Z.ED : WBCHSE

BUSINESS ORGANISATION (XII) -2014

GROUP-A (1 Marks)

Objective:

1. Example of joint sector business is Bengal Peerless / Tata Steel/ I.T.C.(2007

2. Food Corporation of India s an example of------------------. (a) Public sector enterprise, (b) Private Sector.

3. The main objective of public sector is to ---------------. (a) Earn profit; (b) do social welfare

4. India is an example of --------------. (a) Socialistic economy system, (b) mixed economy system

5. Freedom of enterprise is found in (a) Capitalistic economy, (b) Socialistic system, (c) Mixed system

6. Business is a constituent of ---------------. (Economy).

7. Economy is a part of -----------------. (Society).

8. Haldia petrochemicals Limited are an example of ---------------sector business in West Bengal. (Joint)

9. ----------- leads to monopoly. (Capitalism)

10. ----------- is a group of individuals united together with a definite end in view. (Society).

11. In ---------- both government and private capital are invested. (Joint sector).

12. Lack of competition is seen in capitalism. (F)

13. Life Insurance Corporation of India is an example of public sector enterprise. (T)

14. Lack of skill external/internal obstacle of environment.

15. The external factors of business environment are controllable/ uncontrollable.

16. The social/ physical environment of country depends on area, topography, climate, rivers, minerals resources etc.

17. Climate is an important factor of ------------ environment. (Physical).

18. Natural environment is not created by people. (T)

19. Globalization has made business environment complex. (F)

20. Environment pollution is a constraint for industry. (T)

21. Fast and quick technological changes take place due to globalization. (T)

22. The business environment of the country does not depend on its economic condition.(T)

23. Low purchasing power of people is one of the important features of Indian business environment. (T)

24. Foreign trade of the country is regulated by -------------- (Government)

25. National Arbitration Board was formed in 1947/1951/1962

26. Essential commodities Act was passed in 1953/1955/1956

27. Government and business are the two wings of an economy. (T)

28. The main objective of industrial policy, 1991 was to introduce liberalization with a view to integrate the Indian economy with the World economy. (T)

29. The Government Acts as a promoter to settle Industrial disputes through its machinery of conciliation officer and industrial and Tribunals. (F)

30. Hindustan Machine tools limited are an example of departmental organization/ Government Company.

31. Government Company is registered under company Act 1956/ special legislation.

32. In government company, the private ownership is less than/ more than 50%

33. Post and Telegraph is the example of -----------management. (Departmental)

34. The departmental organization is under the full authority of the ------------- (government)

35. ----------- refers to freedom as regards management of an organization. (Autonomy)

36. Joint venture was undertaken first in 1956-57/ 1960-61/01970-71.

37. Gujarat Fertilizer Company is an example of joint sector. (T)

38. A multinational co. is a joint venture. (T)

39. Trust is partial / complete consolidation.

40. Associated cement co. of India Ltd is an example of vertical / horizontal / partial combination.

41. Business combination is formed for increasing……………… (Business strength).

42. Bata India Limited is an example of ………………….. Combination. (Vertical).

43. Under …………………. Various firm engaged in different processes of production are combined. (Vertical)

44. ………………….. is an association of workers formed with the object of protecting their interests and rights. (Trade union)

45. Holding company is the example of partial consolidation. (T)

46. The objective of horizontal combination is to enjoy benefits of large scale production. (T)

47. Elimination of competition is one of the causes of combination. (T)

48. Chamber of commerce is a voluntary association which aims at promoting and protecting the common interest of all the members. (T)

49. Cable connection / computer are must resource of e-commerce.

50. Payment is made through cash card / cheques in e-commerce.

51. Outsourcing / staffing is helpful in earning maximum profit for the country.

52. E-Commerce introduces paperless exchange of business information using electronic data interchange and ……………………. (Electronic mail).

53. E-Commerce involves less clerical work. (T)

54. E-Commerce is offering lower costs per business transaction. (T)

55. Scheduled banks / Non- scheduled bank are called listed banks with Reserve Bank of India.

56. Accepting of deposit is the primary function / secondary function of commercial Bank.

57. Issuing of credit letter is the primary function / secondary function of commercial Banks.

58. Commercial Banks accepts two / four / six types of deposit.

59. Credit cards are issued by banks / insurance companies.

60. No. of scheduled bank under public sector is 224 / 250

61. No. of Nationalized bank is 18/ 28

62. The scheduled banks are required to deposit …………. Of current & term deposits to Reserve Bank. (6%)

63. State Bank of India is an example of ………………….. (commercial bank)

64. Banks having at least Rs. 5, 00,000 towards paid up capital and reserve are known as……………….. (Scheduled banks)

65. When a ………is dishonoured, a notice of dishonor is to be given by the holder to the drawer. (bill)

66. …………………acts as banker’s bank. (Reserve bank of India)

67. Utmost good faith is one of the principles of Insurance / office/ godown.

68. Life Insurance / Marine Insurance is applicable in the name of person only.

69. General Insurance / Life Insurance is a contract of payment of an assured sum of money at the end of certain period or maturity.

70. Nomination is compulsory in case of General Insurance / Life Insurance to avoid any dispute.

71. The agreement of general Insurance is a contract of……………….. (Indemnity).

72. Cash-in-transit insurance is an example of ……………… (General insurance).

73. Endowment policy is the most popular form of life insurance. (T)

74. Marine insurance is an example of general insurance. (T)

75. All risks are not insurable. (T)

76. Cheap mode of transport is airways / waterways.

77. Among all the transport air / road / rail is the fastest in speed.

78. The speed of ocean transport is very low / high.

79. Railway board was constituted in ……….. (1905).

80. Air transport is the costliest mode of transport. (T)

81. Railway transport has no flexibility. (T)

82. Demand of the commodities is decreased / increased by advertisement.

83. The medium of advertisement / sales promotion is distribution of sample, issue of coupon etc.

84. An effective advertisement removes the gap of ……………….. (Knowledge).

85. Advertisement and Publicity are synonymous. (F)

86. One of the powerful media of advertising is television. (T)

87. Henri Fayol propounded 10/ 12/ 14 principles of management.

88. Scientific management is science / art / philosophy /

89. Management is a process of group / single activity.

90. Administration / Management is concerned with policy implementing.

91. Management / Administration formulate board policies of the business.

92. Management is a profession because it has specialized knowledge / training facilities / code of conduct / all the above.

93. The keyword PODSCORB given by Gulick / Fayol.

94. The first function of management is……………… (planning)

95. Father of scientific management is ………………… (W.Taylor)

96. Father of modern management is …………………… (Henri Fayol)

97. Authority and…………………co-exist. (Responsibility)

98. A plan is a ……………….course of action. (Future)

99. …………………translates plan into action. (Directing)

100. PODSCORB stands for planning, organizing, directing, staffing…………………reporting and budgeting. (Co-Ordinating)

101. Group efforts cannot succeed without a sound……………. (Planning)

102. Control is the last function of management. (T)

103. Management is organized body of knowledge. (T)

104. The central office performs various official functions relating to outgoing / incoming & outgoing correspondences.

105. Franking machine is used for………………….. (Affixing stamps on envelops)

106. Office is the ……………….. For storing of different documents. (place)

107. The function of drafting of letters is required for……………….mails. (Outgoing)

108. ………………is the combination of telephone and typewriter. (Teleprinter)

109. Pins are……………..stationery used in office. (Office)

110. Fax machine and telephone are two important instruments of a modern office. (T)

111. Record keeping is an important function of modern office. (T)

112. The first function of an office is to receive information. (T)

113. Agenda are the requisite of a meeting – meeting / notice / business.

114. Managing director / general manager / chairman is a must in a meeting.

115. Notice must be definite, absolute and unconditional / conditional.

116. Minutes / agenda are the concise records of decision arrived at a meeting.

117. A meeting is lawful / unlawful if it is held in a prohibited place, ignoring the law and orders.

118. …………………means the minimum number of members that must be present at a meeting. (Quorum).

119. In case of a company, the appointment of chairman is regulated by the ………………… (Article of Association)

120. A lawful meeting is one which does not break peace. (T)

121. A chairman may be elected from the members of the meeting. (T)

GROUP-B (2 Marks)

Short answer type:

1. What are the features of joint sector in an economy?

Ans: Characteristics/Features OF JOINT STOCK COMPANY.

Artificial Person: A joint stock company is an artificial person Which means that it is created by law and does not possess physical features of a natural person.

Separate Legal Entity: Being an artificial person, a company exists independent of its members. It can make contracts, purchase and sell things, employ people and conduct any lawful business in its own name.

2. What is Joint Stock Company?

Ans: A Joint Stock Company or simply a company is a voluntary association of persons generally formed for undertaking some big business activity. It is established by law and can be dissolved by law. The company has a separate legal existence so that even if its members die, the company remains in existence.

3. What is joint venture?

Ans: A joint venture is a business agreement in which parties agrees to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets

4. What is public sector?

Ans: A pubic sector enterprise may be defined as any commercial or industrial undertaking owned and managed by the government with a view to maximize social welfare and uphold the public interest.

5. Write two features of public sector.

Ans: Two features of public sector are:

Government Ownership and Management: The public enterprises are owned and managed by the central or state government, or by the local authority. The government may either wholly own the public enterprises or the ownership may partly be with the government and partly with the private industrialists and the public

Public Welfare: Public enterprises are not guided by profit motive. Their major focus is on providing the service or commodity at reasonable prices.

6. What is private company?

Ans: According to Indian Companies Act 1956,a private company means a company Private Company means a company which has a minimum paid-up capital of one lakh rupees or such higher paid up capital, as may be prescribed, and limits the number of its member to fifty (excluding members who are or were in the employment of the company)

7. Mention the features of statutory corporation.

Ans: Two features of statutory corporation are:

It is incorporated under a special Act of Parliament or State Legislative Assembly.

It is an autonomous body and is free from government control in respect of its internal management. However, it is accountable to parliament and state legislature.

8. Write two features of business environment.

Ans: Features of business environment:

i) It is dynamic in nature. It keeps on changing.

ii) Business environment are complex and it consist of various factors.

9. Mentions two points of distinction between private sector and public sector.

Ans : Two differences between private sector and public sector are:

Basis of differences	Private sector	Public sector
Objective	Maximization of profit.	Maximize social welfare and ensure balanced economic development.
Ownership	Owned by individuals.	Owned by Government.

10. Mentions two features of Government Company.

Ans: Two features of Government Company are:

It is registered under the Companies Act, 1956.

Not less than 50% of paid up capital is held by the central or by any state government.

11. What relationship do you find between government and business?

Ans: The relation between government and business are:

The government provides environment that promote business activity

The government provides credit facilities, infrastructures like transport for the growth of business.

The government decides which types of industries have to be set up. Which industry has to be given priority through five years plan.

The government imposes Direct and indirect tax on business activities which fetches fund necessary for the development of the economy.

12. Define business combination with example.

Ans: Business combination: When two or more business units combine for common purpose and equal interest to carry on their activities, it is called business combination.

Example: In 1936 ten cement companies belonging to Tatas, Khataus, Killick Nixon and F E Dinshaw groups merged to form a single entity Called the Associated cement company (ACC)

13. What is circular business combination?

Ans: When different types of business units combine themselves under the one management it is called circular combination.
Example: - If a cloth industry combining with shoes industry and sugar industry is an example of mixed combination.

14. What is diagonal combination?

Ans: Diagonal Business Combination:- When two or more than two business units performs subsidiary services, if they combine themselves under the main industry it is called diagonal combination.
Example :- If designing and tailoring business units are combined with the garments industry it is called diagonal combination.

15. Point out different misuses if advertising.

Ans: Misuses of advertisement: Deceiving customer: In the competitive market, the trader uses the advertisement cleverly. The customer becomes bewildered in this policy.

Disappearance of customer free thinking: Now a day, the trader uses the modern mean of advertisement in such a claver way that the customer may lose their independent thought.

16. Name out different print media for advertising.

Ans: The different print media of advertising are: News paper and periodical (magazine).

17. Mention two principle of management.

Ans: These are:

Division of Work: This principle suggests that work should be assigned to a person for which he is best suited. This facilitates specialisation and improves efficiency.

Authority and Responsibility: Responsibility means the work assigned to any person, and authority means rights that are given to him to manage people and things to ensure performance.

18. What is controlling?

Ans: Controlling: Control means to guide something in the direction it is intended to go. Controlling as a function of management consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and principles established.”

19. What is communication?

Ans: Communication: “A process of sharing facts, ideas, opinions, thoughts and information through speech, writing, gestures or symbols between two or more persons”.

20. Mentions any two features of planning.

Ans: Features of planning are:

Planning is the primary function of management as every activity needs to be planned before it is actually performed.

Planning is always goal directed. A manager cannot plan anything unless he knows what he wants to achieve.

21. What is Doctrine of subrogation?

Ans: According to this principle, once the claim of the insured has been settled, the ownership right of the subject matter of insurance passes on to the insurer. In other words, if the damaged property has any value, such properties can not the allowed to remain with the insured because otherwise the insured will realize more than the actual loss which goes against the principle of indemnity.

22. What is Mitigation of losses?

Ans: According to this principle of insurance in case of a mishap the insured must take all possible steps to reduce or mitigate the loss or damage to the subject matter of insurance. This principle ensures that the insured does not become negligent about the safety of the subject matter after taking an insurance policy. The insured is expected to act in a manner as if the subject matter has not been insured.

23. Why fire insurance is called a contract of indemnity.

Ans: The word indemnity means compensating somebody for the actual loss suffered by him; or restore someone to the same position that he/she was in before the insured event took place.In the fire insurance the insurer compensate the actual loss suffered by insured so it is called contract of indemnity.

24. Mention two function of office.

Ans: Two functions of office are:

Collecting information: The office receives or collects information about various activities of the organisation. The information may be collected from internal or external sources. Internal sources may be employees and various departments of the organisation. The external sources are customers, suppliers and government departments etc

Arranging, analysing and processing information: The information collected in an office is generally not in the form in which it may be used by the management. Therefore, facts and figures collected have to be arranged, processed, organised, presented and analysed to make them useful to the management

25. What is indexing?

Ans: Indexing is an important aid to filing. It is a process of determining the name, subject or other captions under which the documents are filed. Index is a guide to records.

26. Write the names of two methods of indexing of business office.

Ans: The two method of indexing are:

Fixed Index – Instead of maintaining a separate index, an index may be bound with the book concerned. Such an index generally appears at the end of standard books in which subject matter is alphabetically arranged and then relevant page numbers are given against each heading or sub-heading.

Bound Book Index – Index is prepared in a bound book or register divided into alphabetical sections in which the names or documents are entered.

27. Write are the essential part of a business letter.

Ans: Essential part of a business letter are :

(1) Form : Its include heading, inside address, salutation, body of a letter signature, Enclosure, post script and Margin.

(2) Layout a letter

(3) Style and effectiveness.

28. What is e- mail?

Ans: Email: Electronic mail, commonly known as email or e-mail, is a method of exchanging digital messages from an author (Sender) to one or more recipients through internet.

29. What is cash credit?

Ans: Cash credit: Cash credit is an arrangement whereby the bank allows the borrower to draw amount upto a specified limit. The amount loan under cash credit is credited to the account of the customer. The customer can withdraw this amount as and when he requires. Interest is charged on the amount actually withdrawn.

30. Differentiate between cheque and draft.

Ans: The differences between cheque and draft are:

Cheque	Draft
cheque is a negotiable instrument which is ordering to pay certain amount money to certain person	Draft is also negotiable instrument which demand to, pay the amount
It is issued by account holder.	It is issued by bank.
It may be dishonoured.	It can’t be dishonoured

31. Give an idea of post dated cheque.

Ans: A post dated cheque is a chequee that has a date on it which is yet to come(future date). We cannot cash it until that date.

32. What is ante dated date?

Ans: If a cheque bears a date earlier than the date on which it is presented to the bank, it is called as "anti-dated cheque". Such a cheque is valid up to six months from the date of the cheque.

33. What is overdraft?

Ans: Overdraft: Overdraft is also a credit facility granted by bank. A customer who has a current account with the bank is allowed to withdraw more than the amount of credit balance in his account. It is a temporary arrangement.

34. Give two differences between Open cheque and crossed cheque.

Open cheque	Crossed Cheque
This cheque is always negotiable.	All type of crossed cheque is not negotiable.
This cheque is not safe and secure.	Thos cheque is more safe and secure
Any one can encash the cheque	It can only be encash by real payee through his bank.

35. Give an idea about quorum of a valid meeting.

Ans: Quorum denotes the minimum number of members of a body of persons whose presence is necessary in order to enable that body to transact its business validly, so that its proceeding may be valid. It is generally left to the committee themselves to fix the quorum of their meetings. No meeting of any organization or body can be held unless there is a proper quorum, i.e. a minimum number of members who must be present before any business can be transacted and its act may be legal.

36. Mention the limitation of air transport.

Ans: It has the following limitations:

It is relatively more expensive mode of transport.

It is not suitable for transporting heavy and bulky goods.

It is affected by adverse weather conditions.

It is not suitable for short distance travel.

37. Mention the advantages of road transport.

Ans: Road transport has the following advantages

It is a relatively cheaper mode of transport as compared to other modes.

It is a flexible mode of transport as loading and unloading is possible at any destination. It provides door-to-door service.

Perishable goods can be transported at a faster speed by road carriers over a short distance.

It helps people to travel and carry goods from one place to another, in places which are not connected by other means of transport like hilly areas.

GROUP-C (5 Marks)

1. Identify the different environmental constraints and briefly describe them.

Ans: Constraints of Business Environment: The favourable business environment is helpful to the promotion and development of business, but the unfavourable environment is constraint to it. The factor creating hindrances to business environment are discussed with a diagram:

(i)Want of capital: A major part of the population of less-developed countries is of low- earning group. Their per- capita income is insignificant. Less income but much consumption lead to less amount of saving and consequently, the amount of investment is less .As a result, the rate of capital formation is low.

(ii) Low standard of living: In less developed country, like India ,most of the people live a low standard of living. This is due to severe unemployment problem and property.

(iii) Lack of managerial skill: At present, the importance of scientific management in the management of industrial establishment cannot be over emphasized .But an account of different types of hindrances, the concept of scientific management cannot be successfully implemented in our country.

(iv) Lack of technical knowhow: The goods of high quality may be produced by applying new method coming out of new inventions. By virtue of technology, it has been possible improve at each stage of economic activities. But in a less developed country like, India ,efficient technical man and technologists are few in number. As such ,the benefits of technology cannot be gained.

(v)Lack of entrepreneur: The promotion of a business enterprise requires at the initial stage an enthused entrepreneur .But its number is very few in less developed countries.

(vi)Socio economic unrest: For development of proper business environment socio-economic stability is utmost essential .For want of stability under no circumstances the business environment can be developed.

(vii) Lack of socio recognition: Most of the educated youths of our country run after getting a service . They have no inclination to develop a business. Beside , the business profession has not been socially recognized with honour. This sense has made to averse to take up business as profession.

2. What is board management? Enumerate a few features of board management?

Ans: Board Mangement: When in departmental management, the public enterprises are managed by Board of Directors. It is called Board Management.This Board is constityuted by the government directly and it has direct control over the organization. Exmple railways board and State electricity board are the example of such enterprise.

Features of the Board management enterprises:

Control: Under this system, the responsibility of management of the enterprises is rested with a board. The government exercises control over all the matters.

Accountability: The board acts directly under departmental minister and secretary. The concern minister is accountable to the parliament.

Submission of budget: The budgets of the board are presented separately to the Parliament or Assembly.

Status of the employee: the employees of theses enterprises are not recognized as direct employee of government.

Sharing of profit: The income and expenditure account is prepared separately. The budget and the income and expenditure accounts are discussed in the parliament or Assembly. If surplus be available, a part of it goes to the government exchequer and rest is used in the development of the business.

3. Explain the disadvantages of public corporations?

Ans: The disadvantages of public corporation are:

Ø A public company has to file several documents with the Registrar of Companies. Its annual accounts are published and its records are open for inspection to public. Therefore, business secrets cannot be guarded effectively.

Ø There are lots of legal formalities required for forming a public limited company. It is costly and time consuming.

Ø In order to protect the interest of the ordinary investor there are strict controls and regulations impose by the government. These companies have to publish their accounts.

Ø There are several directors and managers in a public company. Decisions are taken in meetings of the Board of directors with the consultation of concerned officials. The decisions may often get delayed.

Ø Public Limited companies are huge in size and may face management problems such as slow decision making and industrial relations problems.

4. Mentions with examples the features of departmental form of public sector business.

Ans: The main features of departmental undertakings are as follows:

Ø It is established by the government and its overall control rests with the minister.

Ø It is a part of the government and is managed like any other government department.

Ø It is financed through government funds.

Ø It is subject to budgetary, accounting and audit control.

Ø Its policy is laid down by the government and it is accountable to the legislature.

5. “Competitions lead to business combinations “.Explain. or Excessive and wasteful competition is one of the major causes for forming combination – Explain?

Ans: Now a day there is stiff competition among the business units due to expansion in the market. The stiff competition among the business units has increased the capital risk and lowered the profits of the firms. Some businesses units do not survive the competition and finally close the business. Hence the excessive competition became a very powerful cause of business combination. Hence business units combine together in order to enjoy the benefits of monopoly, like high profits and and eliminate competition.

6. Distinguish between amalgamation and absorption.

Ans: Amalgamation: - Amalgamation means joining 2 or more company to firm a bigger company. In this case the two or more company will close down their business and the bigger company which is newly formed will continue the business.
For Example: - Company A joins Company B and Company C to form a brand new Company D.

Absorption: - Absorption means an existing company taking over 1 or more company. In this case one or more company will close down their business and this business will be continued by the name of the existing company.
For Example: - Company A takes over Company B and Company C. The both target companies i.e. B & C will now work under name of Company A.

7. State at least three causes of combination?

Ans: The three causes of combination are:

Competition: Now a day there is stiff competition among the business units due to expansion in the market. The stiff competition among the business units has increased the capital risk and lowered the profits of the firms. Some businesses units do not survive the competition and finally close the business. Hence the excessive competition became a very powerful cause of business combination

Economies of Large Scale: A large number of economies are achieved if a business is carried on a large scale. These economies relate to production, management, financing and marketing. Small business units may combine together to reap the benefits of large scale operations and organisation. This will reduce the cost of production and increase the profits of the business.

Control of Market: Combinations are created to secure steady market. Sometimes, combinations are created to control the entire market and create a monopoly which is detrimental to the interest of the consumers. By controlling the market, they can sell their products at higher prices and earn huge profits.

8. Classify different types of banks.

Ans: TYPES OF BANKS: There are various types of banks operate in our country to meet the diverse financial needs of customers. The different types of bank according to their function are:

Commercial Bank: Commercial Banks are banking institutions that accept deposits from the public and grant short-term loans and advances to their customers.

Cooperative Banks: Cooperative Banks are the banks that are governed by the provisions of State Cooperative Societies Act and meant essentially for providing cheap credit to their members. It is an important source of rural credit i.e., agricultural financing in India.

Development Bank: Development banks are the financial institutions which provide medium and long-term loans to industry. Rapid development of industries in India after independence requiring huge financial investment and promotional efforts led to the establishment of these institutions. Development banks assist the promotion, expansion and modernisation of industries. Besides providing medium and long-term finance, these banks also subscribe to the capital issues of industrial undertakings. They also provide technical advice and assistance, if needed. Industrial Finance Corporation of India (IFCI) and State Financial Corporations (SFCs) are examples of development banks in India.

Specialised Bank: There are some bank which engage themselves in some specific area or activity and are thus, called specialised banks. Export Import Bank of India (EXIM Bank), Small Industries Development Bank of India (SIDBI), National Bank for Agricultural and Rural Development (NABARD) are examples of such banks.

Central Bank: In every country a bank which is entrusted with the responsibility of guiding and regulating the banking system is known as the Central Bank. Such bank is an apex bank and acts as the highest financial authority. In India, the central banking authority is the Reserve Bank of India. It does not deal directly with the members of public. It acts as bankers’ bank, maintains deposit accounts of all other banks and advances money to banks as and when needed. It regulates the volume of currency and credit, and has the powers of control and supervision over all banking institutions.

9. What are the differences between Bill of exchange and cheque?

Ans:

Points	Bill of Exchange	Cheque
i) Necessity of stamp	Barring a few specific case stamp of proper value should be a affixed.	Here there is no necessity of affixing stamp.
ii)Drawer of instrument	Creditor is the drawer of this instrument.	The depositor is the drawer of cheque.
iii) Days of grace	Three days of grace is allowed after the expiry of maturity.	No days of grace is applicable.
iv) Crossing	Bill of exchange cannot be crossed.	The cheque may be crossed.
v) Requirement of deposit	There is no requirement of deposit in the bank.	Adequate balance is required in the name of depositor.
vi) Withdrawing the order	The drawer of bill cannot withdraw his order before the payment of money.	The drawer of a cheque can withdraw his order if he so desires.
vii) Possibility of becoming free from liability	The drawer becomes free from liability if the bill is not presented on due date for realization to the drawee.	The drawer of a cheque does not become free liability if the cheque is not presented to the bank.

10. What is bank draft? Mentions any two causes of dishonoring cheque.

Ans: Bank Draft: A bank draft is a cheque issued by one bank, and drawn on another bank to pay a beneficiary an amount of money. This money is specified in amount to be paid to a beneficiary. It may be used to send money abroad for gifts, payment for goods purchased, advance travel-related payments and maintenance.

There are various reasons why bank cheque are not being accepted from drawers:
1. Insufficient Fund: When the amount written on the cheque is more than what the drawer has in his account in the bank.
2.The Death of The Drawer: If the bank receives information of the death of its customer, the bank will not honour any cheque presented on the account of the dead customer, until further notice.
3. Irregular Signature: If the signature the drawer signs on the cheque differs from the specimen signature in the bank. The bank will dishonor such cheque.
4. Non-Existing Account: Sometimes, swindlers who have no bank account but possess false cheque books may issue cheque to those whom they have swindled.
5. Bankruptcy: If one is judged by a law court to be unable to pay his debts in full, the bank will dishonour any cheque presented on behalf of that customer.
6.Frozen Account: If court orders or a military government decrees that some people's account be frozen, the bank must definitely dishonour all cheque bearing the account's numbers.
7.When There is Attention: If anything is cancelled on a cheque, the bank will dishonour such a cheque, except the drawer signs his signature above or under the altered word.
8. A Post-Dated Check: If a post dated cheque is presented for payment before the date mentioned on the cheque, the bank will dishonour such a cheque.
9. A Stale Checkd: A check that has been delayed for more than six months of the date written on it, if presented for repayment must be dishonoured by the bank.
10. If There Is A Difference Between The Amount Written In Words And That in Figure. If for instance, the drawer writes thirty thousand only in words and Rs 20000 in figure. The bank will dishonor such cheque.
11. When Payment is Stopped: If the drawer asks his bank not to pay a cheque already issued. The bank will not make the paymernt.

11. Distinguish between Life Insurance and General Insurance?

Ans:

Point of difference	Life Insurance	General insurance
Subject Matter	Man’s life is subject matter of insurance	Man’ property of the subject matter
Possibility of happening.	There is certainty of happening of the risk but the time is uncertain.	There is no certainty of about happening of risk. i.e there may the risk not happen.
Objects.	Protection from risk and investment.	Protection from risk.
Type of contract	Here contract is made about promise. So it is a contract of guarantee.	Here the contract is made in order to indemnify the affected party.
Scope of insurance.	These insurance extents to long term period, ie 20 to 25 years. Or it may cover the whole life.	It is concerned with shoirt term period, i.e mostly for one year through it can renewed.
Possibility of payment.	For life insurance, payment will be made to the insured himself or to his nominee or representative.	For general insurance, if no loss occurs, no payment will be made as compensation.
Insurable interest.	At the time of making contract, there must be insurable interest.	Incase of general insurance there must be insurable interest at the time of causing loss.
Computation of loss.	Human life is invaluable. So it is not possible to compute the loss of life in term of money.	In case of loss or damage to property, the amount actual loss can be computed in terms of money.

12. What are different steps of taking out fire insurance?

Ans:The following procedures are generally adopted to take out a fire insurance policy:

Intimation to the insurer: the person intending to take a fire insurance policy is required to intimate his desire to do so to the insurer.

Sending the proposal form by the in insurance company: The insurer on the basis of intimation, will send the proposal from to the insured for filling up and sending it back to the insurer after its completion. That proposal contains detail description about the subject matter of insurance, its nature, price and location, etc.

Investigation on the basis of information obtained: After receiving the proposal, the insurer will consider the probability of combustibility of the subject matter of insurance and accordingly for fixing the rate of premium, this will be send to the assessor who after enquiry fixes up the premium. Then the insurance company will send and advice for paying the requisite premium.

Receipt of the insurance premium: When the first premium is paid, the insurer gives insured a receipt which is called Cover note. This receipt will be treated as a substitute of the policy till it is received.

Handing over the insurance policy: Afterwards the insurer will hand over the deed with proper stamp and seal of the company to the insured. This deed is called the insurance policy.

The duration of risk: The duration of risk must be stated in the insurance policy. If the same is not renewed with the expiry of the duration or extra three days of grace, it will be assumed that the maturity is over.

13. What are the different steps of settling claims in case of fire insurance?

Ans: Procedure of presenting claim: In order to make a prepare claim in case of any loss by fire the following steps should be taken:

Informing the insurer of the accident: If the subject matter of insurance is lost or damaged due to fire, it should be intimated to the insurer within a reasonable time which is mentioned in the policy. It is customary that it should be intimated within a fortnight of the happening of accident.

The submission of detail information in case of partial loss: Incase of partial loss to the subject matters of the insurance,the amount of partial loss, possibility of getting salvage, its price or incidental expanses, etc. should be informed to the insurer.

Consideration for re-instatement clause: If the re-instatement clause is provided in the policy, the insurer will provide for re-instatement in place of compensation. Incase of damage to building, warehouse, etc. The probable cost of repair should be intimated.

Affidavit from court : For substantiating the claim, it requires some time an affidavit from court.

Sending the inspector: After getting the relevant information about the subject the matter lost or damage, the insurer will send an inspector for spot verification and send the assessor also to determine the amount of loss.

Appointment of arbitrator, if any: If any dispute arise between the claims of the insured and the amount settled by the insurer, an arbitrator is appointed for both the parties for its settlement and if opinion differs among them, the matters will be settled by Judge.

Thus, after compromise, the amount of settlement will be paid as compensation to the insured

14. “Insurance diffuses the risk of business.” – Explain the statement.

Ans: The basic principle of insurance is that an individual or a business concern chooses to spend a definitely known sum in place of a possible huge amount involved in an indefinite future loss. Thus insurance is the substitution of a small periodic payment (premium) for a risk of large possible loss. The loss of risk still remains but the loss is spread over a large number of policyholders exposed to the same risk. The premium paid by them are pooled out of which the loss sustained by any policy holder is compensated. Thus, risks are shared with others. In other words Insurance is a social device in which a group of individuals (insured) transfers risk to another party (insurer) in order to combine loss experience, which provides for payment of losses from funds contributed (premium) by all members. Insurance is meant to protect the insured, against uncertain events, which may cause disadvantage to him.

15. What is meant by “utmost good faith” in insurance?

Ans: Insurance contracts are the contracts of mutual trust and confidence. Both parties to the contract i.e., the insurer and the insured, must disclose all relevant information relating to the subject matter of insurance. In case of life insurance, for example, the proposer must honestly disclose all information relating to his/her health, habits, personal history, family history etc. In case of any concealment about the material facts, the contract will not be valid. It is so because the risk can be evaluated only on the basis of these facts relating to subject matter of insurance.

16. What are the advantages of E-Commerce ?

Ans: Advantages of E-commerce:

Ø Using E-Commerce, organization can expand their market to national and international markets with minimum capital investment. An organization can easily locate more customers, best suppliers and suitable business partners across the globe.

Ø E-Commerce helps organization to reduce the cost to create process, distribute, retrieve and manage the paper based information by digitizing the information.

Ø E-commerce improves the brand image of the company.

Ø E-commerce helps organization to provide better customer services.

Ø E-Commerce helps to simplify the business processes and make them faster and efficient.

Ø E-Commerce reduces paper work a lot.

Ø E-Commerce increased the productivity of the organization. It supports "pull" type supply management. In "pull" type supply management, a business process starts when a request comes from a customer and it uses just-in-time manufacturing way.

17. Mentions the Important qualities of a good salesman.

Ans: Some of the common qualities which a salesperson must possess are as follows.

Good Personality : Personality of a salesperson should be such that the moment he/she comes in contact with the customer, he/she should look friendly with whom the customer is at least ready to start a conversation.

Mental Qualities: A salesperson must have the quality of alertness, imagination, foresightedness, and should have ability to understand and share the feeling of others. He should have the ability to read the customer’s mind and behave accordingly

Good Behavior: A salesperson should be a well behaved person having ability to interact with people comfortably. He/she should be cooperative so that he/she can help people in making up their minds by patiently answering all their questions

Group- D (10 Marks)

1. What do you mean by a bank? Discuss the importance to business.

Ans: Bank is a lawful organisation, which accepts deposits that can be withdrawn on demand. It also lends money to individuals and business houses that need it.

IMPORTANCE OF BANKING

Capital Formation: Deposits accepted by banks are channelised as loans and advances for industrial and trading activities to business organisations.

Services to Business: Banking helps business through a variety of services such as providing long-term and short-term finance, arranging remittance of money, collection of cheques and bills etc., assisting in raising of capital by acting as underwriters and merchant bankers and so on.

Balanced Development of Economy: Banks identify areas that need special assistance for industrial development and provide them the necessary help.

Purchase and sale of foreign currency: Banks provide assistance in transaction of international trade through purchase and sale of foreign exchange.

Development of Credit Policy: Credit policy is a pre-requisite for economic development. The central bank of a country develops a proper monetary policy by determining the bank rate and regulate the money supply in the larger interest of the economy and the pace of its development

Benefits to Rural Economy: Rural branches of banks play a useful role in mobilizing savings in rural areas and provide loans to farmers and artisans at concessional rates and on priority basis. This helps the rural economy in a big way.

2. Define commercial bank.What are the functions of a commercial Bank?

Ans: Commercial bank: A commercial bank is a type of bank that provides services such as accepting deposits, making business loans, and offering basic investment products to general public.

The functions of a commercial bank are divided into two categories viz. (a) primary functions; and (b) secondary functions

Primary functions:

Accepting Deposits: The most important activity of a commercial bank is to accept deposits from the public. People who have surplus income and savings find it convenient to deposit it with banks.

Lending Money: The second important function of a commercial bank is lending of money to the public as well as to the business houses. It takes the form of loans and advances to the customers at the prescribed rates of interest. Loans are granted for a specific period.

Secondary Functions:

Agency Services: Agency services refer to those services which are provided by commercial banks as agents of their customers. These include:

• Collection and payment of cheques and bills;

• Collection of dividends, interest and rent, etc.;

• Purchase and sale of securities (shares, debentures, bonds etc.);

• Payment of rent, interest, insurance premium, subscriptions etc.;

• Acting as a trustee or executor; and

• Acting as agents or correspondents on behalf of customers for other banks and financial institutions at home and abroad.

General Utility Services: General utility services are those services which are

rendered by commercial banks not only to the customers but also to the general public.

These are available to the public on payment of a fee or charge. These include:

• Issue of bank drafts, pay order (banker’s cheque), travellers’ cheques;

• Issue of letters of credit;

• Safe-keeping of valuables in safe deposit locker;

• ATM card, debit card and credit card facility;

• Internet banking and phone banking;

• Sale of prospectus and application forms of various competitive examinations;

• Accepting telephone bills, electricity bills;

• Underwriting loans floated by government and public bodies;

• Supplying trade information and statistical data useful to customers; and

• Acting as a referee regarding the financial status of customers.

3. What are the objectives of government control on business? Or. Explain the objectives and rationale of government control on business. How government controls business activity?

Ans: Businesses are usually profit motivated and many times in order to gain more profit many businesses may neglect issues like environmental protection and production of harmful and dangerous products. Moreover, large businesses take the advantage of their size to exploit consumers, employees and even use unfair tactics to overcome competition from small businesses. As there are numerous problems to society, environment, consumers and employees caused by businesses, the government will need to have some control over the business activities.

Government controls the business activities in many ways both direct and indirect. The government can control business activities in a more direct way. These are as follows:

Controlling what to produce.

In order to safeguard the interest of the community government may ban or limit the production of certain goods and services. For example, selling of guns, explosive and dangerous drugs are illegal in many countries. Moreover, Goods which harm the environment are also totally banned or strictly controlled in many countries, e.g. aerosol cans that use CFCs which has been banned because of their damaging effect on the ozone layer.

Employees Protection legislations:

Government may pass laws to protect the interest of employees such as

Laws against unfair discrimination at work and when applying for jobs: There is no unfair discrimination on the basis of Race, religion, sex, age, or colour.

Legislations for health and Safety at work:To protect workers from dangerous machinery.Workers should be provided with proper safety equipments and clothing.

A reasonable workforce temperature is maintained for workers.

Proper hygienic conditions and washing facilities are provided.

Workers get adequate breaks between shifts.

Protect employees against unfair dismissal

Business can not dismiss the workers because they have joined a trade union or for being pregnant. There should be proper warning before dismissing a worker otherwise it will be treated as unfair dismissal.

Ensure fair wages for the employees

In many countries, government makes it mandatory to have a written contract of employment. It contains the details of the wage rate; working hours, deductions (if any) and other necessary details regarding working conditions. Minimum wages paid to different types of workers are also determined by the government.

Consumer Protection legislations:Most of the countries have consumer protection laws aimed at making sure that businesses act fairly towards their consumers: A few examples are

Weight and Measures Act: goods sold should not be underweight. Standard weighting equipments should be used to measure goods.

Trade Description Act: deliberately giving misleading impression about the product is illegal.

Consumer Credit Act: According to this act consumers should be given a copy of the credit agreement and should be aware of the interest rates, length of loan while taking a loan.

Sale of Goods Act: It is illegal to sell products with serious flaws or problems and goods sold should conform to the description provided.

Environment protection

In the recent years government across the globe have passes legislations to control business activities from harming the environment. This includes setting limits to the pollution, making it mandatory for businesses to treat their wastes etc.

Location decisions

Government often influences location of business through:

Planning controls involve restricting the business activities that can be undertaken in certain areas.

Provide regional assistance to businesses which involves encouraging them to locate in underdeveloped regions of the country.

4. What is Departmental organization? Mention two examples. State the Features of departmental organization.

Ans: Departmental undertakings are the oldest among the public enterprises. A departmental undertaking is organised, managed and financed by the Government. It is controlled by a specific department of the government. Each such department is headed by a minister. All policy matters and other important decisions are taken by the controlling ministry.

Examples: Railways, Postal services, Broadcasting etc.

The main features of departmental undertakings are as follows:

Management and control: ) It is established by the government so it is directly managed and controlled as a department of the government.

Accountability: The full authority of the departmental organization rest with the department Minister and the secretary. The concerned minister and the secretary are accountable to the Parliament or Assembly.

Separate entity: this organization has no separate existence. It is a part of the government and its profit is deposited in the government exchequer.

Status of employee: All the employees of this organization are regarded as the employee of the government.

Compliance of rules: Starting from the Budget preparation, uniform rules have been maintained like a government department in maintain account and in auditing accounts.

Submission of the budget: The budget of income and expenditure of the organization is presented to the parliament with the general budget.

Sovereign immunity: Being a part of the government machinery, the departmental organization cannot be sued at law without the consent of the government.

5. Define Government Company. State the different characteristic of a government company.

Ans: Government Company: Government Company refers to the company in which 51 percent or more of the paid up capital is held by the government. It is registered under the Companies Act and is fully governed by the provisions of the Act.

Characteristics of company:

The main features of Government companies are as follows:

(a) It is registered under the Companies Act, 1956.

(b) It has a separate legal entity. It can sue and be sued, and can acquire property in its own name.

(d) The capital is wholly or partially provided by the government. In case of partially owned company the capital is provided both by the government and private investors.

But in such a case the central or state government must own at least 51% shares of the company.

(e) It is managed by the Board of Directors. All the Directors or the majority of Directors are appointed by the government, depending upon the extent of private participation.

(f) Its accounting and audit practices are more like those of private enterprises and its auditors are Chartered Accountants appointed by the government.

(g) Its employees are not civil servants. It regulates its personnel policies according to its articles of associations.

6. Explain with examples the roles of government as, promoter, regulator, and arbitrator.

Ans: Government as promoter: the term promoter means s some one who support and encourage business activities. Governments promotes business activities

Ø To help small businesses to survive and encourage competition in the economy.

Ø To encourage firms to export and earn foreign exchange for the country.

Ø To encourage businesses to set up in underdeveloped regions of the country and create wealth and employment opportunities in these areas.

The role of government as promoter is to:

Ø Providing cheap loans and giving grants.

Ø Providing advice and information centres for businesses.

Ø Providing college courses and training programmes for entrepreneurs.

Ø Offering subsidies or tax reduction to businesses.

Ø Maintain a stable exchange rate of the currency.

Government as a regulator: Businesses are usually profit motivated and many times in order to gain more profit many businesses may neglect issues like environmental protection and production of harmful and dangerous products. As there are numerous problems to society, environment, consumers and employees caused by businesses. One of the roles of the government is to make sure that the public's interests are maintained and preserved. The government plays regulatory activities over the business by various way. Some are given below

The government regulates business activity through industrial policy and it also regulates price of commodities through essential Commodities Act.

The government regulates monopolies and unfair and restrictive trade practice through the MRTP Act.

The development and Regulation Act direct s to secure approval from SEBI (Securities and Exchange Board Of India) for setting up industries where assets value is more than 3 crores.

Government as an Arbitrator: Arbitrator refers to settlement of dispute arising out of any issue between two parties. If any dispute arises between the employer and employee, The government has to play the role of an arbitrator for its settlement. For certain purpose the government hasto play this role such as for maintaining industrial peace, for continuing the flow of production, for safeguarding the workers interest and for achieving the target of national product.

For maintaing industrial peace and settlement of industrial dispute, The industrial dispute Act was passed in 1947. It has two main objectives i.e prevention and settlement of industrial dispute. In order to settle the dispute through this act, the government has formed some authority, namely works committee, Conciliation officers, Board of Conciliation, Court of enquiry, labour court. Industrial Tribunal and National tribunal etc.

7. Discus the government policy towards joint venture business in India.

Ans: A joint venture (JV) is a business agreement in which the parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets.

8. What is negotiable instrument? State the features of negotiable instrument.

Ans: Negotiable instrument: negotiable instruments are documents meant for making payments, the ownership of which can be transferred from one person to another many times before the final payment is made. Negotiable instruments are documents meant for making payments, the ownership of which can be transferred from one person to another many times before the final payment is made.

Features of negotiable instrument:

Ø A negotiable instrument is freely transferable. Usually, when we transfer any property to somebody, we are required to make a transfer deed, get it registered, pay stamp duty, etc.

But, such formalities are not required while transferring a negotiable instrument.

Ø Negotiability confers absolute and good title on the transferee. It means that a person who receives a negotiable instrument has a clear and undisputable title to the instrument. However, the title of the receiver will be absolute, only if he has got the instrument in good faith and for a consideration.

Ø A negotiable instrument must be in writing. This includes handwriting, typing, computer print out and engraving, etc.

Ø In every negotiable instrument there must be an unconditional order or promise for payment.

Ø The instrument must involve payment of a certain sum of money only and nothing else. For example, one cannot make a promissory note on assets, securities, or goods.

Ø A negotiable instrument must bear the signature of its maker. Without the signature of the drawer or the maker, the instrument shall not be a valid one.

Ø Delivery of the instrument is essential. Any negotiable instrument like a cheque or a promissory note is not complete till it is delivered to its payee.

9. Make a comparative analysis of Departmental organization, Public corporation and Government Company.

Ans: Comparative analysis of Departmental, Public Corporation and Government Company:

	Departmental organization	Public Corporation	Government Company:
Establishment	By a Ministry	By the Parliament under a special Act	By a Ministry with or without private participation
Legal Status	No separate entity distinct from the Government	Separate entity to sue and be sued	Separate corporate existence
Capital	Provided out of budgetary appropriation	Provided wholly by the Government	Part of it may be provided by private entrepreneurs
Management	Government official from the Ministry concerned.	Board of Directors	Board of Directors may include private individuals
Control and Accountability	Control vests with the Minister and the Ministry concerned	Parliament	Government (Ministry concerned)
Autonomy	No autonomy. Works as a part and parcel of government	No governmental interference in day-to-day affairs	Some freedom from governmental interference
Suitability	Defence, public utilities	Heavy industries and service providing enterprises with long gestation period	All types of industrial and commercial enterprises

10. Define insurance. What are the types of insurance?

Ans: INSURANCE: Insurance is a contract between the insurer and insured whereby the insurer undertakes to pay the insured a fixed amount, in exchange for a fixed sum known as premium, on the happening of a certain event (like at a certain age or on death), or compensate the actual loss when it takes place, due to the causes mentioned in the contract

Insurance, which is based on a contract, may be broadly classified into the following types.

Life Insurance

A contract of life insurance (also known as ‘life assurance’) is a contract whereby the insurer undertakes to pay a certain sum either on the death of the insured or on the expiry of a certain number of years. In return, the insured agrees to pay an amount as premium either in a lump sum or in periodical installments, annually, half-yearly, quarterly or monthly. The risk insured against in this case is certain to happen. Hence, life insurance is also referred to as life assurance.

Fire Insurance

A contract of fire insurance is a contract whereby the insurer, on payment of premium by the insured, undertakes to compensate the insured for the loss or damage suffered by reason of certain defined subject matter being damaged or destroyed by fire. It is a contract of indemnity, that is, the insured cannot claim anything more than the value of property lost or damaged by fire or the amount of policy, whichever is lower.

Marine Insurance

Marine insurance is an agreement (contract) by which the insurance company (also known as underwriter) agrees to indemnify the owner of a ship or cargo against risks, which are incidental to marine adventures. It also includes insurance of the risk of loss of freight due on the cargo. Marine insurance that covers the risk of loss of cargo by storm is known as cargo insurance. The owner of the ship may insure it against loss on account of perils of the sea. When the ship is the subject matter of insurance, it is known as hull insurance.

Other types of Insurance

Apart from life, fire and marine insurance, general insurance companies can insure a variety of other risks through different policies. Some of these risks and the different policies are outlined below.

(a) Motor vehicles Insurance: Insurance of all types of motor vehicles passenger cars, vans, commercial vehicles, motor cycles, scooters, etc., covers the risks of damage of the vehicle by accident or loss by theft, as also risks of liability arising out of injury or death of third party involved in an accident. Third party risk insurance is compulsory under the Motor Vehicles Act.

(b) Burglary Insurance: Under this insurance the insurance company undertakes to indemnify the insured against losses from burglary i.e., loss of moveable goods by robbery and theft by breaking the house.

(c) Fidelity Insurance: As a protection against the risks of loss on account of embezzlement or defalcation of cash or misappropriation of goods by employees, businessmen may get policies issued covering the risks of loss on account of fraud and dishonesty on the part of employees handling cash or in charge of stores. This is called fidelity insurance policy. The employees may also be required to sign a fidelity guarantee

Bond.

(d) Personal accident and sickness Insurance: These are policies which can be taken out against death or disability in special circumstances, for example by traveling through flights, etc.

(e) Liability Insurance: This type of policy covers the risk of liability for the injury or death of someone else. These are two main forms as (i) Employers liability- covers the employers legal liability for the safety of each employee.(ii) Public liability- covers the liability of individuals and business for members of public visiting their premises.

(f) Property Insurance: Covers a wide variety of items from goods in transit or in store to building or contents. Applies to both the business persons and the private householders.

11. Elucidate the basic principle of insurance.

Ans: The seven principles of insurance are :-

The Principle of Utmost Good Faith :Principle of Uberrimae fidei (a Latin phrase), or in simple english words, the Principle of Utmost Good Faith, is a very basic and first primary principle of insurance. According to this principle, the insurance contract must be signed by both parties (i.e insurer and insured) in an absolute good faith or belief or trust.

The person getting insured must willingly disclose and surrender to the insurer his complete true information regarding the subject matter of insurance. The insurer's liability gets void (i.e legally revoked or cancelled) if any facts, about the subject matter of insurance are either omitted, hidden, falsified or presented in a wrong manner by the insured.

The principle of Uberrimae fidei applies to all types of insurance contracts.

The principle of insurable interest: The principle of insurable interest states that the person getting insured must have insurable interest in the object of insurance. A person has an insurable interest when the physical existence of the insured object gives him some gain but its non-existence will give him a loss. In simple words, the insured person must suffer some financial loss by the damage of the insured object.

For example :- The owner of a taxicab has insurable interest in the taxicab because he is getting income from it. But, if he sells it, he will not have an insurable interest left in that taxicab.

From above example, we can conclude that, ownership plays a very crucial role in evaluating insurable interest. Every person has an insurable interest in his own life. A merchant has insurable interest in his business of trading. Similarly, a creditor has insurable interest in his debtor.

Indemnity means security, protection and compensation given against damage, loss or injury.

The principle of indemnity: According to the principle of indemnity, an insurance contract is signed only for getting protection against unpredicted financial losses arising due to future uncertainties. Insurance contract is not made for making profit else its sole purpose is to give compensation in case of any damage or loss. In an insurance contract, the amount of compensations paid is in proportion to the incurred losses. The amount of compensations is limited to the amount assured or the actual losses, whichever is less. The compensation must not be less or more than the actual damage. Compensation is not paid if the specified loss does not happen due to a particular reason during a specific time period. Thus, insurance is only for giving protection against losses and not for making profit.

However, in case of life insurance, the principle of indemnity does not apply because the value of human life cannot be measured in terms of money.

Principle of Contribution: Principle of Contribution is a corollary of the principle of indemnity. It applies to all contracts of indemnity, if the insured has taken out more than one policy on the same subject matter. According to this principle, the insured can claim the compensation only to the extent of actual loss either from all insurers or from any one insurer. If one insurer pays full compensation then that insurer can claim proportionate claim from the other insurers.

For example :- Mr. Ram insures his property worth Rs 100,000 with two insurers "AIG Ltd." for Rs 90,000 and "MetLife Ltd." for Rs 60,000. Ram’s actual property destroyed is worth Rs 60,000, then Mr. Ram can claim the full loss of Rs 60,000 either from AIG Ltd. or MetLife Ltd., or he can claim Rs 36,000 from AIG Ltd. and Rs 24,000 from Metlife Ltd.

So, if the insured claims full amount of compensation from one insurer then he cannot claim the same compensation from other insurer and make a profit. Secondly, if one insurance company pays the full compensation then it can recover the proportionate contribution from the other insurance company

Principle of Subrogation: According to the principle of subrogation, when the insured is compensated for the losses due to damage to his insured property, then the ownership right of such property shifts to the insurer.

This principle is applicable only when the damaged property has any value after the event causing the damage. The insurer can benefit out of subrogation rights only to the extent of the amount he has paid to the insured as compensation.

For example :- Mr. Ram insures his house for Rs 1 million. The house is totally destroyed by the negligence of his neighbour Mr.Tom. The insurance company shall settle the claim of Mr. Ram for Rs 1 million. At the same time, it can file a law suit against Mr.Tom for Rs 1.2 million, the market value of the house. If insurance company wins the case and collects Rs 1.2 million from Mr. Tom, then the insurance company will retain Rs 1 million (which it has already paid to Mr. Ram) plus other expenses such as court fees. The balance amount, if any will be given to Mr. Ram, the insured.

Principle of Loss Minimization: According to the Principle of Loss Minimization, insured must always try his level best to minimize the loss of his insured property, in case of uncertain events like a fire outbreak or blast, etc. The insured must take all possible measures and necessary steps to control and reduce the losses in such a scenario. The insured must not neglect and behave irresponsibly during such events just because the property is insured. Hence it is a responsibility of the insured to protect his insured property and avoid further losses.

For example :- Assume, Mr. Ram's house is set on fire due to an electric short-circuit. In this tragic scenario, Mr. Ram must try his level best to stop fire by all possible means, like first calling nearest fire department office, asking neighbours for emergency fire extinguishers, etc. He must not remain inactive and watch his house burning hoping, "Why should I worry? I've insured my house."

Principle of Causa Proxima (Nearest Cause): Proximate Cause: According to this principle, an insurance policy is designed to provide compensation only for such losses as are caused by the perils which are stated in the policy.When the loss is the result of two or more causes, the proximate cause means the direct, the most dominant and most effective cause of which the loss is the natural consequence. In case of loss arising out of any mishap, the most proximate cause of the mishap should be taken into consideration

12. Write the importance of Insurance.

Ans: IMPORTANCE OF INSURANCE

(a) Protection Against Risk: Insurance provides protection against various risks involved in business. The protection is in the form of a provision to compensate for the loss suffered by the insured.

(b) Pooling of Risk: Insurance helps in sharing of risk. In practice, a large number of people seek insurance by paying the premium which results in the formation of insurance fund. This fund is used for compensating a few among them who may suffer a loss. Thus, in effect the loss is spread over a large number of people.

(c) Helps in Securing Loans: Banks and financial institutions usually insist on the insurance of goods and properties before loans can be sanctioned on their security.

So insurance makes it convenient to secure loans and advances from the financial institutions.

(d) Protection Against Liabilities under various Labour Laws: Insurance gives protection to businessmen in the event of compensation payable to employees for accidents leading to fatal injury, partial injury, disablement, as well as sickness and maternity.

(e) Contribute to Economic Development: Funds with the insurance companies are invested in various types of securities and projects, which contribute to economic development of the country.

(f) Generation of Employment: Insurance companies provide employment to a large number of people on regular basis. A number of people earn their livelihood working as insurance agents.

(g) Social Security: Life insurance provides security against risks of old age and premature death of people. Besides, social security is provided to workers through the Employees State Insurance scheme whereby accidental risks are covered.

13. Mentions the advantages and limitations of advertisings.

Ans: Advantages of advertising: In today’s competitive world there are innumerable products competing with each other. Hence, it is necessary that information regarding features, prices and availability of the product is frequently communicated to the consumers so as to ensure a reasonable market share for the manufacturer. Not only that, it also helps the consumers to make a right choice. So, advertising today benefits not only the business houses who manufacture the products but also the consumers and society.

Benefits to Manufacturers: Advertising helps the manufacturers in introducing new products, maintaining cu`stomers of existing products and in increasing their sales by attracting new customers. It also helps the business houses in creating and enhancing their goodwill. It makes the job of salespersons easier by keeping the customer informed about the product. Advertising is an important tool for fighting competition in the market.

Benefits to Consumers: Advertising helps the consumers to gain useful information about the products, prices quality, terms of sale, after sales services, etc. Besides providing such information advertising also guides the customers about the right use of the product. This helps them to make a comparative analysis and make their choice. Not only that, advertising is the main source of information for those who live in remote areas and cannot be easily approached by salespersons.

Benefit to Society:The enhanced competition resulting from advertising motivate the producers to make improvements in their existing products and find out better alternatives through Research and Development (R&D) activity. So it helps in providing more convenience, comfort, better life style to the people. Advertising also works as a guide and teacher for people who do not know about many products and their multiple uses, if any. It generates employment for thousands of people who are connected with advertising world in different capacities. Not only that, advertising generates huge revenue for both print and electronic media. This helps the availability of newspapers, magazines and television programmes at affordable prices.

Disadvantages of advertising:

(i) Advertising multiplies wants : People tend to desire and buy products as they see in advertisement even if they do not actually need or afford them. This multiplication of wants may put them under financial and psychological pressure.

(ii) Advertising adds to the cost and price of product : Money spent on advertising eventually results in increased cost of the product, which is passed on to the consumers through increased prices. You must have noticed that the brands which are advertised heavily in different media are found to be priced higher as compared to those which are not so heavily advertised.

(iii) Creation of monopoly : Business firms which can spend heavily on advertising are usually the ones who grab a bigger share of the market. Such firms generally have a monopoly which results in unequal opportunity for small producers to make a place for themselves in the market. They do not get a fair opportunity to compete.

(iv) Advertising may affect the value-system of society : Advertising may introduce ideas or concepts alien to our culture. These new values generated or propagated by advertising may affect our social, moral and ethical values adversely. Objectionable appeals like sex, horror etc. are sometimes used in advertisement to attract attention.

(v) Motivation for wrong or dangerous deeds : The way advertisements project people consuming liquor, cigarettes or pan-masala, may feel tempted by the people to try and then get addicted to such products which are not good for health. Similarly, models are shown doing dangerous acts like jumping from the top of a hill which some children may try to copy and may face the accidents.

(vi) Advertising may not increase overall demand : Advertising does not always increase demand. In many cases, a number of firms manufacturing similar products may advertise vigorously. This may not result in an increase in the total demand for the product but simply shift demand from one brand to another.

What is salesman ship? Mentions different method of sales promotions, what are the different misuses of advertising.

14. Define management. Discuss the management as science.

Ans: Management: Management refers to the process of using men, money, machines, and material and processes through proper direction, coordination and integration of several activities so as to produce desired results and attain predetermined goals. In other words, management consists of a series of activities classified into various functions like planning, organizing, staffing directing and controlling.

Management as a Science:

Science is an organized or systematized body of knowledge pertaining to a particular field of enquiry. Science is systematized in the sense that it establishes cause and effect relationship between different variables.

Such systematized body of knowledge contains concepts, principles and theories which help to explain past events and to predict the outcome of specific actions. These principles are capable of universal application, i.e., they can be applied under different situations.

They represent fundamental truths derived through empirical results. These principles or basic truths are developed through scientific methods of continuous observation, experiment and testing.

When generalizations or hypotheses are empirically verified for accuracy through continuous observation and experimentation they become principles. Science explains 'why' of human behaviour.

Management is a science because it contains all the characteristics of science. Firstly, there is a systematized body of knowledge in management. Principles are now available in every function of management and these principles help to improve managerial effectiveness.

For instance, there are a number of principles which serve as guidelines for delegating authority and thereby designing an effective organization structure. Similarly, there are several techniques (ways of doing things) in the field of management.

Budgeting, cost accounting, ratio analysis, rate of return on investment, critical path method (CPM), programme evaluation and review technique (PERT) are some of these techniques which facilitate better management.

Secondly, principles of management have been developed through continuous observations and empirical verification. Thirdly, management principles are capable of universal application

15. Explain “Management is science as well as Art”

Ans: Management as an Art, Science or Both

A lot of controversy arises whether management is an art or science or both. It is said that the management is the oldest of arts and youngest of science. This explains the changing nature of management. But to have an exact answer to this question, it is necessary to understand both these aspects separately and combinedly, as given below:

Management as a Science:

Science may be described as a systematized body of knowledge based on proper findings and exact principles and is capable of verification. It is a reservoir of fundamental truths and its findings apply safely in all the situations. In this sense, management is a science as it has also developed some systematized knowledge. Like other sciences, management has also developed certain principles, laws, generalization, which are universal in nature and are applicable wherever the efforts of the people are to be coordinated. But management is not as exact science as other physical sciences like physic, chemistry, biology, astronomy etc. The main reason for the inexactness of science of management is that it deals with the people and it is very difficult to predict their behavior accurately. In this way, management falls in the area of 'social sciences'. Thus, it is a social science.

Management as an Art:

Art refers to the way of doing specific things; it indicates how an object can be achieved. In the words of George R. Terry, "Art is bringing about of a desired result through the application of skill." Art is, thus, skilful application of knowledge which entirely depends on the inherent capacity of a person which comes from within a person and is learned from practice and experience. In this sense, management is certainly an art as a manager uses his skill, knowledge and experience in solving various problems, both complicated and non-complicated that arise in the working of his enterprise successful. In the words of Ernest Dale, "Management is considered as an art rather than science mainly because managerial skill is a personnel possession and is intuitive."

Conclusion- Management is an Art and Science Both

From the above study, we conclude that management is an art and science both. According to American Society of Mechanical Engineers. "Management is the art and science of preparing, organizing and directing human efforts to control the forces and utilize the material of nature for the benefit of men. "Thus, it has now been accepted that management is an art as well as science. It has the elements of both arts and science. In the words of Dean Stanley, "Management is a mixture of an art an science."

16. Write the main function of management?

Ans: Management is at the core of all business activities and without management the success of business unit can-not be expected.

Functions

Management has certain definite tasks before it. A Management as a process includes all the steps of planning, organizing, directing and controlling. All these processes of management are denoted as management functions. The various processes of management are expressed in a simple phrase called "POSDCORB" where :

P denotes Planning

O denotes Organizing

S denotes Staffing

D denotes Directing. .

CO denotes Co-ordination

R denotes Reporting

B denotes Budgeting.

1. Planning

This is the first step in the management process. Planning denotes deciding in advance what is to be done, when and how it is to be done and by whom it is to be done. It is a conscious determination of future course of action. A concrete planning is required at all levels of management to achieve the desired objective. It includes forecasting, policies, programmes, procedures and preparation of schedules.

2. Organizing

Organization denotes collection and integration of money, men and material to achieve the planned objective of the enterprise. In organizing, the work to be performed is classified into various classes and sub-classes. These classes are allotted to some group of persons with authority and responsibility. Organization denotes a pattern of ways in which large number of people has face-to-face contact and engaged in complexity of tasks to achieve the end of the enterprise.

3. Staffing

It is one of the most important processes of management. It means allotment of required amount of manpower to discharge specific job. The principles of right man in right job is important because of organization is overstaffed it may amounts to wastage and if under staffed it will lead the work to be untouched.

4. Directing

Management must guide the personnel through whom it gets the work done. If proper direction of guidance is not given, management will face a lot of difficulties in getting things done. Direction includes:

Supervising the employees.

Decision-making.

Guiding the employees.

Communication and motivation.

5. Controlling

Control is essential for attainment of objectives of an enterprise. Controlling is determining what is being done, evaluating performances and applying corrective measures if necessary. If proper control is not exercised on the activities of the people working, it will create a lot of disturbances as people will work on their own ways.

17. Elucidate different views on the usage of the terms “management “and “administrations”.

Ans: Difference between Administration and Management.

Management and administration are generally taken to mean as one and the same and ai u often used
interchangeably. But there has been a controversy because of these two terms. There are following
three views on the subject of distinction between administration and management.

(1) Management and Administration are different—Oliver Sheldon was the first person to make a
distinction between management and administration. According to him "Administration is the function
in industry concerned with the determination of the corporate policy, the coordination of finance,
production and distribution. Management is the function concerned with the execution of policy within
the limits set up by administration." Thus administration is formulation of policies and is determinative
function while management is execution of policies and is an executive function. Florance and Tead
also support this view. In their view administration involves the overall setting of major objectives,
determination of policies, identifying of general purposes laying down broad programmes, major
objectives etc. while management is the active direction of human efforts with a view to getting this
done.

(2) Management includes administration— According to Brech, "Management is a social process entailing responsibility for the effective and economical
planning and regulation of the operation of an enterprise in fulfillment of a given purpose of task."
Administration is that part of management which is conceerned with the installation and carrying out of
the procedures by which the programme is laid down and communicated and the progress of activities
is regulated and checked against plans. Thus, first and second viewpoints are exactly opposite to one
another.

(3) There is no distinction between management and administration. Other authors like Fayol, Newman
Williams, do not make any distinction between these two terms. This viewpoint is gaining popularity
these days. It is very difficult to demarcate between managerial and administrative functions because
the same set of persons perform both of these functions. We do not have two sets of people to
discharge administrative and operative management functions. Therefore, there is no difference
between the two. Conclusion:

18. What do you mean by planning? What are its basic features?

Ans: Planning is deciding in advance what to do and how to do. It is one of the basic managerial functions. Before doing something, the manager must formulate an idea of how to work on a particular task.

FEATURES OF PLANNING: The planning function of the management has certain special features. These features throw light on its nature and scope:

Planning focuses on achieving objectives: Organisations are set up with a general purpose in view. Specific goals are set out in the plans along with the activities to be undertaken to achieve the goals. Thus, planning is purposeful. Planning has no meaning unless it contributes to the achievement of predetermined organisational goals.

Planning is a primary function of management: Planning lays down the base for other functions of management. All other managerial functions are performed within the framework of the plans drawn. Thus, planning precedes other functions. This is also referred to as the primacy of planning. The various functions of management are interrelated and equally important. However, planning provides the basis of all other functions.

Planning is pervasive: Planning is required at all levels of management as well as in all departments of the organisation. It is not an exclusive function of top management nor of any particular department. But the scope of planning differs at different levels and among different departments. For example, the top management undertakes planning for the organization as a whole. Middle management does the departmental planning. At the lowest level, day-to-day operational planning is done by supervisors.

Planning is continuous: Plans are prepared for a specific period of time, may be for a month, a quarter, or a year. At the end of that period there is need for a new plan to be drawn on the basis of new requirements and future conditions. Hence, planning is a continuous process. Continuity of planning is related with the planning cycle. It means that a plan is framed, it is implemented, and is followed by another plan, and so on.

Planning is futuristic: Planning essentially involves looking ahead and preparing for the future.

The purpose of planning is to meet future events effectively to the best advantage of an organisation. It implies peeping into the future, analysing it and predicting it. Planning is, therefore, regarded as a forward looking function based on forecasting.

Planning involves decision making: Planning essentially involves choice from among various alternatives and activities. If there is only one possible goal or a possible course of action, there is no need for planning because there is no choice. The need for planning arises only when alternatives are available. In actual practice, planning pre supposes the existence of alternatives. Planning, thus, involves thorough examination and evaluation of each alternative and choosing the most appropriate one.

Planning is a mental exercise: Planning requires application of the mind involving foresight, intelligent imagination and sound activity of thinking rather than doing, because planning determines the action to be taken. However, planning requires logical and systematic thinking rather than guess work or wishful thinking. In other words, thinking for planning must be orderly and based on the analysis of facts and forecasts.

19. What is organizing? What are its basic features?

Ans: Meaning of OrganisingIn an enterprise, many managers and employees work together for achieving common objectives. It is the organisational structure which binds them together and brings proper adjustment and coordination in their work. The division of work and authority and the establishment of relationship among individuals or groups are possible due to the organisation structure. In simple words, organizing means arranging the ways and means for the execution of business plan. It is the creation of administrative set-up for the execution of the plan. It suggests the framework within which the management functions. The term organisation suggests a functional group working together for achieving common purposes/objectives.

The main characteristics or Features of organisation are as follows:

Outlining the Objectives: Born with the enterprise are its long-life objectives of profitable manufacturing and selling its products. Other objectives must be established by the administration from time to time to aid and support this main objective.

Identifying and Enumerating the Activities: After the objective is selected, the management has to identify total task involved and its break-up closely related component activities that are to be performed by and individual or division or a department.

Assigning the Duties: When activities have been grouped according to similarities and common purposes, they should be organized by a particular department. Within the department, the functional duties should be allotted to particular individuals.

Defining and Granting the Authority: The authority and responsibility should be well defined and should correspond to each other. A close relationship between authority and responsibility should be established.

Creating Authority Relationship: After assigning the duties and delegations of authority, the establishment of relationship is done. It involves deciding who will act under whom, who will be his subordinates, what will be his span of control and what will be his status in the organisation. Besides these formal relationships, some informal organizations should also be developed.

20. What is directing? What are its basic features?

Ans: In the ordinary sense, directing means giving instructions and guiding people in doing work.

Discuss the powers and right of chairman of a valid meeting. In the context of management of an organisation, directing refers to the process of instructing, guiding, counselling, motivating and leading people in the organisation to achieve its objectives.

The main characteristics of directing are discussed below:

Directing initiates action: Directing is a key managerial function. A manager has to perform this function along with planning, organising, staffing and controlling while discharging his duties in the organisation. While other functions prepare a setting for action, directing initiates action in the organisation.

Directing takes place at every level of management: Every manager, from top executive to supervisor performs the function of directing.The directing takes place wherever superior – subordinate relations exist.

Directing is a continuous process: It takes place throughout the life of the organisation irrespective of people occupying managerial positions. We can observe that in organisations like Infosys, Tata, BHEL, HLL and the managers may change but the directing process continues because without direction

the organisational activities can not continue further.

Directing flows from top to bottom: Directing is first initiated at top level and flows to the bottom through organisational hierarchy. It means that every manager can direct his immediate subordinate and take instructions from his immediate boss.

21. What are the power and duties of chairman.

Ans: Chairman of a general meeting is responsible for conducting the business at the meeting successfully. He has prima facie authority to decide all incidental questions which arise at the meeting and require immediate decision. The chairman is not merely a dummy head but has a discretion with regard to general conduct of the meeting (Wall vs Exchange Investment Corporation). In order that he may properly perform his duties, the chairman is invested by law or the articles with certain powers.

Powers of chairman :

His main powers are as follows:

1. To regulate the course of the proceedings at the meeting.

2. To decide who shall first address the meeting when simultaneously two or more persons, rise to speak.

3. To decide points of order submitted to him.

4. To stop the speaker when his allotted time is over.

5. To get disorderly persons removed from the meeting.

6. To check irrelevant and personal reference during the course of debate.

7. To declare result of voting by show of hands which shall be conclusive evidence of the fact, unless a poll is demanded.

8. To have a recount if he is uncertain who had voted for or against the motion.

9. To order and take a 'poll'.

10. To regulate the manner in which poll shall be taken.

11 . To appoint scrutinizer for checking the votes on a poll,

12. To remove a scrutinizer any time before the result of the poll is declared and to fill the vacancy so caused.

13. To decide the fact of the motion by the exercise of casting vote, if the articles permit, in cases where the members are equally divided.

14. To exclude certain matters from the minutes of the proceeding of the meeting if he is of the opinion that the matter (i) is defamatory of any person, or (ii) is irrelevant, or (iii) is detrimental to the interests of the company

Duties of Chairman :

The Chairman is responsible for conducting the proceedings of the meeting in a regular manner, expeditiously and properly. His main duties are:

1. To see that the meeting is properly convened and constituted. In other words he must find out that a proper notice has been issued, that his own appointment is valid and that the required quorum is present.

2. To take care that the requirements of the Act and Articles of Association are duly complied with.

3. To preserve order at the meeting.

4. To see that the items of business are taken in the order set out in the Agenda paper, unless the order is altered with the consent of the meeting.

5. To see that every motion is property proposed and duly seconded.

6. To decide questions of procedure requiring decision.

7. To act impartially in the general interests of those present at the meeting. All members entitled to speak must be given proper opportunity to express their views.

8. To ensure that the sense of the meeting is properly ascertained with regard to any question before the meeting.

9. To accede to a proper and valid demand for 'poll' and also to direct the manner in which the poll is to be taken.

10. To declare result of voting, by show of hands and by poll.

11. To declare the meeting closed when all the business has been transacted.

12. To see that proper and correct minutes are entered in the Minutes Book and of sign them.

22. Give an idea about agenda and quorum of a valid meeting?

23. Discuss the different office departments and its function

Ans: The office is the central point of coordination of the organization function. According to the nature of the business, the office should be divided into departments for smooth management. The different departments found modern office are:

Planning department: This department is organized under the direction, supervision and control of top level management or owner of the business. The function of this department is to formulate comprehensive planning regarding production.

Production department: The production of goods is the basic function of this department. The production manager prepares production planning and devotes his time in accomplishment of task according to planning.

Stores department: This department has important contribution towards uninterrupted flow of production. This department procures various raw materials, machineries, equipment, spare parts to be used in production and store them carefully.

Purchase department: This department is entrusted with the purchase of necessary raw material, equipments, tool, spare parts, etc on the basis of requisition received from different departments.

Cash department: Daily cash transaction, i.e. receipts and payments of cash is effected through this department. The cashier is the in charge of this department and he submits the accounts of daily transaction after close of business hours to the departmental head.

Sales department: Sale managers are the head of sales department. He makes his sincere effort to sale the goods produced and good procures at the maximum possible price. The stability and amount of profit are wholly depends on the efficiency of this department. The department provides arrangement for packing and delivery goods. This department adopts sale promotion measures like advertising and publicity.

Account department: A separate account department is needed for large undertaking to keep detailed accounts of income and expenditure. This department is concern with recording all monetary transaction taking place in the organisation

24. What are the common appliances found in present day offices? Point out their usages.

Ans: Common office appliances and there use:

Type write: The type writer is most commonly used office appliances for correspondence work. It produces uniform and neat and legible letters which are essential in business correspondence. It saves time and labour as a numbers of copies can be obtained by using carbon copy.

Xerox: The use of Xerox machine has rapidly increased in modern office. It is used for reproducing report, letters, documents and circular etc.

Telephone: The telephone is now indispensable labour saving device and is mostly used for oral communication in all types of office. As cheap and efficient means of communication, the telephone has reduced the cost of communication.

Isophone: It is automatic machine attached to telephone for recording name, address and message of the communicator without the help of any person. When the officers are away from office or telephone call made beyond office hours, this appliance can keep a detailed record of the message.

Computer: This is electronic device that is capable of doing almost all type of electrical operation at high speed. The computer practically does all operation that is expected from human brain but at higher speed. They eliminate errors, expedite operation and reduce cost.

Franking machine: Franking machine is used in most large offices to do the work of affixing postage stamp on the envelopes.

Billing machine: The billing machine is the combination of type writer and calculator..This is used in mostly in big office where a large numbers of bills, invoice, credit note and similar documents is to be prepared daily.

Z.ED

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