Business Services - Class 11 Commerce Business Studies - Extra Questions

What do you mean by discounting of Bills of exchange?

Discounting of a bill of exchange is a method of short-term financing provided by banks. The bank purchases a trade bill from the payee before the maturity date and pays the bill amount after deducting service charges from it.  At the maturity of the bill, the bank recovers the said money from the drawee.


Write Short notes on the following:
Termination of membership.

Termination of membership refers to the expiry of a contract between a member and company where the member no longer holds the shareholder membership of the company. Such a termination takes place on the date of the severance of the member or on the date on which all those benefits which the member is entitled to is fully distributed to him or her. 


What do you mean by current deposit account?

A current deposit account is, usually, opened by businessmen. The account holder can deposit and withdraw money at any time as the deposit is repayable on demand. It is also known as a demand deposit. No interest is paid on current accounts, rather charges are taken by the bank for services rendered by it.


Fill in the blanks with suitable words in the following incomplete sentences.
The insurance that covers the life is called ______.

Life insurance:- 
A life insurance contract is a contract whereby the insurer i.e. the insurance company undertakes to pay a specific sum on the death or after the expiry of the specified period, whichever is earlier, to the insured or his beneficiary for a premium.
In this type of insurance the subject matter of the contract is the life of a person. The premium may be paid in lump sum or in installment.


Fill in the blanks with suitable words in the following incomplete sentences.
The person who receives the benefit is called ____ in insurance.

A person who buys insurance is known as an insured or as  the policyholder.  
The policyholder assigns a person called "the beneficiary" who receives the benefit of insurance. 
The beneficiary can be the policyholder himself or any other person.


Write short answers for the following : 
What is Fire Insurance?

A fire insurance contract is a contract whereby the insurance company undertakes to make good the loss or damage caused due to fire for a consideration called the premium. the subject matter here is any physical property or assets. 
This policy usually does not exceed a period of one year. There is also no surrender value of this policy after the end of the period for which it was taken. The value of the policy cannot be more than the cost or the value of the subject matter.


Write short notes on the following : 
Principle of indemnity.

All the fire and marine insurance contracts are contracts of indemnity. The principle of indemnity states that the insured must be compensated for any loss or damage cause to the goods insured by the insurer. This loss has to be measured in terms of money. According to this principle, the insurer must put the insured in the same position in which he was before the loss or damage occurred. It is not applicable to the life insurance contracts.


State any three purpose other then 'buy - back of shares' for which securities premium can be utilized.

The companies Act, $$1956$$ imposes certain restriction on the utilisation of amount received as securities premium. As per the section $$78$$ of the companies Act of $$1956$$, the amount of securities premium received can be utilised for several purposes. Three of such purposes are listed below. 
i. For issuing fully paid bonus shares. 
ii. For writing off the preliminary expenses of the company.
iii. For writing off the expenses of, or the commission paid or the discount allowed on, any issue of shares or debentures of the company. 


What do you mean by Postal services?

Every business requires postal services to send and receive letters, market reports, parcels, money orders, and other items on a regular basis. Post and telegraph offices located around the country provide all of these services. The aim, here, is to provide reliable, affordable, and universal mail service to the nation.


Huma is working in a company on a permanent basis. As per the job agreement she had to work for 8 hours a day and was free to work overtime. Huma worked overtime, due to which she fell ill and had to take leave from the work. No one showed concern and enquired about the health.She realised that she was fulfilling only some of her needs while some other needs still remained to be fulfilled.
(i)By quoting the lines from the above para, identify the needs of Huma which she is able to fulfil.
(ii)Also explain two other needs of Huma followed by the above needs, which still remained to be statisfied.

i. Huma is able to fulfill the "physiological and security needs".
Physiological needs comprise of essential requirements for the sustenance of life. They are at the top of the hierarchy.The fulfillment of these needs is necessary for survival.For example,food,clothing,shelter are physiological needs. An employee requires a certain basic salary for the satisfaction of these needs.
On the other hand, security needs relate to the physical and the economic security and well being.
Since"she has a permanent job", we can say that these two needs have been fulfilled.
ii. The two needs that still remain to be satisfied are "belongingness and esteem needs".
Belongingness needs comprise of the social needs of an individual such as affection, acceptance,companionship,etc.This is because every individual yearns for social acceptance wants respect and acknowledgement in the peer group.
One can say that these two needs remain unfulfilled from the fact that even when Huma falls sick and takes leave,nobody shows concern towards her.


What is health insurance?

Health insurance is a type of insurance that covers the medical expenses that arise due to illness. The insurance company charges a nominal premium every year and in return undertakes to provide, up to the sum insured, for the treatment of diseases, hospitalisation costs, doctor's fees, etc. General insurance companies provide special health insurance policies, such as mediclaim, for the general public. 


Explain the meaning of transportation.

Transportation comprises freight services together with auxiliary services that facilitates physical movement (national and international) of goods and people various modes of transportation, that is rail, road, air, and sea. It enables trade, commerce and communication that establish civilization.


Make a list of the differences between Life Insurance and General Insurance.

 Basis of differenceLife insuranceGeneral insurance 
 1. Subject matter
2. Duration
3. Indemnity
4. Measurement of loss
5. Surrender Value.		Life of a person is the subject matter. 
The policy is for a period of more than one year.
Not based on the principle of indemnity.
The loss is not measurable.
The policy has a surrender value.		 A property or a thing is the subject matter.
The policy is only for one year.
Based on the principle of indemnity.
The loss is measurable.
The policy has no surrender value.




What are the advantages of insurance companies?

The advantages of insurance companies are:
1. They invest the money of the premium on various financial institutions and earn interest upon that.
2. In case of general insurance the company only pay the amount of loss and not the actual capital after careful inspection due to which sometimes the claim of insurance is suspected to be false and the company earns all the money. 


Explain the importance of life insurance.

The importance of life insurance are as follows : 
1) It provides protection to the family at the premature death or gives adequate amount at old age when earning capacities are reduced.
2) It is a sort of investment because a lump sum amount is returnable either at the death or after the expiry of the contract.
3) It encourages savings, providing a sense od security.



What are the steps to be taken at the time of taking an insurance policy?

The steps to be taken at the time of taking an insurance policy are:

1.  Determining the type of asset and the amount of it which we have to insure.

2.  Look at the cost factor of the whole process.

3.  Contact various insurance companies for the policy.

4.  Don't go overboard buying policies from the insurance company and select the most ideal policy.

5.  Revisit your insurance needs.



What is insurance?

Insurance is a contract between two parties where one part undertakes or promises to indemnify the loss or damage caused to the other party for the payment of a specific sum. 
The party who indemnifies or makes good the loss is known as the insurer. The party who is to be indemnified is known as the insured. 
The amount to be paid to the insurer is known as premium.


Fill in the blanks with suitable words in the following incomplete sentences.
The person who has accepted to pay the loss is called _________ in insurance.

A person who buys insurance is known as an insured or as the policyholder. 
A person who undertakes to pay the compensation to the insured for the loss suffered is called "insurer".


Define Company Meetings.

A meeting therefore can be defined as a lawful association or assembly of two or more persons by previous notice for transacting some business. The meeting must be validly summoned and assembled. Such gatherings of the members of companies are known as company meetings. In the case of Sharp vs. Dawes (1971), the meeting is defined as “An assembly of people for a lawful purpose” or “the coming together of at least two persons for any lawful purpose." 



Distinguish:
Motion and Resolution.

The motion refers to a formal step to introduce a matter or a topic for consideration by a group in general meetings of trade unions, student's unions, corporations, and other deliberative assemblies whereas Resolution refers to the written form of a motion that was introduced by a group in a meeting which gets drafted after its successful discussion and approval in the meeting.


Distinguish:
Voting by Show of Hands and Voting by Poll. 

Voting by show of hands refers to voting that is cast for any resolution where the members use their hands to vote for or against the resolution and proxies cannot vote in such a case whereas voting by poll refers to a system where polling paper is distributed among the members present at the meeting, in person or by proxy, to have the voting right in the poll in proportion of the number of shares held by each of them.


Explain the circumstances under which the secretary writes letters to directors.

Circumstances under which the director writes a letter to directors are: 
1. When sending notice and agenda for the meeting.
2. When sending the names of the members who were absent for the meeting.
3. When sending the minutes of the meeting. 


Distinguish:
Voting by Ballot and Voting by Poll. 

Voting by ballot :

Postal ballot, as can be deciphered from its name, means voting through post or any electronic mode. The purpose of launching this methodology is to create a culture of ‘corporate democracy’, and to facilitate the shareholders to cast their votes without making their presence in the general meeting.

Voting by poll :  A procedure used at a general meeting of a company underwhich every ordinary shareholder present in person or by proxy has one vote for every ordinary share held. This procedure is commonly used where it is not possible to obtain a clear result by voting on a show of hands.



Essay type questions:
What are minutes ? Explain the contents of minutes. 

Minutes are a formal summary of the meeting with all the necessary details and events that took place in the meeting in a orderly manner. The contents of a minutes are :-

1. Registered address of the office

2. Date 

3. Introduction 

4. List of Attendance 

5. Body with all the events that were witnessed

6. Vote of thanks

7. Signature of secretary and the chairman.



Write short answers for the following:
What are the essentials of a valid meeting? 

The essentials of a valid meeting are as follows:- 
  1. Proper notice should be issued about the meeting. 
  2.  The meeting should be backed with some agenda.
  3. There should be a legal purpose for the meeting. 
  4. Requisite quorum that is a minimum number of voting members must be there. 
  5. The meeting must be conducted according to the agenda.


Write short answers for the following:
Explain the need or importance of a meeting. 

The importance of the meeting as follows :-
1. To discuss the business affairs of the company in presence of everyone. 
2. To discuss the financial statements of the company.
3, To appoint new directors for the company. 
4. To appoint new secretary, solicitors etc for the company. 


Write short answers for the following:
Explain the rules for amendment.

Amendment refers to the changes that are done to a past resolution by a group after its successful discussion and approval in the meeting. The rules for amendment are: 

1. Amendment to an amendment cannot be amended.

2. Secondary motion can be amended to the extend of their variable element. 

3. Motions to commit can be amended as to the details of the committee.



Essay type questions:
What is a motion ? State the different types of motions. 

Motion refers to a formal step to introduce a matter or a topic for consideration by a group in general meetings of trade unions, student's union, corporations and other deliberative assemblies. The types of motions are: 
1. Main Motions: The purpose of a main motion is to introduce affairs to the company for their consideration and discussion. They cannot be made when any other motion is on the floor.
2. Subsidiary Motions: The purpose of such motion is to change the effect of how a main motion is handled, and is voted on before a main motion.
3. Privileged Motions: The purpose of such motion is to bring up items that are urgent like special or important matters irrelevant to pending business.
 4. Incidental Motions: The purpose of such motion is to provide a means of questioning procedure concerning the respective motion  and must be considered before the other motion are introduced. 


Essay type questions:
Explain the powers and duties of the chairman in a meeting.

Chairman is the person who presides over the meeting and conducts the proceedings of the meeting. He occupies the chair provided for the purpose. The appointment of the chairman is usually regulated by the Articles of Association.
Power of Chairman are as follows:- 
  1. To keep order and conduct the meeting properly.
  2. To decide the priority of speakers
  3. To maintain relevancy and order in debate.
  4. To prevent the use of improper language and behavior of the member.
  5. To give casting vote when votes in favor of the proposal and against the proposal are equal.
Duties of Chairman are as follows:- 
  1. To see that the meeting is properly convened and constituted.
  2. To see the proceeding of the meeting is conducted in a proper manner.
  3. To maintain order in the meeting. 
  4. To declare the result of voting.
  5. To act in the best interest of the meeting.


Essay Type Questions:
What are the duties of an auditor?

An auditor is a person authorized to review and verify the accuracy of financial records and ensure that companies comply with tax laws To act as an auditor, a person should be certified by the regulatory authority of accounting and auditing or possess certain specified qualifications.
The duties of an auditor are: 
  • Show compliance with established internal control procedures by examining records, reports, operating practices, and documentation of the company. 
  • Verifies assets and liabilities by comparing items to documentation. 
  • Completes audit work papers by documenting audit tests and findings through the law. 


Write Short answers for the following: 
Explain the duties and functions of the Registrar of Companies. 


Functions of the ROC

1. The ROC takes care of registration of a company (also referred to as incorporation of the company) in the country.

2. It completes regulation and reporting of companies and their shareholders and directors and also administers government reporting of several matters which includes the annual filing of numerous documents.

3. The Registrar of Companies plays an essential role in fostering and facilitating business culture.

4. Every company in the country requires the approval of the ROC to come into existence. The ROC provides incorporation certificate which is the conclusive evidence of the existence of any company. A company, once incorporated, cannot cease unless the name of the company is struck-off from the register of companies.

5. Among other functions, it is worthy to note that the Registrar of Companies could also ask for supplementary information from any company. It could search its premises and seize the books of accounts with the prior approval of the court.

6. Most importantly, the Registrar of Companies could also file a petition for winding up of a company.



Essay Type Questions:
Who is managing director? What are his powers?

A Managing director is a person from a group of managers who guides and leads the whole company as the head of the company. The person controls the overall business of the company and takes the final and key decisions of the company. The power of managing directors are:-

1. They have the power to make strategic objectives and plans for the company. 

2. They create the long-term policies of the company. 

3. They have the power to hire and terminate any employer or employee in the company. 

4. They take all the financial decisions of the company. 



Write a letter to the Director following cases.
Informing director about his removal from Directorship.

                                                  Voltas  India Ltd
                                         Voltas tower, Pimpri, Pune-456321
Tel : 246856                                                      Email : voltas45@tata.in
Fax : 4567809                                                   Date :20th september 2018
Dr. Manmohan Modi,
Dr. Ambedkar road,
Dadar (west)
                                   Sub : Removal from directorship 
Sir,
I have been directed by the Chairman to be inform you that, the company recieved 14 special notice from the members proposing your removal from the directorship on account of misuse of company property. This charges against you have been established and proved by the committee appointed for the purpose.
As per rules, an extra ordinary general meeting was convened on 15th September 2018 and the members, after due consideration of your explaination have passed a resolution favouring your explaination, have passed a resolution favouring termination of your directorship.
Under these circumstances, i am directed to inform you that your directorship in the company has been terminated with effect from 20 th September 2018.
                 

                                                                                                     Yours faithfully,
                                                                                                                 Sd/-
                                                                                                             Secretary


Write different principles of insurance contract.

The different principles of an insurance contract are:-

1. Utmost good faith:- A contract of insurance is based on the principle of utmost good faith. This means that the insurer and the insured should disclose all the facts related to the insurance contract to each other voluntarily.
2. Insurable interest:- It states that the insured must have an insurable interest in the subject matter of insurance. It means that he should suffer a loss in case of damage to the thing insured.
3. Indemnity:- The insurer should undertake to indemnify the insured for any loss to the thing insured.
4. Subrogation:- The insurer must step into the shoes of the insured at the time of compensating him for the damage.
5. Mitigation:-It is the duty of the insured to try to minimize the loss that occurred to the thing insured.


Letter Writing : 
Write a letter enquiring about fire insurance policy.

                                                                       J.K.L. CO. LTD.
                                                     Registered Office: '2', Bombay House,
                                                      Modi Street, Fort, Mumbai - 400 001.
Tele No.: 67345621                                                                                                   Date: 18th August, 2011
Fax No.: 67345621
Ref. No.: A5-102

The Manager,
ABC fire Insurance Company
24, Nariman Point,
Mumbai - 400 021
                                                    Sub.  Inquiry about fire policy.
Sir, 
     We write this to inform you that our factory is located at Malad which is going to start commercial production shortly. Hence, we would like to insure our goods and factory property and premises against risk of loss due to fire. The value of property is worth Rs. 5 crores.
     We would like to obtain a fire insurance policy for a period of one year. Kindly let us know the terms and conditions of your company for fire insurance.
      Thanking You,
                                                                                                                             Yours faithfully,
                                                                                                                                      sd/-
                                                                                                                                 secretary.


What do you mean by Insurance? 

Insurance is a contract under which the insurer undertakes the responsibility to indemnify the insured against any damage for which it has taken insurance. The insured needs to pay a certain amount of premium to the insurer to avail insurance. Insurance is a contract of indemnity and also is based on utmost faith. There are three types of insurance are as follows:- 1.Life Insurance 2. Fire insurance, 3. Marine Insurance.


Distinguish between : 
Fire Insurance and Marine Insurance.

Fire Insurance:- The subject matter under this contract is any physical property or assets. The insurable interest in the subject matter should be there at the time of taking the policy as well as at the time of claiming the damages caused. A fire insurance policy generally is only for a period of one year. It is a contract of indemnity where the insured cannot claim any amount more than the actual loss. 
Marine Insurance:- The subject matter under this contract is a ship, cargo, or freight. The insurable interest in the subject matter should be present at the time of claim. A marine insurance policy is for a period or for a particular voyage. In this case, the insured can claim the market value of the ship and the actual cost of the goods.


Write short notes on the following : 
Average policy.

Average policy refers to a policy followed in fire insurance which states that the insurance company will only pay the rate able proportion of loss which means that if the sum insured is less than the actual amount of loss then the insurance company will only pay to sum of the assets which were insured and occurred loss. 


What do you mean by warehousing?

Warehousing is the act of storing goods that will be sold later. Some goods are produced in a particular season only but are demanded throughout the year For example Wheat, rice, pulses, etc. On the other hand, some goods are produced throughout the year but demanded in a particular season. So there is a time gap between production and consumption. The goods need to be kept safe and fresh during this time gap. The warehousing segment of commerce helps in removing the problem of the time gap.


Write short notes on the following : 
Floating policy

Floating insurance : A type of insurance in which the value of the goods being insured cannot be calculated exactly, so the payment for insuring them can be changed after a period of time. a type of insurance that protects property or goods in any place and while they are being moved from one place to another.



Write short answers for the following : 
Explain the terms of insurance contract.

Insurance is a contract under which one party (insurer or insurance company) agrees in return for a consideration (insurance premium) to pay an agreed sum of money to another party (insured) to make good for a loss, damage, or injury to something of value in which the insured has a financial interest as a result of some uncertain event. It Means protection from financial loss in the form of risk management which is used to hedge against the risk of a contingent or uncertain loss. An insurance contract is a document representing the agreement between an insurance company and the insured. Central to any insurance contract is the insuring agreement, which specifies the risks covered, the limits of the policy, and the term of the policy.



Write short answers for the following : 
What are the principles of insurance?

Following are the principles of an insurance contract:-

1. Utmost good faith: A contract of insurance is based on the principle of utmost good faith. This means that the insurer and the insured should disclose all the facts related to the insurance contract to each other voluntarily.

2. Insurable interest: It states that the insured must have an insurable interest in the subject matter of insurance. It means that he should suffer a loss in case of damage to the thing insured.

3. Indemnity: The insurer should undertake to indemnify the insured for any loss to the thing insured.

4. Subrogation: The insurer must step into the shoes of the insured at the time of compensating him for the damage.

5. Mitigation: It is the duty of the insured to try to minimize the loss occurred to the thing insured.


Write short notes on the following : 
Accident Insurance.

Accident insurance is insurance that provides compensation for accidental injury or death. Accident insurance covers death, dismemberment, loss of sight, loss of income, and medical expenses caused by accidental injury. Accident insurance is insurance that provides compensation for accidental injury or death.


Essay type questions:
Define the term insurance and state the principles of insurance.

Insurance is a contract where the insurer agrees in return for a premium to pay an agreed amount of money to the insured to make a loss, damage or injury to something of value in which the insured has a pecuniary interest as a result of some uncertain event.
The principles of Insurance are as follows:-
1. Utmost good faith:-  Insurance contacts are based upon mutual trust and confidence between the insurer and the insured. It is a condition of every insurance contract that both the parties must disclose every material fact and information related to insurance contact to each other and must not hide any relevant information or mislead the other party. This principle is known as utmost good faith.
2. Insurable Interest:- Principle of Insurable Interest:- According to this principle, the insured must have an insurable interest in the subject matter of the insurance policy. Without interest taking an insurance policy is a gamble and fraudulent activity and the law does not permit it.
3. Indemnity:- Indemnity is a contractual obligation of one party to compensate for the loss of another. The principle of indemnity applies to all contracts except the contract of life insurance because estimation regarding loss of life cannot be made. The objective of the contract of insurance is to compensate the insured for the loss he has incurred. These contracts provide security from loss and no profit can be made out of these contracts.
4. Proximate cause:-Proximate cause is a key principle of insurance and is concerned with how the loss or damage occurred. The insurance company will compensate for the loss incurred by the insured due to reasons mentioned in the insurance policy. But if the loss is incurred due to any other reason not mentioned in the insurance policy then the principle of proximate cause is followed.
5. Subrogation:-This principle applies to all insurance contracts which are contracts of indemnity. As per this principle, when an insurance company compensates the insured for loss of any of his property, then all rights related to that property automatically get transferred to the insurance company.
6. Contribution:- If a person has taken more than one insurance policy for the same risk then all the insurers will contribute the amount of loss in proportion to the amount assured by each of them and compensate for the actual amount of loss because the insured does not have the right to recover more than the actual amount of loss.
7. Mitigation:- According to the mitigation principle, the insured must take care of his property or subject matter of insurance in the same way as he would take care without taking the insurance policy. The insured should not become careless of his property after taking the insurance policy.


Essay type questions:
What is indemnity? Why the principle of indemnity is not applicable to life insurance?

Indemnity refers to make good the loss or damage caused due to an uncertain event. The principle of indemnity states that the insured has to be compensated by the insurer for the loss caused to him and bring him back to the same position in which he was before the loss. 
The principle of indemnity is not applicable to life insurance because the insurer may pay any amount but the insured cannot be brought back to the same state. Also, the loss of a life is not measurable and no money can indemnify the loss of a life. 


Write a letter to a bank.
Requesting to open Current Account.

                                                   GLOBAL INFOCOM LIMITED
                                                          SAHYADRI BULDING
                                                         DECCAN GYMKHANA,
                                                               PUNE - 411004.
TEL _______                                                                                                 E-MAIL ____
TELEX _____                                                                                                 FAX ______
Ref. No. ____                                                                                                 DATE: March 15, 2006

                                                Subject : Opening of a Current Account.
The Board of Directors of a company have passed a resolution on March 13, 2006, to open a Current Account in your bank, in the name of the company and to appoint you as the company's banker.
A duly filled account opening form of your bank is sent with this letter together with following documents.
(1) Certified copy of the Memorandum of Association.
(2) Certified copy of the Articles of Association.
(3) Certified copy of the Board Resolution regarding opening of a Current Account.
(4) Specimen signature of two directors and a secretary, who are authorised to operate bank account on behalf of the company.
(5) Certified list of present directions.
(6) Certified of Incorporation, (Original)
(7) Certified of Commencement of Business (Original).
You are requested to return the documents against 6 & 7 above after your inspection and verification.
 We also send herewith a sum of Rs. 10,000 (Rupees Ten Thousand Only) in cash being the initial deposit.
 We agree to comply with the rules of the bank in force, from time to time, for the conduct of such account and inform you wherever any changes occur in the management and Articles of the company.
                                                                                                                                   Yours faithfully,
                                                                                                                                            sd/-
                                                                                                                                    R.G. Marathe.
                                                                                                                                     (Secretary)
Encl: As above


Write a letter to a bank.
Requesting to issue a letter of credit.

                                                     NATIONAL MANUFACTURING INDUSTRY LTD.
                                                      UDYOG BHAVAN, WORLI, MUMBAI - 400025.
Ref. No.:                                                                                                                                  April 26,2006.
The manager,
Deutsche Bank,
Worli, Mumbai: 400025.   
Dear Sir,                                                                                                                             
                                                          Subject : Letter of Credit D.M. 2,40,000.
     
We have proposed to import MACHINERY from KRUPP International, GMBH, Germany. As per the terms of quotation, we have to place an order along with a Letter of credit.
We, therefore, request you to issue a letter of credit in favour of the said company for D.M. 2,40,000. This letter may be issued on the basis of credit balance in our current account and as per the prevailing exchange rate.
Kindly issue the letter of credit and oblige that will enable us to place an order at an early date.
                                                                                                                                            Yours faithfully,
                                                                                                                                                    sd/-
                                                                                                                                              R.G. Marathe.
                                                                                                                                               (Secretary)
Encl: As above


Distinction between:
Overdraft and Cash Credit.

  Overdraft  Cash Credit
1)Meaning:
It is a credit facility given to current account holder to draw more than the credit balance in his account, subject to overdraft limit sanctioned.		1)Meaning:
It is a loan facility given by a bank in which certain amount is called in the account of the customer. 
2)Duration:
Overdraft is a temporary loan given for a short period.		2)Duration:
Cash credit facility is for longer period than overdraft facility.
3)Interest:
Interest is changed on the actual amount overdrawn.		3)Interest:
Interest is charged on the amount actually withdrawn.
4) To whom facility given:
Overdraft facility is given only to current account holder.		4) To whom facility given:
Cash credit facility is given to regular bank customers and even to outsiders.


Write a letter to a bank.
Requesting to stop payment of a cheque.

                                                     J.K. INDUSTRIES LIMITED.
                                                          6, Council Estate,
                                                             Ballard Estate,
                                                           Mumbai - 400038.
TEL _______                                                                                                         E-MAIL ____
FAX No. _____                                                                                                      TELEX ______
                                                                                                
The Manager,
Bank of Maharashtra,                                                                                           DATE: March 16, 2006
Fort Branch, Mumbai- 400001.
Dear Sir,
                                                Subject : STOP PAYMENT, CHEQUE NO. 654321,
                                                 DATED FEBRUARY 27, 2006, OF RS. 60,000/-

I am writing to confirm our Fax sent to you this morning, which reads as:
"STOPPAYMENT, CHEQUE NO. 654321, OF RS. SIXTY THOUSAND , DATED TWENTY SEVENTH FEBRUARY, IN FAVOUR OF TYRESTONE LTD." The same cheque was sent to them by post on the Pune address on 28 February. The company has informed us that they have not received the cheque so far. The cheque must have been lost in transit. You are, therefore, requested to 'STOP PAYMENT' of the cheque and the said cheque be treated as "CANCELLED" 

                                                                                                                                   Yours faithfully,
                                                                                                                                            sd/-
                                                                                                                                    M.N. Gokhale
                                                                                                                                     (Secretary)
Encl: As above


Distinction between:
Saving Accounts and Current Accounts.

 Saving Account  Current Account 
1)Meaning:
It is a type of bank account which is opened by the people to save a part of their income and earn interest on  their savings.		1)Meaning: 
It is a type of bank account which is opened by the business to carry out their business activities.
2) Purpose:
It is opened to save something out of regular income		2)Purpose:
In order to settle business (financial) transaction, this account is opened. 
3)Withdrawals:
Number of withdrawals are restricted.		3)Withdrawals:
There are no restriction over number of withdrawals.
4)Interest:
Interest on saving account is paid at a nominal rate.		4)Interest:
Generally no interest is paid on current account.
5)Overdraft facility:
No overdraft facility is granted.		5)Overdraft facility:
Overdraft facility is granted.
6) Minimum Balance:
Saving account holders require to maintain minimum balance in the account.		6) Minimum Balance:
No compulsion on maintenance of minimum balance.


Write short notes on the following:
Cash Credit.

Cash credit is a facility to withdraw money from a current bank account without having a credit balance but limited to the extent of borrowing limit which is fixed by the commercial bank. The interest on this facility is charged on the running balance and not the borrowing limit which is given by the bank.



Write short notes on the following:
Bank Overdraft.

An overdraft is an extension of credit from a lending institution that is granted when an account reaches zero. The overdraft allows the account holder to continue withdrawing money even when the account has no funds in it or has insufficient funds to cover the amount of the withdrawal.



Write short notes on the following:
Fixed Deposit Account.

Fixed deposit is investment instruments offered by banks and non-banking financial companies, where you can deposit money for a higher rate of interest than savings accounts. You can deposit a lump sum of money in a fixed deposit for a specific period, which varies for every financier.

Once the money is invested with a reliable financier, it starts earning an interest based on the duration of the deposit. Usually, the defining criteria for FD are that the money cannot be withdrawn before maturity, but you may withdraw them after paying a penalty.

Features of Fixed Deposit

  • Fixed deposit enable investors to earn higher interest on their surplus funds
  • You can deposit money in a fixed deposit account only once, but to deposit more money, you need to create another account
  • Though liquidity in fixed deposit is lesser, you can look for higher rates of interests, which are higher in case of company fixed deposit
  • Fixed deposit can be easily renewed
  • Tax is deducted at source, from interest on Fixed Deposit as applicable, as per the Income Tax Act, 1961.


Write short notes on the following:
Banks Agency Functions.

  1. Agency Functions: The bank is an agent for its customers in a way that it invests on behalf of its customer. Acting as the agent of the customer the bank may transfer funds, the collection of cheques, periodic payments, portfolio management, periodic collections, and several other agency functions. All of these functions are the secondary functions of the bank.


Write short notes on the following:
Secondary Functions of bank.

Secondary function of bank are as follows:-
  1. Agency Functions: The bank is an agent for its customers in a way that it invests on behalf of its customer. Acting as the agent of the customer the bank may transfer funds, the collection of cheques, periodic payments, portfolio management, periodic collections, and several other agency functions. All of these functions are the secondary functions of the bank.
  2. General Utility Functions: The bank also performs several utility functions. Some of the most important utility functions of the banks may include the issue of drafts, letters of credits, etc. locker facility, underwriting of shares, dealing in foreign exchange, project reports, social welfare programs, other utility functions. The banks also provide several services like safe deposit locker facilities, safe custody facilities, and Demat accounts. The opening of Demat accounts allows the account holder to trade in the stock exchange or the money market directly. The customer that holds a Demat account can directly buy or sell shares from the capital market.


State the various types of warehouses.

A warehouse is a place where goods are stored. Types of warehouses are:
1. Private warehouses: These are operated, owned or leased by a company for handling their own goods. Its benefits are control, flexibility and others like improved dealer relations, etc.
2. Public warehouses: The operations of these are regulated by the government by issuing licenses to private parties. They can be used by traders or manufacturers or any person after the payment of the storage charges. 
3. Bonded warehouses: These are licensed by the government to accept the imported goods prior to the payment of tax and customs duty.
4. Government warehouses: These are fully owned and managed by the government. For example, FCI, STC, etc.
5. Cooperative warehouses: These are set up by the marketing cooperative societies.


State the advantages of outsourcing.

Outsourcing refers to the long-term contracting out of non-core activities of an organization to third party specialists to benefit from their expertise and experience.
Advantages of outsourcing are:
1. Focusing attention: When the non-core activities are outsourced, we get more time to focus on the core activities.
2. Quest for excellence: When an organization wants to excel in an activity it may outsource it to the third party so that it can be performed by the experts.
3. Cost reduction: When the activities are outsourced the overhead costs of such activities reduces
4. Growth of alliance:  When two or more parties work together, they build a good alliance among them.


What do you mean by Bonded Warehouse?

A bonded warehouse is a licensed warehouse located near a port. It is either owned by the Government or works under the supervision and control of the Government. It is called a bonded warehouse because the goods deposited with it are held in a bond. When an importer does not wish to pay the custom duty and withdraws the imported goods from the dockyard immediately, he is allowed to keep the goods in a bonded warehouse.


What reference to post office services, write the expanded forms of:
T M O

TMO in India postmeans Transit mail office. When the speed post letter , sent by you , passes through Palan Tmo  it will be scanned and data about letter movement will be stored.


When is a business said to be using a single entry system?

A business is said to be using single entry system if it is not completely following the principles of double entry system of book-keeping. 
Single entry system may consist of double entry system in respect of certain transactions such as cash received from debtors, cash paid to creditors etc. It may consist of single entry in respect of certain transactions such as cash sales, fixed assets purchases etc. 
Sometimes, in single entry system, there is no entry in respect of certain transactions such as depreciation, bad debts etc.


What do you mean by 'Insured' and 'Insurer'?

The Insurance Co. which promises to cover the risk for an amount known as premium is called Insurer, while the person who pays the premium or who benefits from the insurance contract is called Insured.


What reference to post office services, write the expanded forms of:
R M S


The expression Railway Mail Service means the service responsible for the carriage of mails by rail, road, river and air and for the collection and distribution of mails received from Post Offices by Mail Offices and sections. 


What is the difference between a with-profit and without-profit insurance policy?

In the case of with-profit policy, the assured gets not only the sum assured but also a share in the profits that are declared by the insurer. These profits are declared at intervals and credited to the policy holder as bonus. On the other hand, in without-profit policy, the policy holder does not get any right to share in the profit of the insurer. The rate of premium for without-profit policy is lower than the with-profit policy.


Answer briefly the question:
What is meant by unsolicited applications?

An unsolicted applications is a request for life insurance coverage that is made by an individual rather than an insurance agent or broker. Insurers generally scrutinize these applications because of the likelihood of self-selection.


What is the difference between a Whole Life Policy and Endowment Policy?

In whole life policy, there is no period of maturity as it is payable on death, but endowment policy has a maturity period. Rate of premium is low for whole life policy as compared to endowment policy. Premium is payable throughout the life for whole life policy while only for a specified period in endowment policy.


Select the proper option from the options given below and rewrite the sentence:
Businessmen are_________of the society.

Business man are representative of society, Business is extremely important to a country's economy and because businesses provide both goods and services and jobs. Businesses are also the means by which many people get their jobs. Businesses create job opportunities because they need people to produce and sell their goods and services to consumers.


Answer briefly the question:
With reference to Post Office, expand the following:
(a) VPP
(b) PIN

a. The value payable post (VPP) is a service offered by the Indian Postal Services. It is a system in which the person receiving the articles pays for the value of the articles only after receiving them. The things that can be transmitted through VPP are registered Parcels, registered letters, registered book packets and newspapers prepaid with postage, etc. However, the amount specified for remittance to the sender, in any case, should not exceed Rs.5,000.
b. The postal index number (PIN) is a six-digit code of Post office that is used by the  Indian postal services. It was introduced on 15th August 1972. The first digit indicates the region, second the sub-region, third one indicates sorting district and the last three digits refer to the delivery post office.


Briefly explain any four advantages of the following:
Telefax

Advantages of Telefax  :
  1. Reliability : the person can be reliable on telefax machine because it does not have the threat of getting affected by virus.
  2. Security : the computer or the email may get hacked or affected by hacking so telefax is the safest and secured method of communication.
  3. Convenient method : it is most convenient method as compared to the email system. In email ,to attach a file it consumes a lot of time and data but in comparision you just need the number of fax of the person.
  4. Ease of Use : Since fax machines have been used in offices for decades now, most people know how to use them. Even if you don’t know how though, they’re easy to operate and you won’t spend too much time trying to figure it out.


Attempt the following question:
State the working of payment gateway.

A payment gateway is a merchant service that authorizes credit card or direct payment processing for e-businesses, online retailers, etc.  
It facilitates a payment transaction by the transfer of information between a payment portal (such as a website, mobile phone) and the front end processor or acquiring a bank.

HOW IT WORKS - 
Payment gateways encrypt sensitive information and details of payment such as credit cards number. It is to guarantee that the information is passed securely between the customer and merchant. 
Step- The bank settles the money with the payment gateway and then the payment gateways settle the money to the merchant.


Write short note on the following:
Disadvantages of e-business.

E-business does have certain disadvantages when compared to the traditional way of doing business. 
Some of the limitations of e-business are as follows:
  • Lack of Personal Touch: E-business lacks the personal touch. In traditional business, you get the product as soon as you buy it. 
  • Technical Disadvantages. There can be a lack of system security, reliability or standards owing to the poor implementation of e-commerce. 
  • The software development industry is still evolving and keeps changing rapidly. In many countries, network bandwidth might cause an issue.


Distinguish between the following:
Current Account and Fixed Deposit Account.

Current account is one of the two components of its balance of payments, the other being the capital account. The current account consists of the balance of trade, net primary income or factor income and net cash transfers, that have taken place over a given period of time.
A fixed deposit account is a financial instrument provided by banks or NBFCs which provides investors a higher rate of interest than a regular savings account, until the given maturity date. It may or may not require the creation of a separate account.


Select the proper option from the options given below and rewrite the sentence:
The process of contracting a business function to someone else is called as_________.

Trading is person or entity, in finance, who buys and sells financial instruments such as stocks, bonds, commodities, derivatives, and mutual funds in the capacity of agent, hedger, arbitrageur, or speculator.


What do you mean by Multiple Option Deposit Account?

This account offers multiple options to depositors. This account can be combination with saving A/c or current A/c. In this account, the depositor can enjoy the liquidity of saving and current A/c and rate of interest of fixed deposit. When the amount of deposit exceeds a particular limit then automatically the amount gets transferred into fixed deposit.


What are the different benefits of e-banking to customers?

Benefits of e-banking to customers:-
  1.  Digital Payment and Transparency:- With e-banking there is a possibility of digital payment. It promotes transparency in financial statements. 
  2. 24X7 Services:- E-banking provides twenty-four hours,365 days a year services to the customer of the bank.
  3. Convenience:- Customer can make some of the permitted transactions from offices or houses or while traveling through mobile phones.
  4. Financial Discipline:- E-banking inculcates a sense of financial discipline by recording each and every transaction.
  5. Unlimited Access:- E-banking leads to greater customer satisfaction by offering unlimited access to the bank not limited by the walls of the branch.
  6. Less Risk:- There is greater security to the customer as they can avoid traveling with cash.


What do you mean by subrogation?

This principle applies to all insurance contracts which are contracts of indemnity. As per this principle, when an insurance company compensates the insured for loss of any of his property, then all rights related to that property automatically get transferred to the insurance company.


What are the types of mail services offered by post office?

The government at national and international levels provides postal services. Mail services offered by the post office:-
  1. UPC (Under Postal Certificate):- This service is now rarely used whereas this service was frequently used before courier services. In UPC, the sender will deliver the parcel or letter with an ordinary post at the specified counter of a post office at an extra nominal cost say Rs 1 for 3 envelopes and have proof of posted letters.
  2. Registered Post:- Sender affixes more postal stamps on the envelope and delivers at the counter of a post office and obtains receipt, then the postal authorities will deliver that parcel or letter to addresses only. Whereas letters send under UPC may reach addressees or may not.
  3.  Parcel Post:- It is a service of postal service of the postal department for sending parcels through the post across the country as well as outside the country. This is the most economical way of sending the parcels.
  4. Speed post:- It is a service to send the mail as fast as possible. In this, the post office provides time-bound delivery of mail, letters, and other documents. The charges of speed post are higher than ordinary mail.
  5. Courier Services:- Courier services are provided by a private post office for providing dest-to-desk services. They are faster and more reliable. This service is comparatively cheaper than services provided by post offices. 


Explain any four features of ‘demonetization’. 

The following are the main features of Demonetisation:

(i) Elimination of Black Money: Black money is a household name in India. It refers to unaccounted money. Holders of black money avoid payment of tax on this money. By demonetizing high-value currency notes, the government wants to eliminate the stock of black unaccounted cash balances.

(ii) Eradication of Corruption: High-value currency notes are the commonly accepted medium or bribe. The government wants to strike at the root of corruption by banning these notes.

(iii) Elimination of Counterfeit Currency: A note ban would have implied the elimination of counterfeit currency. Counterfeit currency enhances money in circulation and contributes to an inflationary spiral. it destabilizes the economy

(iv) Money Laundering: Demonetisation is expected to check money laundering. It refers to the hidden transfer of funds across different regions of the country. With cash transactions coming to a grinding halt, demonetization hurt money laundering in a big way.


Write short answer of the following.
State the types of warehouses.

There are 5 types of warehouses : - 
1. Private Warehouses - These warehouses are privately owned and managed by manufacturers and traders that need the private space to store their inventory. 
2. Public Warehouses - These warehouses are owned by government and semi government bodies and are made available to private firms to store goods on payment of rent. 
3. Bonded Storage - Bonded warehouses are storage facility used to store imported goods for which import duty is still to be paid.
4. Co-operative Warehouses - These warehouses are owned, managed and controlled by co-operative societies.
5. Distribution Centers - These warehouses basically by nature, serve as points in the distribution system at which goods are procured from different suppliers and quickly transferred to various customers.


What do you mean by business services? Explain the types of business services.

Business services are those services that are used by the business enterprise to carry on business activities more smoothly. Following are the types of business services:- 
  1. Transport:- It facilitates the movement of goods from one place to another.
  2. Warehousing:- Provides coverage from various types of risks
  3. Advertising:- Provides information to consumers.
  4. Banking:- A bank is an institution which attracts money on deposit for the purpose of being lent to industry or trade. Bankers are not merely moneylenders. A bank lends what it borrows from others. A bank is buyer and seller of money. A bank earns a margin of profit by lending money which it borrows.
  5. Insurance:- Insurance is a device for transfer of risks of individuals to an insurer, who agrees for a consideration (called the premium) to assume, to a specific extent, losses suffered by the insured."
  6. Telecom:- Telecom services are the backbone of every business activity. In the absence of telecom services, every business activity will remain as a dream only. There are lots of developments in convergence of telecom, IT, electronic and media industry worldwide.


What are the different types of services?

There are three types of business services:-
1. Social service: Provided voluntarily to achieve certain goals that are healthcare and education services provided by NGOs.
2. Personal services:- Services which are experienced differently by different customers, for example, tourism, restaurants, etc.
3. Business Services:- Services used by business enterprises to conduct their activities smoothly, for example, Banking, Insurance, Communication, Warehousing, and transportation.


What do you mean by term loans?

A loan is a lump-sum advance repayable on the expiry of a specified period. It may be secured or unsecured. The loan may be paid back by the borrower in installment. These loans are provided by the banks to their customers for a fixed period to purchase machinery, truck, scooter, house, etc. The borrowers repay the loans in Monthly/Quarterly/Half Yearly/Annual installments. 


What precisely do you mean whenever you state whole life policy?

A whole life policy is a life insurance policy that is guaranteed to remain in force for the insured's entire lifetime, provided required premiums are paid, or to the maturity date. Generally, people take life insurance policy when they have the fear of dying too early. Then to provide financial support to their family they take a life insurance policy. In life insurance, the sum assured is paid at the death or on maturity period whichever comes earlier. If a person dies early his family gets a compensation amount and if a person survives then he can get the policy amount.


What do you mean by life insurance?

Life insurance is a type of insurance policy in which the sum assured is paid on the maturity of the policy or the death of the policyholder whichever is earlier. The insurance company offers to insure the life of a person in exchange for a premium which may be paid in a lump sum or periodically, say yearly, half-yearly, or monthly. If the policyholder survives till maturity, he enjoys the amount of insurance. If he dies before maturity, then the insurance claim helps in the maintenance of his family. 


What are the types of telecom services?

Telecom services are the backbone of every business activity. In the absence of telecom services, every business activity will remain as a dream only. The various types of telecom services are:- 
  1. Cellular Mobile Services:- It includes all mobile telecom services including voice, non-voice, message, data service and PCO etc. They can provide direct interconnectivity with any other type of telecom service provider.
  2. Radio Paging Services:- It is an affordable means of communication. It transmits information to persons even when they are mobile. It is a way of information broadcasting solution, Radio paging services are available including tone only, numeric only and alpha/numeric paging.
  3. Fixed Line Services:- These are primarily connected through fiber optic cables laid across the country. They provide interconnectivity with other types of telecom services.
  4. Cable Services:- These are linkage and switched services within licensed areas of operation to provide entertainment services. It includes two-way communication i.e. voice data and information services. Offering services through the cable network would be similar to providing fixed services.
  5. DTH Services (Direct to Home):- It is a direct satellite-based media service provided by cellular companies. To receive this service, one needs a small dish antenna and a set-top box. These services are provided by DTH services providers and consist of a bouquet of multiple channels. These channels can be viewed on television on television without being dependent on cable network service providers.


What is the definition of a joint life policy?

A joint life insurance policy covers two or more lives at the same time. On the death of any of the people insured, the policy money is paid out, and the promised sum is paid out to the survivors. There are two types of joint life policy:-
  1. First-to-die:- Which pays out to the surviving spouse after the first dies. 
  2. Second-to-die or survivorship:- Which pays a death benefit to the heirs after both spouses are gone.


What does the term marine insurance indicate?

A contract of marine insurance can be defined as an arrangement under which the insurer undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. Marine risks are the perils of sea e.g. Strom, collision, capture, seizure, the sinking of the ship, etc. 
Marine insurance is a contract between the insured and the insurer. The insured may be cargo or a shipowner or a freight receiver. The insurer is known as an underwriter. The insured pays a particular sum which is called premium, in exchange for an undertaking from the insurer to indemnify against the loss or damage caused by the sea perils.


What does the term "Health Insurance" mean?

Health insurance provides for payment of medical expenses in case of illness of the insured person and his family. It provides the following types of coverage.
  1. Basic Medical Expenses:- It covers the expenses of hospitalization and doctor's services.
  2. Major Medical Expenses:- It covers the cost of catastrophic (sudden disaster) illness.
  3. Long-term Hospitalisation:- It covers nursing home charges for elderly people.
  4. Medical Supplement:- It fills gaps in medicare programmes of social security.
  5.  Disability Income:- It replaces the income lost by the insured while the insured is unable to work.


In terms of insurance, what do you mean by mitigation?

According to the mitigation principle, the insured must take care of his property or subject matter of insurance in the same way as he would take care without taking the insurance policy. The insured should not become careless of his property after taking the insurance policy.


What are fast moving consumer goods (FMCG)?

Fast-moving consumer goods (FMCG) are those products that sell quickly, in high volume, at a relatively low unit price, and have fast consumer repurchase. These goods are also known as consumer packaged goods. Examples of FMCGs include milk, gum, fruit and vegetables, toilet paper, soda, beer, and over-the-counter drugs like aspirin.


Write short note on the following:
Types of life insurance policies.

Different types of life insurance policies are :- 
1. Term Life Insurance - Term insurance plan are those plan that is purchased for a fixed period of time, say 10, 20 or 30 years.
2. Unit Linked Plans (ULIPs) - A unit linked plan is a comprehensive combination of insurance and investment. 
3. Endowment policy - in this, policyholder receive a lump sum amount in case if he survives until the date of maturity. 
4. Money Back Life Insurance - In this, a percentage of the sum assured is paid back to the insured on periodic intervals as survival benefit.
5. Whole Life Insurance - A whole life insurance policy covers the life assured for whole life. 
6. Child Plan- Child plans help to build funds for child’s education and marriage.
7. Retirement Plan - Retirement plan helps to build savings for retirement.


Class 11 Commerce Business Studies Extra Questions