distribute.
If the dividend income is taxed heavily, shareholders may prefer capital gains, and
companies may retain earnings instead of paying dividends.
Conversely, if dividend income is tax-exempt or lightly taxed, companies may be more
inclined to declare dividends.

b) Cash Flow Position

A company must have adequate cash reserves to pay dividends.
Even if profits are high, insufficient cash flow can restrict dividend payments.
Companies with strong cash flow are better positioned to declare regular and higher
dividends.
27. Steps in organising process.(with explanation.)
(i) Identifying and dividing the work into manageable activities.

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 (ii) Departmentalization or departmentation where activities of a similar nature
are grouped together.
(iii) Assignment of duties to job position.
(iv) Establishing reporting relationship so that each individual knows from
whom he has to take orders and whom he is accountable.
28. Any 4 functions of Staffing.
(i) Recruitment.(Search for qualified people.)
(ii) Analysing jobs, Collecting information about jobs to prepare job
descriptions.
(iii) A Developing compensation and incentive plans.
(iv) Training and development of employees for efficient performance and
career growth.
(v) Maintaining labour relations and union management relations.
(vi) Handling grievances and complaints,
(vii) Providing for Social Security and welfare of employees,
(viii) Defending the company in lawsuits and avoiding legal complications.
29. (a) Apprenticeship training.
a) These are designed to acquire a high level of skill.
b) People seeking to enter skill jobs to become, for example, plumbers, electricians or
iron workers are often required to undergo apprenticeship training.
c) These apprenticeship are training

(b) Benefits David could get on being trained.

1. Practical Skill Development
Apprenticeship training provides hands-on experience in real work environments.
Trainees learn by doing, which helps them acquire job-specific skills more effectively
than classroom learning alone.

2. Cost-Effective for Employers

Organizations benefit from having semi-skilled workers during the training period.
Apprentices contribute to productivity while learning, reducing the cost of hiring fully
trained professionals.

3. Builds a Talent Pipeline

Apprenticeship programs help companies groom future employees who are already
familiar with the organization’s processes, culture, and expectations. This reduces
recruitment and onboarding time later

30. (Factors affecting the choice of capital structure.(Any 4 With explanation.)

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1. Cash Flow Position 8. Floatation Costs

2. Interest Coverage Ratio 9. Risk Consideration

(ICR)

3. Debt Service Coverage 10. Flexibility

Ratio (DSCR)

4. Return on Investment (ROI) 11. Control

5. Cost of Debt 12. Regulatory Framework

6. Tax Rate 13. Stock Market Conditions

7. Cost of Equity 14. Capital Structure of Other Companies

Factor Key concept

Cash Flow Position Stable cash flows are needed to meet fixed financial
obligations.

ROI / ICR Debt is favorable if ROI > cost of debt; ICR shows
ability to cover interest.

DSCR Measures ability to cover all debt payments; higher

DSCR = better debt capacity.

Cost of Debt Lower interest rates make debt more attractive.

Tax Rate Interest is tax-deductible; higher tax rate increases

debt's attractiveness.

Cost of Equity More debt raises financial risk and cost of equity;
balance is essential.

Floatation Costs Equity issuance is costlier than borrowing; affects

financing choice.

Risk Consideration Low business risk allows more debt; high risk requires
caution.

Flexibility Full debt usage limits future borrowing; maintain

reserve capacity.

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1. Cash Flow Position 8. Floatation Costs

2. Interest Coverage Ratio 9. Risk Consideration

(ICR)

3. Debt Service Coverage 10. Flexibility

Ratio (DSCR)

4. Return on Investment (ROI) 11. Control

5. Cost of Debt 12. Regulatory Framework

6. Tax Rate 13. Stock Market Conditions

7. Cost of Equity 14. Capital Structure of Other Companies

Factor Key concept

Control Debt retains control; equity dilutes ownership.

Regulatory Framework Legal compliance affects ease of raising funds.

Stock Market Conditions Bullish market favors equity; bearish market favors
debt.

Industry Norms Industry debt-equity ratios guide decisions but must be

adapted to the firm.

31. a) Identification of Frameworks

The frameworks referred to in the case are Organizational Structures.
Malini's company uses a Functional Structure:
She divides the work into departments like web designing, accounting, R&D, and
customer service. Each department performs specialized tasks and reports to a
coordinating head.
Shalini's company uses a Divisional Structure:
She heads the Babylon Web Services division and is responsible for its profit or loss.
The division operates as an autonomous unit, allowing faster decision-making.

b) Four Differences Between Functional and Divisional Structures

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 Basis of Functional Structure Divisional Structure
Difference

Formation Based on functions (e.g., Based on products, services,

marketing, finance) or geographical areas

Responsibility Responsibility lies with Responsibility lies with

functional heads divisional heads

Decision- Slower due to centralized Faster due to autonomy of

making authority divisions

Specialization Promotes functional Promotes product/service

specialization specialization
32. a) Concept of Financial Management:The concept discussed is Working Capital
Management.
Working capital refers to the funds required for day-to-day operations of a business.
Satya Prakash makes sufficient investments in current assets and faces delays in stock
replenishment, which directly impacts working capital needs.

b) Factors Affecting Working Capital Requirement in the Case

Nature of Business:
Since it's a wholesale business, it requires a higher investment in current assets to maintain
inventory and meet customer demand.
Credit Policy:
Selling goods on credit (₹50 lakhs to Deshmukh Pure Grains) increases the receivables,
thereby increasing the need for working capital.
Inventory Management:
Immediate placement of stock replenishment order and delayed delivery from suppliers
highlights the need for buffer stock, affecting working capital.
Operating Cycle:
The time lag between sales and replenishment affects the cash conversion cycle,
increasing the working capital requirement.
33. Set of marketing tools that can be constantly shaped and reshaped by marketing
managers are:
(i) Product: Product is a mixture of tangible and intangible attributes which are capable
of being exchange for a value with ability to satisfy customer needs.
(ii) Price: Price may be defined as the amount of money paid by the buyer (or received
by the seller) in consideration for the purchase of a product or a service.

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 (iii) Place or Physical Distribution: Place or Physical Distribution is concerned with
making the goods and services available at the right place, in right quantity and at the
right time so that the consumers can purchase the same.
(iv) Promotion: Promotion refers to the use of communication with the objective of
informing potential
customers about the product and persuading them to buy the same.
34. (a) Coordination
(b) Features of Coordination:(any 5)
(i) Coordination integrates group efforts by unifying diverse interests into purposeful
work activity.
(ii) Coordination ensures unity of action by acting as a binding force between
departments and ensuring that all action is aimed at achieving the goals of the
organisation.
(iii)Coordination is a continuous process as it starts at the planning stage and continues
till controlling (iv) Coordination is a pervasive function as it is required in all types of
organisations, in all the departments
and at all levels.
(v) Coordination is the responsibility of all managers at the top, middle and operational
level.

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