SAMPLE QUESTION PAPER - 5

Business Studies (054)

Class XI (2024-25)

Time Allowed: 3 hours Maximum Marks: 80

General Instructions:
1. This question paper contains 34 questions.
2. Marks are indicated against each question.
3. Answers should be brief and to the point.
4. Answers to the questions carrying 3 marks may be from 50 to 75 words.
5. Answers to the questions carrying 4 marks may be about 150 words.
6. Answers to the questions carrying 6 marks may be about 200 words.
7. Attempt all parts of the questions together.
1. Which of the following document is prepared by the exporter and includes details [1]
of the cargo in terms of the shipper's name, the number of packages, the shipping
bill, port of destination, name of the vehicle carrying the cargo?

a) Shipping bill b) Mates receipt

c) Packaging list d) Bill of exchange

2. Which of the following is the main problem for small business? [1]

a) Finance b) Managerial skill

c) Raw material d) All of these

3. A proposed name of the Company is considered undesirable if: [1]

A. It resembles closely with an existing company the name of an existing company.
B. It is an emblem of Government.
C. It is identical with the name.

a) Only C b) Only B

c) Only A d) All of these

4. Which of the following is come under Fixed Shop Small Retailers? [1]

a) Malls b) General stores

 c) Multiple stores d) Departmental stores

5. When does SFURTI was set up by the Central Government of India? [1]

a) 2005 b) 2002

c) 2003 d) 2004

6. PayPal is a good example of ________. [1]

a) B2C activities b) C2C activities

c) B2B activities d) C2B activities

7. A government company is any company in which the paid-up capital held by the [1]
government is not less than

a) 49 percent b) 51 percent

c) 25 percent d) 50 percent

8. Expand KVIC [1]

a) King of Village Investment b) Khadi and Village Industries

Culture Commission

c) Khadi and Village Industries d) King of Village Industries

Core Commission

9. Which of the following statements is true regarding preference shares? [1]

A. Preference shares provide an unsteady income in the form of a flexible rate of
return.
B. Preference shares are preferably for investors with a high-risk appetite.
C. Preference shareholders have voting rights.
D. Preference shareholders enjoy a preferential position over equity shareholders.

a) Only A is true b) Only C is true

c) Only D is true d) Only B is true

10. Assertion (A): If a person, through his/her own initiative, conduct or behaviour, [1]
gives an impression to others that he/she is a partner of the firm, he/she is a partner
 by Estoppel.
Reason (R): Partner by Estoppel is liable for the debts of the firm.

a) Both A and R are true and R is b) Both A and R are true but R is
the correct explanation of A. not the correct explanation of
A.

c) A is true but R is false. d) A is false but R is true.

11. The persons who come in between the primary producer and the final consumer to [1]
promote trade is called ________.

a) middleman b) auctioneer

c) Retailer d) trader

12. When does GST has been implemented in India? [1]

a) Jan 1, 2016 b) July 1, 2016

c) Jan 1, 2017 d) July 1, 2017

13. In terms of the continuity of the business organization, which form of organization [1]
is the most advantageous?

a) Sole Proprietorship b) Co-operative Society

c) Partnership d) Joint Stock Company

14. Expand DIC [1]

a) District Industries Centers b) Directorate of Indian company

c) Directorate of Indian d) Directorate of Industry

Corporation Corporation

15. Social interests and business interests are ________. [1]

a) Contradictory b) Complementary

c) Counteractive d) Conflicting

16. Assertion (A): Double Insurance means when more than one insurance policy is [1]
taken to cover the same amount of risk.
 Reason (R): In health insurance, the insurer undertakes to pay medical expenses in
case of illness of the insured.

a) Both A and R are true and R is b) Both A and R are true but R is
the correct explanation of A. not the correct explanation of
A.

c) A is true but R is false. d) A is false but R is true.

17. Limit of investment in small scale industry is ________. [1]

a) ten lakh b) five crore

c) two crore d) ten crore

18. Which of the broad categories of industries covers oil refinery and sugar mills? [1]

a) Service industry b) Secondary industry

c) Tertiary industry d) Primary Industry

19. A maximum investment that is required for equipment in Microenterprises which [1]
are engaged in rendering services is-

a) ₹ 5 lakhs b) ₹ 10 lakhs

c) ₹ 20 lakhs d) ₹ 15 lakhs

20. Stages in the formation of a public company are in the following order: [1]
A. Promotion, Incorporation, capital subscription, commencement of business
B. Incorporation, Capital of Business, Capital Subscription Commencement of
Business, Promotion
C. Promotion, Commencement of business
D. Capital Subscription, Promotion, Incorporation, Commencement of Business

a) D is correct b) C is correct

c) B is correct d) A is correct

21. Ramakant is a successful businessman who is engaged in manufacturing of auto [3]

spare parts. The products manufactured by him are sold not only in India, but are
 also exported to various countries like Singapore, Switzerland, Belgium, etc. On
the basis of given case, answer the following questions:
a. Identify the two kinds of business in which Ramakant is engaged.
b. Differentiate between the two types of business as identified in part (a) of the
question.

22. To which Auxiliary to Trade has related the following statement? [3]
i. There is a lot of risk in Business.
ii. Information in business has a special significance.
iii. Business can't be run without funds.
iv. To do business material has to be purchased from far off places.

OR
Pramesh was a successful businessman and owned a departmental store. He was aware
of the fact that profit is the reward of risk-bearing. So, in order to earn more profits, he
opened two more departmental stores and employed a team of young staff to look after
the stores. Initially, the staff was very sincere and Pramesh earned huge profits from his
3 departmental stores. However, over the last two years, his business is running into
losses. On close analysis, he found that his staff was not giving much attention to the
customers. Moreover, there were many cases of embezzlement (misappropriation of
funds) by the employees.
Identify and explain the main cause behind the losses in Pramesh’s Business.

23. When we buy some goods from the market the shopkeeper issues us a Trade [3]
Document. At the bottom of this document is written E. & O.E. What do you
understand from these letters? Explain the justification of these letters.

24. Mayank has a surplus money of Rs. 25,00,000, which he wants to invest either in [3]
equity shares or in preference shares. Two real estate companies (Magic Estate and
Skylark Enterprises), with almost the same creditworthiness, are launching their
public issue. Magic Estate is coming up with a public issue of preference shares,
while Skylark Enterprises is coming up with equity shares. Mayank is confused
about the two issues. He consulted his friend Gaurav, who is a portfolio manager
and Gaurav convinced him to invest the money in Magic Estate due to ‘Preferential
Rights’ of preference shareholders over equity shareholders.
State the ‘Preferential Rights’ stated by Gaurav, which convinced Mayank to invest
in Magic Estate.
 OR
Mr. Ankit is a Sole Trader. He runs the 'Prabhat Medical Store'. He needs some money.
For this, he met the Branch Manager of a bank. Ankit told the Manager that he needed
some such loan as may have the maximum limit fixed. He should be permitted to
withdraw as much money as desired up to that limit from the bank. Also, he wants that
the interest charged should not be on the maximum limit fixed but on the actual amount
withdrawn. The Bank Manager said that they had got such a scheme under which loan
could be granted only when the person availing loan kept some property with the bank
by way of security. Mr. Ankit became prepared to fulfil this condition. In this way, the
loan agreement was finalised between Mr. Ankit and the bank.
Identify this scheme of the bank and explain it.

25. Explain the types of home trade on the basis of level. [4]

OR
Geeta recently came across an advertisement of portal weight-reducing equipment in
the newspaper. The product is being manufactured by a small trader and is available for
sale throughout the country by placing an order through the post. The buyer has been
given an option of cash on delivery or e-wallets as a payment option.
In the context of the above case answer the following questions:
a. Identify the type of retail trade being described in the above lines.
b. List any five conditions under which it may be considered suitable.

26. What is business risk? What is its nature? [4]

OR
Explain the objectives of business briefly.

27. After completing a course in gemology, Esha joins her father in the family business [4]
of fashion jewellery. Her father owns two showrooms at different locations in the
city and operates his business through them. However, Esha intends to expand the
business by venturing into online retailing. She also intends to introduce flexible
manufacturing with the use of computer networks wherein the marketing
department can interact constantly with the production department and get the
customized products made as per the requirements of the individual customer.
a. How is the mode of business that Esha intends to adopt different from the one
that her father has been following over the years?
 b. Distinguish between the two different modes of business as identified in part (a)
of the question by giving any four points.

28. Write the merits of statutory corporations. [4]

29. What are the responsibilities of business towards society (public)? [4]

30. Write the meaning and features of the small-scale industry. [4]

31. India is considered to be one of the leading exporters of leather goods. The main [6]
leather items include leather bags, belts, leather pouches, and handbags. Different
kinds of gift items like key rings, leather journals, and leather-covered notebooks
also have a huge demand in foreign countries. Numerous small scale and large
scale enterprises in India are constantly engaged in exporting leather goods to
various foreign countries like Germany, UK, Italy, Hong Kong, France, Spain,
Netherlands, UAE, Belgium, and China.
In the context of the above case answer the following:
a. Briefly outline any two benefits available to the business firms who are engaged
in leather export.
b. How do the different countries engaged in international trade of leather goods
stand to gain (any two points)?

OR
What do you mean by exporting and importing? Mention its advantages and
disadvantages.

32. What do you understand by a sole proprietorship firm? Explain its merits and [6]
limitations.

OR
Amul is an Indian dairy cooperative, based at Anand in the state of Gujarat. It was
formed in 1946 and is a brand managed by a cooperative body, the Gujarat Co-
operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by
3.6 million milk producers in Gujarat. Amul spurred India's White Revolution, which
made the country the world's largest producer of milk and milk products. In the process,
Amul became the largest food brand in India and has ventured into markets overseas.
In the context of the above case answer the follwoing qustions:
a. What is a cooperative society?
 b. Why do you think Amul was promoted in the form of the cooperative? Explain by
giving any four merits of a cooperative society form of business organization.

33. Ding Dong Ltd. is planning to float an issue of equity shares in the market in the [6]
next four months. The directors of the company are also of the opinion that the
company should raise some portion of funds from international capital markets
through equity.
In the context of the above case:
a. State any four merits of raising funds through equity shares.
b. Explain briefly any one source through which Ding Dong Ltd. can raise funds
through international capital markets.

34. Jay owns an event management company in Jaisamaler which provides customized [6]
facilities to meet the needs of the customers and ensure a memorable event for them
whether they are planning a workshop, a management seminar, marketing or
training session. He has a staff of 50 persons. Earlier the salary of the staff
members was paid through cheques. The employees had to deposit their cheque in
the bank and had to wait for a few days for cheques to be cleared. But now the
salary reaches their account on the same day itself with the help of a particular
banking service.
In the context of the above case, answer the following questions:
a. What is a cheque?
b. How is a cheque different from a bank draft?
c. Name the banking service which facilitates the transfer of the salary to the
employee's account on the same day itself.
 Solution
SAMPLE QUESTION PAPER - 5
Business Studies (054)
Class XI (2024-25)

1. (a) Shipping bill

Explanation:
The shipping bill is the main document on the basis of which customs office grants
permission for the export. The shipping bill contains particulars of the goods being
exported, the name of the vessel, the port at which goods are to be discharged, country of
final destination, exporter's name and address, etc.
2.
(d) All of these
Explanation:
The problems of traditional small scale units include a remote location with less developed
infrastructural facilities, lack of managerial talent, poor quality, traditional technology, and
inadequate availability of finance.
3.
(d) All of these
Explanation:
A proposed name of the Company is considered undesirable if it resembles closely with an
existing company the name of an existing company, it is an emblem of Government and it
is identical with the name.
4.
(b) General stores
Explanation:
General Stores come under Fixed Shop Small Retailers. General stores are most
commonly found in a local market and residential areas.
5. (a) 2005
Explanation:
In the year 2005 SFURTI was launched to look for setting up of multi-product cluster by
Central Government.
6.
(b) C2C activities
Explanation:
C2C markets provide an innovative way to allow customers to interact with each other.
7.
(b) 51 percent
 Explanation:
51 percent
8.
(b) Khadi and Village Industries Commission
Explanation:
The various policies, programmes and schemes related to agro and rural industries are
implemented by the ministry through the Khadi and Village Industries Commission
(KVIC), Handicrafts Board, Coir Board, Silk Board, etc.
9.
(c) Only D is true
Explanation:
Preference shares are the shares that carry preferential rights on the matters of payment of
dividend and repayment of capital.
10.
(b) Both A and R are true but R is not the correct explanation of A.
Explanation:
Partners by Estoppel are held liable for the debts of the firm because in the eyes of the
third party they are considered partners, even though they do not contribute capital or take
part in its management.
11. (a) middleman
Explanation:
Middleman is an intermediary or agent between two parties; especially: a dealer, agent, or
company intermediate between the producer of goods and the retailer or consumer for
promotion of trade.
12.
(d) July 1, 2017
Explanation:
After the enactment of various laws, Goods and Services Tax was launched all over India
with effect from 1 July 2017.After this date all existing taxes has been subsumed into
GST.
13.
(d) Joint Stock Company
Explanation:
A Joint Stock Company has a legal status independent of its members. Members may
come and go, but the company continues to exist.
14. (a) District Industries Centers
Explanation:
 The District Industries Centers Programme was launched on May 1, 1978, with a view to
providing an integrated administrative framework at the district level, which would look at
the problems of industrialisation in the district, in a composite manner.
15.
(b) Complementary
Explanation:
Complementary, because both are linked to each other.
16.
(b) Both A and R are true but R is not the correct explanation of A.
Explanation:
When more than one insurance policy is taken to cover the same amount of risk, it is
called Double Insurance. Health insurance is taken to get medical expenses in case of
illness from the insurer in return for the premium paid.
17.
(d) ten crore
Explanation:
A small enterprise is an enterprise whose investment in plant, machinery and equipment
does not exceed Rs.10 crore, and turnover does not exceed Rs.50 crore.
18.
(b) Secondary industry
Explanation:
The secondary industry involves manufacturing products using raw materials from
primary industries. The industry that converts the raw materials provided by primary
industry into commodities and products for the consumer; manufacturing industry.
19.
(b) ₹ 10 lakhs
Explanation:
Maximum ₹ 10 lakhs investment is required in equipment by micro-enterprises.
20.
(d) A is correct
Explanation:
The formalities of the formation of a company can be divided into four distinct stages,
which are:
i. Promotion
ii. Incorporation
iii. Subscription of capital
iv. Commencement of business.
21. a. The two kinds of business in which Ramakant is engaged are:
i. Domestic Business
ii. International Business
b. The two difference between Domestic Business and International Business are:
i. In the domestic business, both buyers and sellers belong to the same country,
whereas in the case of international business, buyers and sellers come from two
different countries.
ii. Domestic Business involves less degree of risk as people belong to same country
whereas International Business involves a high degree of risk.
22. i. Insurance
ii. Advertisement
iii. Banking
iv. Transport
OR
Pramesh suffered losses due to the negligence of his employees. Thus, ‘Human Causes’
are the reason for it.
Human causes may include the chance of losses due to human resources employed within
the organisation. There maybe carelessness, misunderstanding, dishonesty, ill intentions on
the part of human beings or stoppage of work due to strikes, riots, management
inefficiency, etc.
23. Its full name/form is "Errors and Omissions Excepted". E. & O.E. (Errors and Omissions
Excepted): It refers to that term that is used in trade documents to say that mistakes and
things that have been forgotten should be taken into account. This term is used in an
attempt to reduce legal liability for incorrect or incomplete information supplied in a
document such as a price list, invoice, cash memo, quotation, etc. In legal terms, it seeks
to make a statement that information can not be relied upon, or may have changed by the
time of use.
24. The preference shareholders enjoy two preferential rights over equity shareholders:
i. Right to receive a fixed rate of dividend before any dividend is paid to equity
shareholders.
ii. Right to receive repayment of capital on winding up of the company, before the capital
of equity shareholders is returned.
OR
This scheme of the bank is known as 'Cash Credit'.
Cash Credit: Under this facility, a bank grants the right to its customer to borrow money
up to a certain limit against security. Out of the sanctioned limit, the customer withdraws
 the amount according to his need. It may be noted that he pays interest on the amount
actually withdrawn by him.
25. Internal trade can be classified into two broad categories viz., (i) wholesale trade and (ii)
retail trade.
i. Wholesale trade: wholesale trade refers to buying and selling of goods and services in
large quantities for the purpose of resale or intermediate use.
ii. Retail trade: A retailer is a business enterprise that is engaged in the sale of goods and
services directly to the ultimate consumers. The retailer normally buys goods in large
quantities from the wholesalers and sells them in small quantities to the ultimate
consumers.
OR
a. The type of retail trade being described in the above lines is a Mail Order House.
b. The five conditions under which mail-house trading may be considered suitable are as
follows:
i. The products can be standardized and graded.
ii. The products can be easily transported at low cost.
iii. The products have ready demand in the market.
iv. The products are available throughout the year and in large quantity.
v. The products can be described through pictures.
26. The term 'business risk' refers to the possibility of inadequate profits or even losses due to
uncertainties e.g. changes in tastes and preferences of consumers, strike, increased
competition, change in Government policy etc. It refers to the chance of loss on account of
unfavourable or unpredictable happenings. These are of two types -
a. Speculative - It involve both the possibility of gain as well as the possibility of loss.
b. Pure - It involve only the possibility of loss. Their occurrence may result in loss
whereas non-occurrence may explain absence of loss, instead of gain.
Nature of Business Risks:
i. Business risks arise due to uncertainties: Uncertainties mean when you are not sure
of what is going to happen in future. Common examples of uncertainties are: change in
demand, government policy, technology etc. Business risk is due to these uncertainties.
ii. Risk is an essential part of every business: A risk is an important characteristic of the
business. No business can avoid risk although the degree of risk may vary Risk can be
reduced but cannot be eliminated.
iii. Degree of risk depends mainly upon the nature and size of business: For small scale
business it is less and for large scale business it is more.
iv. Profit is the reward for risk-taking: The business earns a profit because they are
bearing risk. ”No risk no gain” larger the risk more is the profit. An entrepreneur bears
 the risk with the expectations of earning a profit.
OR
Objectives represent the purpose for which an organisation has been started. Objectives
guide and govern the actions and behavior of businessmen. Business objectives are the
ends which a business organisation wants to achieve or accomplish over a specified period
of time. These may be to earn profit for its growth and development, to provide quality
goods to its customers, to protect the environment, etc.
The objectives of the business are as follows;
a. Economic Objectives are the objectives pursued to achieve the profit motive.
b. Social Objectives are the objectives pursed or desired to be achieved for the benefit of
society.
c. Human Objectives refer to the objectives aimed at the well-being as well as the
fulfillment of expectations of employees.
d. National Objectives are the objectives in order to serve the nation, business is an
important element of the economy should have a goal to fulfill national goals and
aspirations of its people.
e. Global Objectives are the aspirations of an entrepreneur to spread business across the
borders and supplying quality products at reasonable prices.
f. Global Objectives
27. a. Esha intends to start e-business, whereas her father is following the traditional business.
b. The difference between e-business and traditional business is as follow:
S. Basis of
Traditional business e-business
No distinction
The procedure involved in
Ease of The procedure involved in setting up
1. setting up the business is
formation the business is difficult.
simple.
Physical
2. Required Not required
presence
Cost of Investments are low as there is
3. High investment is needed
setting up no need for physical facilities
Operating cost is high due to fixed
The operating cost is low since
charges associated with an
Operating the business operates on a
4. investment in procurement and
cost network of relationships rather
storage, production, marketing, and
than ownership of resources.
distribution facilities.
28. Some of the merits of Statutory corporations are as follows:
 i. Operational flexibility: Statutory corporation is able to enjoy a high degree of
flexibility in its operations, as it is free from unnecessary government controls and
regulations.
ii. Non-interference by the government: Since the funds of these organisations do not
come from the central budget, the government generally does not interfere in their
financial matters, including their income and receipts.
iii. Autonomous organization: Statutory corporations have the autonomy to frame their
own policies and procedures within the authority of the Act granted to them under the
Special Act of Parliament or by State or Central Legislature.
iv. A valuable instrument for economic growth: These enterprises are considered to be
an effective instrument for economic development because they have the power of the
government along with the initiative of private enterprises
29. Business should work for the economic and social well-being of the community. The
responsibilities of business towards society are as follows:
i. Maximum utilization of natural resources.
ii. To provide opportunities to public for meaningful work.
iii. To preserve social and cultural values.
iv. To uplift the weaker section of the society.
30. Small scale industries comprise of small enterprises who manufacture goods or services
with the help of relatively smaller machines and a few workers and employees.
Features of the small-scale industry:
i. Both the management and the control generally is with the owner/owners. So the owner
is actively involved with the daily running of the business.
ii. These small scale industries tend to use labour and manpower for their production
activities. So their dependence on technology is pretty limited.
iii. These units are more adaptable to their changing business environment. So in case of
sudden changes or unexpected developments, they are flexible enough to adapt and
keep carrying on. Large industries do not have this advantage.
iv. They use local and readily available resources. This also helps the economy with better
utilization of natural resources and less wastage.
31. a. The two benefits available to the business firms engaged in leather export are as
follows:
i. Prospects for higher profits for the business firms as they get an opportunity to sell
their products in countries where prices are high.
ii. Increased capacity utilization may help the business firms to take advantage of
economies of scale, which leads to a reduction in the production cost and increases
per-unit profit margin.
 b. The two ways in which different countries engaged in international trade of leather
goods stand to gain are as follows:
i. Improving growth prospects and employment potentials as the scope of production
activities increase.
ii. Increased standard of living as it provides access to the products with better
technology from other countries.
OR
Selling and sending goods and services from the home country to a foreign country is
known as exporting while buying goods and services and bringing them into the home
country from a foreign country is known as importing. The import and export of goods can
be done either directly or indirectly. When the firm itself approaches the overseas buyers
or sellers and performs all the formalities related to import and export of goods, it is
referred to as direct importing or exporting. When the firm's participation in the import
and export operations is minimum and most of the formalities are carried out by some
middlemen, it is referred to as indirect exporting or importing. In this case, firms don't
directly deal with overseas customers.
Advantages:
i. The easy way: It is the simplest way of gaining entry into international markets and
does not involve any complex activity.
ii. Less investment: It does not require much of investment in foreign countries.
iii. Low risk: It does not carry much of the risks and requires less time.
Limitations:
i. Since the goods move from one country to another country, it involves, additional
packaging, transportation, and insurance cost is incurred in transferring the goods which
increases the cost of the product.
ii. Less knowledge of the foreign market. Basically, the export firms produce goods in the
home country and send their goods to foreign countries. Hence, export firms do not
have much contact with the foreign market.
iii. No longer feasible when import restrictions exist in a foreign country.
32. Sole proprietorship refers to a form of business organisation which is owned, managed and
controlled by an individual who is the recipient of all profits and bearer of all risks. This
single individual has to supply capital owned or borrowed to the business. This form of
organisation is also known as 'Sole Trader', 'Individual Proprietorship' or 'Individual
Entrepreneurship'.
Benefits of Sole Proprietorship:
i. Ease of formation and dissolution: The sole proprietorship is the simplest form of
business ownership. No legal formalities required for starting such firm.
ii. Quick decision making: A sole proprietor enjoys a considerable degree of freedom in
making business decisions.
iii. Confidentiality of information: Sole decision-making authority enables the proprietor
to keep all the information related to business operations confidential and maintain
secrecy. A sole trader is also not bound by law to publish the firm’s accounts.
iv. Direct Incentive: A sole proprietor enjoys all the profits of the business as there is no
one else to share earnings of the business.
v. Sense of accomplishment: Sole proprietorship provides personal satisfaction to people
who want to be self-employed. As the proprietor is himself responsible for the success
of the business, it not only provides him satisfaction but also creates a sense of
accomplishment and confidence.
Limitations of Sole Proprietorship:
i. Limited resources: Resources of a sole proprietor are limited to his/her personal
savings and borrowings from others. He doesn't have enough security to acquire big
loan.
ii. Limited life of a business concern: In the eyes of law, the proprietor and the owner are
considered one and the same. Death, insolvency or illness of a proprietor affects the
business and can lead to its closure. In most cases, the business collapses when the
owner dies.
iii. Unlimited liability: A major disadvantage of the sole proprietorship is that the owner
has unlimited liability. If the business fails, the creditors can recover their dues not only
from the business assets but also from the personal assets of the proprietor.
iv. Limited managerial liability: The owner has to assume the responsibility of varied
managerial tasks, such as purchasing, selling, financing etc. It is rare to find an
individual who excels in all these areas.
OR
a. The cooperative society is a voluntary association of persons, who join together with
the motive of the welfare of the members.
b. Amul was promoted in the form of cooperative by a group of farmers who decided to
bring an end to the exploitation of marginal milk producers by traders or agents of the
only existing dairy, thereby gaining access to markets and maximizing returns for their
efforts. The four merits of a cooperative society form of organization are described
below:
i. Equality in Voting Status: Regardless of the amount of capital invested by a
member, the principle of 'one man one vote' governs the cooperative society.
ii. Limited Liability: The liability of the members of the cooperative society is limited
to the extent of capital invested by them. The personal assets of the members cannot
 be used to settle the claims of the business against outsiders.
iii. Stable Existence: The existence of a cooperative society is not affected by the death,
insolvency or insanity of its members. Thus, it is a stable form of business
organization
iv. Economy in Operations: The operations of a cooperative society are economical in
nature. This is due to multiple factors like the members may work on an honorary
basis, elimination of middlemen, etc.
33. a. The four merits of raising funds through equity shares are as follows:
i. The issue of equity shares does not create any fixed burden on the company as the
payment of the dividend is not compulsory.
ii. Generally equity capital is to be repaid only at the time of liquidation of a company
after settling the other claims. Therefore, it serves as a source of permanent capital
for the company.
iii. Equity capital helps to build up creditworthiness of the company as it is the ow ner's
fund. Thus, it becomes easier for the company to raise loans.
iv. Equity share capital constitutes the part of ow ner's fund. Hence, there is no need to
provide any security of assets while raising it.
b. Ding Dong Ltd. can raise funds through international capital markets through global
depository receipts (GDRs).
A global depository receipt (GDR) is a certificate issued by a depository bank, which
purchases shares of foreign companies and deposits it on the account. In the Indian
context, a GDR is an instrument issued abroad by an Indian company to raise funds in
either U.S. dollars or euros. GDRs represent ownership of an underlying number of
shares of a foreign company. Normally, one GDR is equal to ten underlying shares, but
any ratio can be used. The market price of global depository receipts are based on the
values of related shares, but they are traded and settled independently of the underlying
share.GDRs are often listed in the Frankfurt Stock Exchange, Luxembourg Stock
Exchange, and the London Stock Exchange.
34. a. A banker's cheque is the most convenient and inexpensive medium of exchange and
function of banks for the withdrawal of deposits. There are two types of cheques,
mainly (a) bearer cheques, which are encashable immediately at bank counters and (b)
crossed cheques which are to be deposited only in the payee's account.
b. A bank draft is a cheque provided on nominal commission charges to a customer of a
bank or acquired from a bank for remittance purposes, that is drawn by the bank, and
drawn on another bank or payable through or at a bank. Unlike a cheque, a draft is a
pre-paid negotiable instrument, wherein the drawee bank acts as a guarantor to make
payment in full when the instrument is presented.
c. Real-Time Gross Settlement are specialist funds transfer systems where the transfer of
money or securities takes place from one bank to another on a 'real-time' and on a
'gross' basis. It does not require any physical exchange of money. Settlement in 'real-
time' means a payment transaction is not subjected to any waiting period, with
transactions being settled as soon as they are processed. 'Gross settlement' means the
transaction is settled on a one-to-one basis without bundling or netting with any other
transaction. 'Settlement' means that once processed, payments are final and irrevocable.
RTGS systems are typically used for high-value transactions that require and receive
immediate clearing.