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Class 11 Business Studies Sample Paper

Refer to below provided Class 11 Business Studies Sample Paper with solutions. These Guess papers for Business Studies Class 11 have been designed based on the latest examination guidelines and paper pattern issued by CBSE. We have provided all Sample Papers for Class 11 Business Studies with answers. You can click on the links below to access the practice papers for free.

CBSE Sample Papers for Class 11 Business Studies

Class 11 Business Studies Sample Paper Term 2 Set A

Class 11 Business Studies Sample Paper Term 2 Set A

Section – A

1. Finance is not only needed to open a business, even the day-to-day running of a business requires a constant stream of finance.’ Explain the meaning of finance and its importance in business.
Answer : For carrying out business, firms need money, which is also called finance. Finance can be defined as managing money and investing, borrowing, saving, etc. It can also be defined as the process of raising funds or capital for a business. A business needs to run its operations smoothly and successfully. No business can run its operations smoothly without the availability of the right amount of funds at the right cost and the right time.

2. The District Industries Centres offers a subsidy loan scheme for young professionals under the Ministry of Social Justice and Empowerment guidance. It was established in 1978 and was initiated by the central government to promote small-scale industries in smaller towns. DICs’ primary focus is to generate employment in rural regions of India. Considering the above para, state two main functions of the District Industrial Centre (DIC)?
Answer : Two main functions of the District Industries Centre are:
(i) Recognizing and supporting the new entrepreneurs financially.
(ii) Providing financial support to small units.
(iii) Development and expansion of industrial clusters.
(iv) Identification of suitable schemes.
(v) Preparation of feasibility reports
(vi) Arranging for credit, machinery and equipment

3. ‘Countries that can produce a product at lower cost will be able to gain a larger share in the market’. Which benefit of international trade is being talked about here? Elaborate.
Answer : International trade promotes efficiency in production as countries adopt better methods of production to produce at lower costs to remain competitive. By adopting this, countries can produce products at lower costs and will be able to gain a larger share in the market. Hence, the efficiency of production rises. This will also help in increasing the standards of the product and consumers will have a good quality of products to consume.

4. Suman is a retailer of leather boots. She usually buys the goods from Ravi, who is a wholesaler of leather boots. Both, Suman and Ravi deal in goods within the country, and Suman sells them to the end customers. Identify the type of trade Suman and Ravi are engaged in.
Answer : Suman and Ravi are engaged in Internal Trade, which refers to buying and selling of goods and services within the boundaries of a nation. Ravi is a wholesaler and Wholesale Trade refers to buying and selling of goods and services in large quantities for resale or immediate use. Suman is a retailer selling goods to the end customer.

Section – B

5. Pepper Ltd. is a manufacturing company co-owned by Ratul and Shakti. The firm made a profit of ₹200 crore in 2010. Ratul and Shakti decided to expand the operations of the business and open a new department. To expand the business operations, what options do Ratul and Shakti have? Identify various sources of funds on the basis of ownership and discuss the different types of owner’s funds that are available.
Answer : Sources of funds based on ownership are:
(i) Owner ’s funds
(ii) Borrowed funds
The owner’s funds can be raised by issuing preference shares, retained earnings, equity shares, etc.
(a) Preference shares: Preference shares are the types of shares for which dividends are paid to shareholders before the payment of common stock dividends.
(b) Retained earnings: Retained earnings are an accumulation of the company’s net income over all the years that the business has been in operation.
(c) Equity shares: Equity shares are long-term financing sources for any company, which are issued to the general public and are non-redeemable.

6. ‘To facilitate MSMEs in accessing credit assistance from nationalized and private sector banks.’ Discuss the scheme of NSIC being indicated here.


Mention three main objectives of small-scale industries.
Answer : The ‘Bank Credit Facilitation’ scheme of NSIC is being discussed here. NSIC has partnered with several private and public sector banks to fulfill the credit needs of micro, small and medium enterprises. The firms can get credit support by following the proper documentation process. The firms can download the loan application forms from the banks’ official website under the Banks Credit Facilitation scheme.


The main objectives of small-scale industries are:
(i) To provide an opportunity for large-scale employment at a minimum cost.
(ii) To meet the growing demands of the consumer’s goods and simple producer goods.
(iii) To ensure maximum utilization of unexploited resources of the country.
(iv) To help in the development of rural and under-developed regions of the country.

7. Discuss the services of retailers to manufacturers and wholesalers.
Answer : Retailers provide the following services to wholesalers and manufacturers:
(i) Help in the distribution of goods: Retailers assist in the dissemination of manufacturers’ products by making them available to end-users who may be dispersed across a vast geographical area.
(ii) Personal selling: Retailers relieve producers of this work and considerably assist them in the process of actualizing product sales by engaging in personal selling efforts.
(iii) Enabling large-scale operations: Retailers allow them to function at a somewhat large scale, allowing them to focus totally on their other tasks.
(iv) Collecting market information: Retailers are a significant source of market data about customer tastes, interests, etc. which can help marketers to make critical marketing decisions.

8. International trade has an adverse impact on the development of domestic countries. If we take the example of Iran, we know that crude oil cannot be produced by every country and that is why Iran is at a disadvantage all the time due to the monopoly of oil-exporting nations. The exploitation of the importing country by the exporting country can take place. Keeping in mind the case above, point out any four disadvantages of international trade for the underdeveloped and developing countries.
Answer : Following are the disadvantages of international trade for underdeveloped and developing countries:
(i) Economic Dependence: Most underdeveloped and developing countries are dependent on exporting countries for importing the goods and services for their economic development. Too much dependence on exporting countries has serious political and socio-economic implications.
(ii) Dumping of goods: Many exporting countries capture the market in underdeveloped countries, dump their goods at throwaway prices. Though such goods are inferior and have shorter life; they attract customers in importing countries which results in cutthroat competition to domestic industries.
(iii) Adverse effect on the BOP (Balance of Payments): Because of relatively more freedom in international trade, the underdeveloped and developing nations are not in a position to compete with developed countries due to lack of competence. Thus, the balance of trade remains negative on a long-term basis.
(iv) Colonialism: International trade leads to colonialism in the world, which means the domination of developed countries over-dependent underdeveloped countries to fulfill their mean interests.

Section – C

9. Differentiate between owner’s funds and borrowed funds.


‘Public deposits are received by a company from the public as unsecured debt.’ Discuss the concept of public deposits.
Answer : (image) 21


Public deposits are the deposits raised by business organizations from the public. Any member of the public can fill-up the form and deposit money with the company. The company issues a deposit receipt in return. The rate of interest on these deposits depends upon the period of deposit and the reputation of the company. A company can invite public deposits for a period of 1 year to 5 years. Public deposits refer to the deposits received by a company from the public as unsecured debt. These are preferred by the companies because they are cheaper than bank loans. These are a very convenient source of business finance. Interest paid on public deposits is tax-deductible which reduces tax liability.

10. Discuss the role of small businesses in India with special reference to rural areas.
Answer : Small businesses are small in size and are owned and controlled by a limited number of people. These businesses require a small amount of capital to start. They provide profits to their owners and serve the local community. These businesses are mostly operated in rural parts of the country to provide employment to a large number of people and strengthen them financially.
The role of small businesses can be described as:
(i) Generates employment: Small businesses employ a large number of people in rural areas. They are more concerned about the laborers in rural areas and employ unskilled workers in their operations. Hence, they play an important role in reducing poverty and improving the lives of people in rural areas.
(ii) Best utilization of local resources: There are a variety of resources in rural areas. These resources include sufficient and cheap raw materials and cheap labor. Small Industries use these resources to the full extent and make the better utilization of these resources.
(iii) Promotes rural development and growth: Rural development or industrialization is one of the main functions of the industries located in rural areas. It also helps in removal of poverty from the villages.
(iv) Increase tax revenue: As the industries employ a large number of people in rural areas, they are earning efficiently and generating revenue. These industries pay taxes to the government on their incomes. When the industries are increasing, the number of laborers is increasing, the tax revenue to the government is also increasing.

Case/Source Based Question

11. Sheetal Ltd., a handbag manufacturing company owned by Shree, opens its shops in different Indian locations. She sells goods in cash only. The shops have identical decorations and fixed prices of goods. This way they help in eliminating unnecessary middlemen and benefit the customers. Keeping in mind the above situation, answer the following questions:

(i) Identify the type of shop referred to.
Answer : The shops being talked about in the para are multiple shops or chain stores. Many chain stores have sprouted up at various locations across the country. These shops sell standardized and branded consumer goods with high sales turnover. These stores use the same merchandising techniques and are owned by the same company.

(ii) State a few characteristics of such shops.
Answer : Characteristics of chain stores are:
(a) The goods are dispatched to each shop by the head office.
(b) The shops are under the supervision of a Branch Manager, who is responsible for day-to- day management.
(c) The head office is in charge of creating policies and ensuring that they are executed.
(d) The prices of goods in such shops are fixed, and all sales are conducted in cash.

12. Suresh is a dealer in groceries. He owns a shop in the central market of his area. He buys goods in larger quantities and sells them to small businessmen. He also stores groceries for these small businessmen and provides warehousing facilities to them. Considering the case above, answer the questions below:

(i) Which type of trader Suresh is?
Answer : Suresh works as a wholesaler. A wholesaler buys the products in bulk from the manufacturer and sells it to the retailer/businessmen because it acts as an intermediary between manufacturers and retailers. A wholesaler is an important link in the distribution network. The retail stage of distribution is where items are transmitted from the hands of small businessmen to the hands of consumers.

(ii) State the services Suresh provides to these businessmen.
Answer : Services wholesalers provide to the retailers are:
(a) Ready supply: The wholesalers enable the consumer to buy the desired quantity and quality of goods at a convenient time and place because they supply goods regularly to the retailers.
(b) Fair-priced goods: Since a wholesaler buys goods from manufacturers in bulk and allows him to reap the benefits of economies of large-scale production.
(c) Stabilization of price: The wholesaler is in a better position to stabilize the prices of the products by adjusting demand and supply.
(d) Advertising the goods: Wholesalers advertise the goods extensively to enlighten about their uses, types, and qualities. The retailers get knowledge about the goods and are in a better position to inform their customers accordingly.


Ritu and Shashi were talking about expanding their manufacturing business to international countries. They already have many stores in several cities of the country and are earning huge profits. Shashi was satisfied with the domestic business, but Ritu was in favor of expanding the business internationally and explained the benefits of international business. What would Ritu have told Shashi about the benefits?
Answer : Benefits of international trade are:
(i) Cost of transportation from India will be reduced by setting up a production plant overseas.
(ii) Business firms can earn more profits by selling their products in countries with high pricing when local prices are lower.
(iii) Making use of excess production capacity to increase operational profitability.
(iv) When domestic market competition is fierce, internationalization appears to be the only way to grow significantly.
(v) The desire to become international stems from a ambition to expand, a desire to become more competitive, and a desire to reap the strategic benefits of internationalization.

Class 11 Business Studies Sample Paper

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