12th Commerce 5 Mark Questions And Answers 2021 - 2022

IV. Long answer questions:

12th Commerce 5 Mark Questions And Answers 2021 - 2022

1. Explain the concept of management.

i). Body of Knowledge:

Management knowledge is the best passport to enter the world of

employment either in business world or government or private.

ii). Management Tools:

 Accounting,

 Business Law,

 Psychology,

 Statistics,

 Econometrics,

 Data Processing,

iii). Separate Discipline:

 Management studies in many universities and institutions of higher learning

are recognized as a separate discipline.

 Seminars, special courses, training programmes are becoming fashionable and

popular for orientation.

iv). Specialization:

 There is a growing tendency to select and appoint highly qualified, trained and

experienced persons to manage the business in each functional areas of

management.

v). Professional Association:

 The Business Management Associations in many countries to promote the

spread of knowledge in all management areas and to build up the bright

public image of managerial profession.

2. Explain the management process in detail.

 The substance of management should be identified as a process.

 A process is something that what a person does in the context of his individual

duties and responsibilities.

 A process also implies ongoing and unceasing cyclical operations.

 In management there is planning-action-control cycle.

 A process indicates the dynamic nature of management.

3. Describe the principles of scientific management.

 i). Science, Not Rule of Thumb:

 In order to increase organizational efficiency, the ‘Rule of Thumb’ method should

be substituted.

 It means decisions taken by manager as per their personal judgments.

 This will help in saving time as well as human energy.

 ii). Harmony, Not Discord:

 Taylor emphasized that there should be complete harmony between the workers.

 It will not be beneficial either for the workers or the management.

 The management and the workers should realize the importance of each other.

ii).Mental Revolution:

 The technique of Mental Revolution involves a change in the attitude of workers

 The workers should aim to increase the profits of the organisation.

 There should be a spirit of togetherness between workers and management.

iv). Cooperation, Not Individualism:

 The intention is to replace internal competition with cooperation.

 Both ‘Management’ and ‘Workers’ should realize the importance of each other.

 Workers should be considered as part of management.

v). Development of each and every person to his or her greatest efficiency and

prosperity:

 Efficiency of any organisation also depends on the skills and capabilities.

 To attain the efficiency, steps should be taken right from the process of selection

of employees.

4. Explain the principles of modern management.

i). Division of Work:

 According to this principle the whole work is divided into small tasks.

 The specialization of the workforce according to the skills of a person, creating

specific personal and professional development within the labour force.

ii). Authority and Responsibility:

 This is the issue of commands followed by responsibility for their consequences.

 Authority means the right of a superior to give the order to his subordinates

whereas responsibility means obligation for performance.

iii). Discipline:

 It is obedience, proper conduct in relation to others, respect of authority, etc.

 It is essential for the smooth functioning of all organizations.

iv). Unity of Command:

 This principle states that each subordinate should receive orders and be

accountable to one and only one superior.

 If an employee receives orders from more than one superior, it is likely to create

confusion and conflict.

v). Unity of Direction:

 All related activities should be put under one group, there should be one plan of

action for them, and they should be under the control of one manager.

1. Explain the various functions of management.

i). Planning

 “Look Before you Leap” are traditional proverbs which provide a basis for

planning.

 Planning is the primary function.

ii). Organizing

 It is the process of establishing harmonious relationship among the members of

an organisation and the creation of network of relationship among them.

iii). Directing

 Directing denotes motivating, leading, guiding and communicating with

subordinates on an ongoing basis in order to accomplish pre-set goals.

iv). Representation:

 A manager has to act as representative of a company.

 Manager has dealings with customers, suppliers, government officials, banks.

v). Decision-making:

 Every employee of an organisation has to take a number of decisions every day.

 Decision- making helps in the smooth functioning of an organisation.

2. Enumerate the different kinds of financial markets.

Kinds of financial market as:

 Marketable assets

 Non-marketable assets

i). Marketable Assets

 Marketable assets are those which can be easily transferred from one person

to another without much hindrance.

 Example: Shares of Listed Companies, Government Securities, etc.

ii). Non-Marketable Assets

 If the assets cannot be transferred easily, they come under this category.

 Example: Bank Deposits, Provident Funds, Pension Funds, etc.

3. Discuss the role of financial market.

 (i) Savings Mobilization

Obtaining funds from the ‘surplus’ units such as business firms, public sector

units, Government is an important role played by financial markets.

(ii) Investment

Financial market plays a key role in arranging the investment of funds thus

collected, in those units which are in need of the same.

(iii) National Growth

Financial markets contribute to a nation’s growth by ensuring an unfettered flow

of surplus funds to deficit units.

(iv) Entrepreneurship Growth

Financial markets contribute to the development of the entrepreneurial class by

making available the necessary financial resources.

(v) Industrial Development

The different components of financial markets help an accelerated growth of

industrial and economic development of a country.

4. What are the functions of Financial Markets?

(i) Transfer of Resources:

Financial markets facilitate the transfer of real economic resource from lenders to

ultimate borrowers.

(ii) Enhancing Income:

Financial markets allow lenders earn interest on their surplus investible funds and

thus contributing to the enhancement of the individual and the national income.

(iii) Productive Usage:

Financial markets allow for the productive use of the funds borrowed and thus

enhancing the income and the gross national production.

(iv) Capital Formation:

Financial markets provide a channel through which new savings flow to aid capital

formation of a country.

(v) Sale Mechanism:

Financial market provides a mechanism for selling of a financial asset by an

investor so as to offer the benefits of marketability and liquidity of such assets.

1. Discuss the characters of a Capital Market.

(i) Securities Market

The dealings in a capital market are done through the securities like shares,

debentures, etc. The capital market is thus called securities market.

(ii) Price

The price of the securities is determined based on the demand and supply.

(iii) Participants

There are many players in the capital market. It includes individuals, corporate

sectors, Govt., banks and other financial institutions.

(iv) Location

Capital market is not confined to certain specific locations, although it is true that

parts of the market are concentrated in certain well-known centers known as Stock

Exchanges.

(v) Market for Financial Assets

Capital market provides a transaction platform for long term financial assets.

2. Explain the characteristics of Money Market?

i).Short-term Funds

It is a market purely for short-term funds or financial assets called near money.

ii).Maturity Period

It deals with financial assets having a maturity period up to one year only.

iii).Conversion of Cash

It deals with only those assets which can be converted into cash readily without

loss and with minimum transaction cost.

iv).Existence of Secondary Market

There should be an active secondary market for these instruments.

v).Wholesale Market

It is a wholesale market and the volume of funds or financial assets traded in the

market is very large.

3. Explain the Instruments of Money Market?

i). Treasury Bill Market

 A market for the purchase and sale of Treasury Bills is known as a “Treasury Bills

Market”.

ii). Certificate of Deposits

 Certificate of Deposits are short-term deposit instruments issued by banks and

financial institutions to raise large sums of money.

 Certificate of Deposits are issued in the form of usance promissory notes.

iii). Commercial Bills

 The Commercial Bill is an instrument drawn by a seller of goods on a buyer of

goods.

 These bills are of 30 days, 60 days and 90 days maturity.

iv). Government Securities Market

A market whereby the Government or gilt-edged securities can be bought and sold

is called ‘Government Securities Market’.

4. Explain the features and types of Commercial Bills?

Features:

 Drawer

 Acceptor

 Payee

 Discounter

 Assessment

 Maturity

 Credit Rating

Types:

a. Demand and Usance Bills

 A demand bill is one wherein no specific time of payment is mentioned.

 Demand bills are payable immediately when they are presented to the drawee.

b. Clean bills and documentary Bills

 Bills that are accompanied by documents of title to goods.

 Clean bills are drawn without accompanying any document.

 E.g. Railway Receipt and Lorry Receipt

c. Inland bills and Foreign Bills

 Bills that are drawn and payable in India on a person who is resident in India

are called inland bills.

 Bills that are drawn outside India and are payable either in India or outside

India are called foreign bills.

d. Indigeneous Bills

 The drawing and acceptance of indigenous bills are governed by native custom

or usage of trade.

e. Accommodation and supply Bills

 Accommodation bills are those which do not arise out of genuine trade of

transactions.

5. What are the Characteristics of Government Securities?

i). RBI Special Role

RBI takes a special and an active role in the purchase and sale of these securities

as part of its monetary management exercise.

ii). Nature of Securities

Securities offer a safe avenue of investment through guaranteed payment of

interest and repayment of principal by the Government.

iii). Liquidity Profile

 The liquidity profile of gilt-edged securities varies.

 Accordingly liquidity profile of securities issued by Central Government is high.

iv). Issue Mechanism

The Public Debt Office of the RBI undertakes to issue government securities.

v). Issue opening

A notification for the issue of the securities is made a few days before the public

subscription is open.

1. Explain the functions of Stock Exchange.

i). Ready and Continuous Market

 Stock Exchange is, in fact, a market for existing securities.

 If an investor wants to sell his securities, he can easily and quickly dispose

them off on a stock exchange.

ii). Correct Evaluation of Securities

 One can easily evaluate the worth of one’s securities on the basis of these

quotations.

 The lender can easily assess the worth of security offered for loan.

iii). Aid to Capital Formation

 The facilities provided by it for their purchase and sale induce people to save

and invest.

 Stock exchanges thus ensure a steady flow of capital into industry and assists

industrial development.

iv). Facilities for Speculation

 Speculation is an integral part of stock exchange operations.

 As a result of speculation, demand for and supply of securities are equalized.

 Similarly, price movements are rendered smoothly.

v). Seasoning of Securities

 Speculators and underwriters hold for a temporary period, securities issued by

new companies.

 They unlock them when the market is prepared to absorb the new issues.

2. Explain the features of Stock Exchange.

i). Market for Securities

Stock exchange is a market, where securities of corporate bodies, government

and semi-government bodies are bought and sold.

ii). Deals in Second Hand Securities

It deals with shares, debentures bonds and such securities already issued by the

companies.

iii). Regulates Trade in Securities

 Stock exchange does not buy or sell any securities on its own account.

 It regulates the trade activities so as to ensure free and fair trade.

iv). Association of Persons

A stock exchange is an association of persons or body of individuals which may be

registered or unregistered.

v). Recognition from Central Government

Stock exchange is an organized market. It requires recognition from the Central

Government.

3. Explain the Benefits of Stock Exchange.

A. Benefits to the Community

i. Economic Development

It accelerates the economic development by ensuring steady flow of savings into

productive purposes.

ii. Fund Raising Platform

It enables the well-managed, profit-making companies to raise limitless funds by

fresh issue of shares from time to time.

iii. Tools to Divert Resources

Scarce resources are thus diverted to efficiently run enterprises for better

utilization.

iv. Capital Formation

It encourages capital formation.

v. Fund Raiser for Government

It enables Government to raise funds for undertaking projects through sale of

securities on the stock exchange.

B. Benefits to the Company

i. Enhances Goodwill or Reputation

Companies whose shares are quoted on a stock exchange enjoy greater goodwill

and credit standing.

ii. Wide Market

There is a wide and ready market for such securities.

iii. Raises huge funds

Stock Exchange can raise huge funds easily by issue of shares and debentures.

iv. Increases bargaining strength

Companies whose shares rise in the stock exchange command higher bargaining

power in the event of further expansion, merger or amalgamation.

C. Benefits to Investors

i. Liquidity

Stock exchange helps an investors to convert his shares into cash quickly and

thus increases the liquidity of his investments.

ii. Adding collateral value of security

The fact that a security is dealt on a stock exchange makes it a good collateral

security for obtaining loan from banks.

iii. Investor protection

The stock exchange safeguards, investor’s interest and ensures fair dealing by

strictly enforcing its rules and regulations.

iv. Assessing real worth of security

An investor can easily assess the real worth of securities in his hands, as market

quotations are published daily in the newspapers and in websites.

v. Mechanism to trade security

Stock Exchange provides a mechanism by which purchase and sale of listed

securities take place in a matter of few minutes

1. Explain the Characteristics of Human Resource.

 Human resource is the only factor of production that lives

 Human resource created all other resources

 Human resources are emotional beings

 Human resources are movable

 Human resource can work as a team

2. Describe the significance of Human Resource Management.

i). To identify manpower needs:

 It is very important as it is a form of investment.

 The number of men required are to be identified accurately to optimize the cost.

ii). To incorporate change:

Change is constant in any organisation and this change has to be introduced in

such a way that the human resource management acts as an agent to make the

change effective.

iii). To ensure the correct requirement of manpower:

At any time the organisation should not suffer from shortage or surplus manpower

which is made possible through human resource management.

iv). To select right man for right job:

It ensures the right talent available for the right job, so that no employee is either

under qualified or over qualified

v). To update the skill and knowledge:

 Managing human resource plays a significant role in the process of employee

skill and knowledge.

 Enhancement to enable the employees to remain up to date through training

and development programmes.

3. Elaborate on the Managerial functions of Human Resource Management.

 i). Planning

 Planning is deciding in advance what to do, how to do and who is to do it.

 It helps in the systematic operation of business.

ii). Organizing

 It includes division of work among employees by assigning each employee their

duties, delegation of authority as required and creation of accountability to

make employees responsible.

iii). Directing

It involves issue of orders and instructions along with supervision, guidance and

motivation to get the best out of employees.

iv). Controlling

 It is comparing the actual with the standards and to check whether activities

are going on as per plan and rectify deviations.

 This is made possible through observation, supervision, reports, records and

audit.

4. Discuss the Operating functions HRM.

i. Procurement:

Acquisition deals with job analysis, human resource planning, recruitment,

selection, placement, transfer and promotion

ii. Development

Development includes performance appraisal, training, executive development,

career planning and development, organizational development

iii. Compensation

It deals with job evaluation, wage and salary administration, incentives, bonus,

fringe benefits and social security schemes

iv. Retention

This is made possible through health and safety, welfare, social security, job

satisfaction and quality of work life.

v. Integration

It is concerned with the those activities that aim to bring about reconciliation

between personal interest and organizational interest