Internal Trade: Wholesale and Retail
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Questions and Answers

What is one of the main services offered by a departmental store?

  • Exclusive merchandise
  • Online sales support
  • Seasonal discounts
  • Home delivery of goods (correct)

What is a key disadvantage of departmental stores mentioned?

  • Lack of personal attention (correct)
  • High customer loyalty
  • Exclusive product range
  • Limited advertising budget

How do departmental stores benefit from large-scale operations?

  • Reduced overhead expenses
  • Limited service offerings
  • Information technology integration
  • Increased purchasing power (correct)

What promotional strategy can departmental stores utilize to boost sales?

<p>Significant advertising expenditure (D)</p> Signup and view all the answers

What happens if customer tastes change in a departmental store?

<p>Need to hold clearance sales (B)</p> Signup and view all the answers

Where are departmental stores generally located?

<p>At central locations (B)</p> Signup and view all the answers

What is a characteristic of chain stores?

<p>They have a uniform appearance (B)</p> Signup and view all the answers

What can result from high operating costs in a departmental store?

<p>Higher chances of incurring losses (B)</p> Signup and view all the answers

What characterizes speciality shops compared to other retail stores?

<p>They specialize in a specific line of products. (B)</p> Signup and view all the answers

Which of the following is a common location for speciality shops?

<p>Central places with high customer traffic (C)</p> Signup and view all the answers

What is a primary feature of departmental stores?

<p>They offer products classified into distinct departments. (B)</p> Signup and view all the answers

Who typically manages a departmental store?

<p>A managing director assisted by a board of directors. (C)</p> Signup and view all the answers

Which of the following is NOT a type of product typically found in a departmental store?

<p>Antique goods (C)</p> Signup and view all the answers

What role do departmental stores play in relation to manufacturers?

<p>They purchase directly from manufacturers and operate warehouses. (B)</p> Signup and view all the answers

Which of the following best describes a fixed shop?

<p>A large, established store with a variety of goods. (D)</p> Signup and view all the answers

What type of products might you find in a departmental store?

<p>A wide variety including electronics and clothing (A)</p> Signup and view all the answers

What is a primary aim of the Goods and Services Tax (GST)?

<p>To create uniform pricing across India (D)</p> Signup and view all the answers

What has been the effect of GST on luxury goods since its implementation?

<p>Luxury goods have become costlier (C)</p> Signup and view all the answers

Which feature of GST helps in preventing excessive profits by entities?

<p>Anti-profiteering measure (B)</p> Signup and view all the answers

How does GST contribute to overall economic activity?

<p>By reducing the overall tax burden (C)</p> Signup and view all the answers

What aspect of GST ensures that consumers benefit directly from cost reductions?

<p>The establishment of a National Anti-profiteering Authority (NAA) (A)</p> Signup and view all the answers

What constitutes the key method of tax revenue collection under GST?

<p>Taxation at the point of consumption (C)</p> Signup and view all the answers

What does the mechanism of matching invoices aim to prevent?

<p>Tax fraud and evasion (B)</p> Signup and view all the answers

What is a consequence of the input tax credit system under GST?

<p>Input tax credit is limited to taxable supplies received (B)</p> Signup and view all the answers

What is one advantage of departmental stores?

<p>Attracts large number of customers (B)</p> Signup and view all the answers

Which of the following is a limitation of chain stores?

<p>Limited selection of goods (D)</p> Signup and view all the answers

What differentiates mail order houses from other retail outlets?

<p>Sales occur through mail without personal contact (C)</p> Signup and view all the answers

Which of the following is a benefit of consumer cooperative stores?

<p>Democratic management (C)</p> Signup and view all the answers

What is a common characteristic of both departmental stores and chain stores?

<p>Offer a wide variety of products (D)</p> Signup and view all the answers

What is an advantage of mail order houses?

<p>Convenience of purchasing (C)</p> Signup and view all the answers

Which of the following does NOT represent a limitation of consumer cooperative stores?

<p>Democratic management (D)</p> Signup and view all the answers

Which factor does NOT typically differentiate departmental stores from multiple shops?

<p>Operating hours (D)</p> Signup and view all the answers

What type of GST is applicable for intra-state supply of goods and services?

<p>CGST/SGST (C)</p> Signup and view all the answers

What triggers the tax liability for a taxable person under GST?

<p>Crossing the exemption limit of ` 20 lakh (A)</p> Signup and view all the answers

Which organization is NOT mentioned as playing a role in promoting internal trade?

<p>World Trade Organization (D)</p> Signup and view all the answers

What is one of the primary objectives of commerce and industry associations?

<p>To reduce hindrances and increase interstate movement of goods (C)</p> Signup and view all the answers

What is IGST primarily associated with?

<p>Inter-state supply of goods and services (C)</p> Signup and view all the answers

Which of the following is a role of the Chambers of Commerce and Industry?

<p>Interacting with the government to shape policy (B)</p> Signup and view all the answers

Which of the following is NOT a benefit promoted by the chambers of commerce?

<p>Development of international trade agreements (B)</p> Signup and view all the answers

The term 'exemption limit' under GST refers to what amount?

<p>` 20 lakh (C)</p> Signup and view all the answers

What is a significant advantage of the mail order business regarding capital requirements?

<p>It can be started with a relatively low amount of capital (C)</p> Signup and view all the answers

Which aspect does the mail order system eliminate between buyers and sellers?

<p>Middlemen (A)</p> Signup and view all the answers

What is a potential downside of mail order selling regarding after sales service?

<p>Buyers and sellers may be located far apart (A)</p> Signup and view all the answers

What type of business promotion method is heavily relied upon in mail order selling?

<p>Advertisements (D)</p> Signup and view all the answers

What is the consequence of mail order houses not extending credit facilities?

<p>Limited customer participation (D)</p> Signup and view all the answers

Which of the following is NOT a disadvantage of mail order selling?

<p>Lower profit margins due to middlemen (B)</p> Signup and view all the answers

How does mail order selling affect the examination of products by buyers?

<p>It completely restricts product examination (B)</p> Signup and view all the answers

What concerns buyers in mail order selling, particularly due to distance and communication?

<p>Misunderstanding and mistrust (A)</p> Signup and view all the answers

Flashcards

Specialty Stores

Retail stores that focus on selling a specific type of product.

Fixed Shop

A retail store with a fixed location, as opposed to a stall.

Departmental Stores

Large stores offering diverse products, organized into departments.

Product Variety

The range of different goods or services offered by a store.

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Joint Stock Company

A business organization where ownership is divided among shareholders.

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Board of Directors

A group of people who manage a company and make decisions.

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Warehousing

The process of storing goods before they are sold.

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Retailing

Buying and selling goods to customers.

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Departmental Store Limitation

High operating costs, large-scale operations, and potentially high loss risks due to changing tastes and fashion trends.

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Departmental Store Service

Offering services like home delivery, phone orders, credit, rest rooms, and so on.

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Economy of Scale in Retail

Departmental stores benefit from cost savings in purchasing due to their large size.

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Sales Promotion in Retail

Departmental stores can spend heavily on advertising to boost sales.

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Personal Attention Shortfall

Departmental stores often lack individualized customer service.

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Inconvenient Location

Central locations can make it hard to get items quickly.

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Chain Store or Multiple Shops

A network of shops owned by a single entity.

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Chain Store Ownership

Chain stores are commonly owned and operated by manufacturers or intermediaries.

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Mail Order Selling

A system where goods are ordered by mail, advertised through catalogs and delivered to customers' addresses.

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Advantage of Mail Order: Limited Capital

Mail order businesses need less money to start because they avoid high costs of physical stores.

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Advantage of Mail Order: Eliminating Middlemen

Mail order directly connects buyers and sellers, cutting out extra costs and profits taken by intermediaries.

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Disadvantage of Mail Order: Misunderstanding

Lack of face-to-face interaction can lead to confusion and mistrust between buyers and sellers.

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Disadvantage of Mail Order: High Promotion Cost

Mail order companies need to invest heavily in advertising to reach customers, as they lack physical storefront visibility.

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Disadvantage of Mail Order: No After-Sales Service

With limited interaction, mail order buyers may experience challenges in resolving issues or getting help after purchasing a product.

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Disadvantage of Mail Order: No Credit Facilities

Mail order businesses often don't provide credit options, limiting customer options and potentially hindering purchases.

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Who Can Benefit from Mail Order?

Literate people can most effectively utilize mail order selling, as they interact through written advertisements and catalogs.

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GST Goal

GST aims to simplify taxes by combining multiple taxes into one nationwide system, making goods uniformly priced across India.

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GST Impact on Prices

GST can cause some goods to become more expensive while others become cheaper due to the simplification and standardization of taxes.

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GST: Destination Tax

GST is levied where the final consumer buys the product, not where it's manufactured.

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GST and Invoice Matching

GST has a system for verifying invoices. Input tax credit is only available if the purchases are correctly documented.

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GST and Anti-Profiteering

GST includes measures to prevent businesses from excessively raising prices after the implementation of the tax.

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GST Benefits for Consumers

GST is expected to reduce the overall tax burden, eliminate hidden taxes, and offer a wider choice of goods and services for consumers.

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GST and Economic Activity

GST can contribute to increased economic activity by promoting a harmonized national market and creating more employment opportunities.

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GST Key Feature: Harmonized Market

GST aims to create a unified national market for goods and services by standardizing taxes across India.

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GST Taxes

The Goods and Services Tax (GST) is a value-added tax levied on the supply of goods and services. There are three types of GST: CGST (Central GST), SGST (State GST), and IGST (Integrated GST).

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Intra-state Supply

Intra-state supply refers to the supply of goods or services within a single state. CGST and SGST are applicable to these transactions.

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Inter-state Supply

Inter-state supply refers to the supply of goods or services between two or more states. IGST is applicable in such cases.

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Tax Liability Threshold

The tax liability threshold is the minimum amount of turnover or income a business must have before it is required to register for GST. In India, the threshold for 2019-20 was INR 20 lakh.

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Role of Associations in Trade

Associations like ASSOCHAM, CII, and FICCI play a crucial role in promoting internal trade by advocating for policies that reduce trade barriers, simplify tax structures, and improve infrastructure.

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Associations' Impact on Trade

By engaging with the government, these associations aim to reduce hindrances to interstate movement of goods, increase transparency, and streamline inspection processes.

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Associations' Goals

The goal of these associations is to create a favorable environment for internal trade by simplifying tax structures, building sound infrastructure, and removing bureaucratic hurdles.

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Harmonized Tax Structure

Associations aim to achieve a harmonized tax structure, which means simplifying and unifying tax rules across different states to ensure consistency and reduce complexities for businesses.

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Advantages of Departmental Stores

They attract many customers, offer convenience, provide attractive services, benefit from economies of scale, and promote sales effectively.

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Limitations of Departmental Stores

They lack personalized attention, face high operating costs, have a high risk of losses, and might have inconvenient locations.

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Chain Store

A network of retail stores owned and operated by manufacturers or intermediaries selling standardized and branded products.

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Advantages of Chain Stores

They benefit from economies of scale, eliminate middlemen, avoid bad debts, easily transfer goods, diffuse risks, have low costs, and offer flexibility.

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Limitations of Chain Stores

They offer limited product selections, lack initiative, lack personalized touch, and struggle to adapt to changing customer demands.

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Mail Order House

A retail outlet that sells merchandise through mail, without direct personal contact with buyers.

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Advantages of Mail Order Houses

They require limited capital, eliminate middlemen, avoid bad debts, reach a wide audience, and provide convenience for customers.

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Study Notes

Internal Trade

  • Internal trade involves buying and selling of goods and services within a country
  • It's categorized into wholesale and retail trade
  • Internal trade is important for economic growth and distributes goods to consumers

Wholesale Trade

  • Wholesalers buy goods in large quantities from producers
  • They resell these goods to retailers
  • They play a crucial role in distribution, helping manufacturers reach a wider market
  • They also provide support functions like storage, transportation, and risk management
  • Wholesalers help manufacturers by facilitating large-scale production and risk sharing

Retail Trade

  • Retailers sell goods in smaller quantities to consumers
  • Various types of retailers exist, including:
    • Itinerant retailers: no fixed location, move from place to place to sell goods
    • Fixed shop retailers: have a fixed store location, various sizes and specializations.
    • Fixed shop retailers - General stores: wide variety of products located in residential/market areas
    • Fixed shop retailers - Speciality shops: focus on a specific product line
    • Market traders: have a specific day or several days to do business
    • Street stall holders: sell goods at street crossings, heavy traffic areas
    • Chain stores/Multiple shops: many stores serving similar products, strategically placed in various locations
    • Supermarkets: large retail settings, provide great convenience to consumers through wide selections.
    • Mail order houses: goods are sold and delivered through mail
  • Retailers play a crucial role in connecting producers and consumers
  • Retailers provide services like selling in smaller lots, information about goods and services

Services of Wholesalers

  • Facilitate large-scale production
  • Bear risks
  • Give financial assistance
  • Offer expert advice
  • Assist in marketing functions
  • Enable production continuity
  • Provide storage

Services of Retailers

  • Provide regular availability of products
  • Information about new products
  • Provide convenience in buying
  • Wide product selection
  • Offer after-sales service
  • Possible credit facilities

Role of Chambers of Commerce and Industry

  • To promote and protect common interests of business & industrial houses
  • Support national trade, commerce, and industry
  • Act as guardians in these areas
  • Interacting with government on trade-related policies
  • Play important roles in activities like interstate movements of goods, octroi management, and harmonization of Tax structures

Goods and Services Tax (GST)

  • A single tax in the country for goods and services, abolishing numerous indirect taxes previously levied at federal, state levels
  • The objectives include improved tax administration, reduction in tax burden, increased tax revenue, & more

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NCERT Class 11 Business Studies Chapter 10: Internal Trade PDF

Description

This quiz covers the fundamentals of internal trade, focusing on its importance in economic growth and consumer distribution. It delves into wholesale and retail trade, examining the roles and operations of wholesalers and retailers. Understand the various types of retailers and their significance in the market.

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