Class 11 Business Studies Important Questions PDF

Important Questions for Class 11 Business Studies Chapter 4 - Business Services Very Short Answer Questions 1 or 2 Marks 1. State the five I's of services? Ans: The five I’s of services are: ...

Important Questions for Class 11 Business Studies Chapter 4 - Business Services Very Short Answer Questions 1 or 2 Marks 1. State the five I's of services? Ans: The five I’s of services are:  Intangibility  Inconsistency  Inseparability  Inventory  Involvement. 2. What is the meaning of Banking? Ans: Banking companies transact the business of banking for the aim of lending and investing public money deposits repayable on demand or otherwise, and withdrawable by checks, drafts, orders, or some other means. In simple terms, a bank accepts money on deposit that is repayable on demand, as well as lending money to generate a profit margin. 3. It is the prime responsibility of the insured to take reasonable steps to minimize loss/damage to the insured property. Name the principle of insurance. Ans: Principle of Mitigation of Loss. This principle states, as the owner of an insurance policy, the insured has an obligation to take the required actions to limit the loss of his/her insured property. The insured can't be careless or irresponsible just because he’s insured. The insured shall treat the insured thing with the same care as he or she would if the insurance were not present. Class XI Business Studies www.vedantu.com 1 4. Define Insurance. Ans: Insurance is a device that spreads the risk of a loss produced by an unpredictable event among a group of people who are exposed to it and who prepare to protect themselves against it. It's a contract or agreement in which one party agrees to pay an agreed amount of money to another party in the event of a loss, damage, or injury to something of value in which the insured has a pecuniary interest as a result of an uncertain event in exchange for a consideration. 5. Rahul's father wants to save Rs. 100,000 so that he can gift the money to Rahul on his graduation day. Which type of deposit should he open with the bank? Ans: Fixed Deposit should be opened with the bank. Fixed accounts are time deposits with higher rates of interest as compared to savings accounts. 6. Name two companies that offer DTH service in our country? Ans: Airtel, Tatasky offers DTH services in our country. 7. A company insures its stock against fire for Rs. 15 Lakh. A fire broke down and the total stock was lost. At the time of the fire, there was stock worth Rs. 25 Lakh. What is the value of compensation the company would be entitled to? Ans: The contract for fire insurance is a rigorous indemnity contract. An insurance contract's objective is to make you whole in the case of a loss, not to allow you to profit. Hence in case of insurance other than life insurance, one can only be compensated for the amount of loss or the amount assured, whichever is lower. As a result, the value of compensation the company would be entitled to is Rs 15 lakh. Short Answer Questions 3 or 4 Marks 8. Mr. Satish gets his house insured against fire of Rs. 20 Lakh with insurer A and for Rs. 10 Lakh with insurer B. A loss of Rs. 3 Lakh occurred. Class XI Business Studies www.vedantu.com 2 (a) How much compensation can be claimed from A and B separately and Why? Ans: According to this principle, the insurer can only seek compensation from all insurers or from a single insurer to the extent of the real damage. If one insurer provides the full compensation, the other insurers must pay a proportionate share of the claim. Total value of insurance: Rs. 20,00,000 + Rs. 10,00,000 = Rs. 30,00,000 20, 00, 000 A's Contribution  3, 00, 000  30, 00, 000 A’s Contribution = Rs. 2 Lakhs 10, 00, 000 B's Contribution  3, 00, 000  30, 00, 000 B’s Contribution =1 Lakh (b) Name the principle of Insurance in the above case. Ans: Principle of Contribution is followed. If an individual purchases many insurance policies for the same item, the insurers will pool their resources to reimburse the insured for the real loss. The insured can only claim reimbursement to the extent of actual loss from all insurers or from any one insurer, according to this concept. It applies when:  Different policies cover the same subject matter;  The policies cover the same period that generated the loss;  All the policies are in force at the time of loss; and  One of the insurers has paid the insured more than his share of the loss, the right of contribution arises. 9. Explain the function of Insurance Ans: Insurance's Functions are as follows:  Certainty: Class XI Business Studies www.vedantu.com 3  Insurance tends to reduce the level of risks, and the insured receives the payment for loss. The insurer charges for providing the certainty, in terms of premium.  Protection: Insurance provides protection from probable chances of loss, such as loss due to fire, theft etc. Insurance may not prevent a risk or event from occurring, but it can compensate for losses incurred as a result of it.  Risk sharing: All those who have been affected by the loss, share it. Every insured member pays a premium to acquire their share.  Capital formation: The assets accumulated by insurers as a result of premium payments made by the insured are invested in a variety of income-generating schemes.  Promote effectiveness and motivation: Insurance has made significant contributions to the progress of industry and commerce. Insurance businesses provide a variety of services that have resulted in today's large-scale industrial and commercial enterprises. 10. Explain the Difference between Goods and services based on its nature. Ans: On the basis of nature, the following differences exist between services and goods: Basis of Services Goods Comparison Nature An activity or process, for A physical object, For example watching a movie in a example, video cassette of cinema hall. movie Type Heterogeneous Homogenous Class XI Business Studies www.vedantu.com 4 Intangibility Intangible Tangible Example; Treatment from a Example; medicine. doctor. Inconsistency Different customers have Different customers getting different demands. a standardized demand fulfilled. Example; mobile service may vary from customer to Example; mobile phones customer. Inseparability Simultaneous production and Separation of production consumption takes place. and consumption. Example; eating ice cream in a Example; purchasing ice restaurant. cream from a store. Inventory Cannot be kept in stock. Can be kept in stock. Example; experience of a train Example; train journey journey. ticket Involvement Participation of customers at Involvement at the time of the time of service delivery delivery is not possible. exists. Example; manufacturing a Example; Customer tells the vehicle type of service in a fast food joint. 11. Name the principle of insurance for each of the following statements: (a) The insured is expected to disclose all the important facts related to the property insured. Ans: Principle of Utmost Good Faith. Class XI Business Studies www.vedantu.com 5 (b) Insured must have some economic interest in the subject matter of Insurance contract. Ans: Principle of Insurable Interest. (c) To claim for insurance the insured must take reasonable steps to minimize the loss. Ans: Principle of Mitigation of loss. (d) Insured is entitled to recover the loss suffered by him, up to the limit of the policy amount. Ans: Principle of Indemnity. 12. Explain the types of Life Insurance Policies? Ans: Different types of life insurance policies include:  Whole Life Policy: In this type of policy, the sum due to the insured is not paid until the assured passes away. The money is then solely due to the deceased's beneficiaries or heirs.  Endowment Life Assurance Policy: The insurer agrees to pay a set amount when the insured reaches a certain age or dies, whichever comes first. In the event of the assured's death, the payment is payable to his legal heirs or nominee stated therein. Otherwise, the payment will be paid to the assured when a certain amount of time has passed.  Joint Life Insurance: This coverage is purchased by two or more people. The premium is paid jointly or by either of them in installments, or in a lump sum assured sum or policy money is due to the other survivor or survivors upon the death of any one of them.  Policy on Annuities: After the person reaches a particular age, the promised sum or policy money is paid out in monthly, quarterly, or annual installments.  Policy on Children's Endowment: A person purchases this policy for his or her children in order to cover the costs of their education or marriage. The agreement specifies that the insurer will pay a certain amount when the children reach a certain age. Class XI Business Studies www.vedantu.com 6 13. Explain electronic banking and state its three benefits? Ans: Online banking, often known as internet banking, e-banking, or virtual banking, is an electronic payment system that allows bank or other financial institution customers to execute a variety of financial transactions via the financial institution's website. The word "internet banking" refers to the process of a client doing banking transactions over the internet. This sort of banking makes use of the internet as the primary mode of delivery for all banking transactions. The following are some of the advantages:  Availability 24x7: E-banking is available 24 hours a day, 365 days a year. At any moment, a client can log into his or her own bank account and execute financial activities online. Customers benefit from increased flexibility and comfort because they do not have to visit their banks in person.  Convenient access: Transactions may be done on mobile phones and PCs as needed.  E-banking decreases bank workload: E-banking reduces bank workload by allowing a substantial part of tasks to be performed electronically. 14. Explain the Functions of Warehousing? Ans: The functions of warehousing are:  Storage: Warehouses make it easier to store products and raw materials that aren't needed right away for sale or manufacture, while also protecting them from rotting and damage.  Value-added services: They provide producers with value-added services such as product grading, packaging, and labelling.  Financing: The warehouse receipt can be used as collateral to borrow money from banks or other financial organisations by the owner of the products or raw materials kept in the warehouse.  Break the bulk: Warehouses are responsible for dividing large quantities of items received from manufacturing companies into smaller quantities. The smaller quantities are then transported according to the requirements of clients to their places of business Class XI Business Studies www.vedantu.com 7   Consolidation: The warehouses gather and consolidate material/goods from various manufacturing units before dispatching them to a specific consumer via a single transportation package.  Stockpiling: The seasonal storing of commodities for certain businesses is the next role of warehousing. Raw materials, which are not required immediately for sale or manufacturing, are stored in warehouses. They are made available to enterprises according to the number of consumers they have.  Price stabilisation: Warehousing provides the role of price stabilisation by adapting the supply of products to the demand condition. 15. Explain the three important insurances involved in Marine Insurance? Ans: A marine insurance contract is an arrangement in which the insurer agrees to indemnify the insured against marine losses in the way and to the extent agreed upon. Marine insurance protects against losses caused by marine perils, often known as sea perils. There are three important insurances under this:  Ship or Hull Insurance: Because the ship is exposed to several dangers at sea, this insurance policy is designed to compensate the insured for losses incurred as a result of ship damage.  Cargo insurance: Cargo or the goods in the ship is exposed to numerous dangers while being transported by ship, this insurance covers the risk of voyage.  Freight insurance: If the cargo is damaged or lost in transit, the shipping business is not reimbursed for the freight payments, hence to avoid this scenario, the shipping company takes up this insurance policy. Long Answer Questions 5 or 6 Marks 16. Describe briefly Types of warehouses? Ans: Warehousing is the process of keeping things in a systematic and orderly way in order to preserve their worth and quality. Warehouses provide not only storage but also logistical services by locating the appropriate amount in the right place at the right time and at the right price. Class XI Business Studies www.vedantu.com 8 The different types of warehouses are:  Private Warehouses: Large manufacturers and merchants own and run private warehouses to meet their own storage needs. Big businesses who require a lot of storage space on a regular basis and can afford it build and manage their own warehouses.  Public Warehouses: A public warehouse is a specialised business entity that charges a fee for providing storage facilities to the general public. An individual or a cooperative organisation may own and operate it. It operates under a government-issued license and follows all applicable rules and regulations. Small producers and traders can store their goods for free in public warehouses. To assure the safe custody of commodities, these warehouses are well-built and guarded 24 hours a day, seven days a week. Public warehouses are typically found around railway, highway, and canal intersections.  Duty-paid Warehouses: If an importer encounters any difficulties in transporting goods after paying duty, the products can be housed at a duty- paid warehouse. All duty-paid warehouses are open to all importers and are public warehouses. Importers benefit from duty-paid warehouses because the items are properly cared for and processed, such as sorting and repacking.  Government Warehouses: The federal and state governments, as well as public authorities, own, administer, and control these warehouses. Because owning a warehouse is difficult for small farmers, businesses, and traders, these government warehouses aid them in storing their goods for a fee.  Co-operative Warehouses: Co-operative societies own, manage, and administer these warehouses. They mostly provide warehousing services at the most affordable prices. Farmers, traders, and the general public benefit greatly from these types of warehouses.  Cold storage warehouses: Cold storage warehouses are used to store perishable goods such as fruits, flowers, vegetables, dairy products, and other perishable items. Goods are held and chilled at extremely low temperatures in cold storage facilities in order to preserve them and utilize them in the future. These warehouses have made international trade possible. Class XI Business Studies www.vedantu.com 9 17. A factory owner gets his stock of goods insured, but he hides the fact that the electricity board has issued him a statutory warning letter to get his factory's wiring changed. Later on, the factory catches fire due to a short circuit of wiring. Can he claim compensation ? Ans: No, he cannot claim the compensation. This is because he has hidden a very crucial fact about his factory wirings. Therefore, he has violated the principle of Utmost Good faith. This principle states that the insurance contracts require that both parties act with the utmost good faith. This means that both parties must provide all relevant information honestly and completely. This not only measures the level of risk, but also helps insurance companies accurately price premiums for insurance applicants. Insurance policies can be declared null and void if an applicant provides wrong representation of material fact that was relied on by the insurance company. 18. Write notes on the RTGS system and NEFT. Also, state the difference between them. Ans: The notes are:  NEFT: The acronym NEFT stands for National Electronic Funds Transfer. It is an internet technique for moving payments within India from one banking institution to another (usually banks). The system was introduced in November 2005, and it was designed to take over the SEFT clearing system's query bank. NEFT is a Deferred Net Basis system, in which transactions are packaged and deferred for a defined period of time. Also, in NEFT, the transactions are processed in batches with no minimum and maximum limits.  RTGS: The abbreviation RTGS stands for Real Time Gross Settlement. RTGS is a real-time gross funds transfer system that allows money to travel from one bank to another in real time. RTGS is the fastest way to transfer money when using the banking method. The term 'real-time' refers to the lack of a waiting period in the payment process, as the transaction will be finished, as soon as the processing is done. Also, gross settlement means a transfer is performed one by one, without being grouped with other transactions. Following are the difference between RTGS and NEFT: Class XI Business Studies www.vedantu.com 10  Basis RTGS NEFT Full form Real Time Gross Settlement National Electronic Funds Transfer Introduced in 2004 2005 Transaction RTGS processes transactions in NEFT processes transactions type real-time,in which processing of in batches. transactions takes place continuously, and throughout the day. Type of RTGS is a gross settlement NEFT is a Deferred Net Basis system system, in which a transfer is system, in which transactions performed one by one. are packaged and deferred for a defined period of time. Value of Minimum 2 lakhs, while no No minimum or maximum transactions maximum limit. limit, however the value per transaction is limited to Rs. 50,000 Suitable for Large Transactions Small transactions 19. Divya Garments Ltd. has a loan of Rs. 10,00,000 to pay. They are short of funds so they are trying to find means to arrange funds. Their manager suggested claiming from the insurance company against stock lost due to a fire in the warehouse. He actually meant that they can put their warehouse on fire and claim from an Insurance company against stock insured. They will use the claim money to pay the loan. (a) Will the company receive a claim if the surveyor from the company comes to know the real cause of the fire? Ans: No, the company will not be reimbursed if the surveyor discovers the true cause of the fire, and the contract will be voided. Class XI Business Studies www.vedantu.com 11 (b) Which values did the company ignore while planning to arrange money from the false claims? Ans: When attempting to arrange money from a false claim, the principle of utmost good faith is disregarded. Insurance contracts demand that both parties operate in the best interests of the other. This means that both parties must provide all relevant information honestly and completely. This maintains impartiality while also assisting insurance firms in appropriately pricing premiums for applicants. If an applicant makes a major fact deception that the insurance company relies on, the policy might be deemed null and void. Hence, the values disregarded are trust, honesty and transparency. (c) Explain three elements of fire insurance. Ans: There are three aspects to fire insurance:  Insurable Interest: The insured must have an insurable interest in the insurance's subject matter. The insurance contract is void if there is no insurable interest.  Utmost Good Faith: When providing information to the insurance company about the subject matter of the policy, the insured should be accurate and honest.  Indemnity: The contract for fire insurance is a rigorous indemnity contract. In the case of a loss, the insured can sue the insurer for the full amount of the loss. This is subject to the maximum amount of insurance coverage for the subject matter. 20. Write a detailed note on various facilities offered by the Indian Postal Department and different types of telecom services offered? Ans: The Indian Postal and Telegraph Department provides a variety of postal services throughout the country. Facilities provided by Indian Postal Department  Financial facilities: Post offices provide a range of savings options to the general public. These facilities are provided through the post office's savings schemes like: Class XI Business Studies www.vedantu.com 12  o Public Provident Fund (PPF) o Kisan Vikas Patra o National Saving Certificate (NSC) o Recurring Deposit Scheme o Fixed Deposit Scheme  Mail facilities: Mail services include: o Parcel facilities: They make it easier to transport an item from one location to another. o Registration services: These services ensure that the article being sent is secure. o Insurance facilities: These cover the risks associated with postal transmission. The following are some of the mail services supplied by banks: o Postcards: This is the least expensive method of mail delivery. o Letter: It is enclosed in an envelope and guarantees the confidentiality of the information communicated. o Registered mail: Registered mail ensures that the mail sent to the recipient is delivered or returned to the sender if it is not.  Additional Services: Greeting cards, media mail, international money transfers, speed mail, passport services, and e-billing services are also offered by these departments. Telecom Services  Cellular mobile service: This includes voice and non-voice transmission, as well as data transmission.  Radio paging service: This is a one-way communication system that sends out information in the form of a tone, numeric, or alphanumeric message. Class XI Business Studies www.vedantu.com 13   Fixed-line service: This type of service entails the installation of fibre optic cables across the nation for the transmission of data, including voice and non-voice communications.  Cable service: This service transmits media-related information to a designated operational region for which a licence has been obtained. The information flow is one-way with this sort of telecom service.  VSAT service: VSAT stands for "Very Small Aperture Terminal" and refers to a satellite-based communication service that allows information to be sent to far-flung and remote locations. As a result, businesses benefit from a broader reach and greater flexibility.  DTH service: DTH stands for Direct-To-Home, and it is a form of telecommunications service provided by DTH providers. Customers receive TV channels through satellites from the corporations. Customers may watch several channels by connecting their television to a tiny dish antenna and a set-top box. 21. State Six Difference Between Life Insurance, Fire Insurance, and Marine Insurance? Ans: The difference between Life Insurance, Fire Insurance, and Marine Insurance is: Basis Life Insurance Fire Insurance Marine Insurance Subject Human life is the The subject matter is The subject Matter subject matter of life any physical property matter is ship, Insurance. or any asset that could cargo or freight. be damaged due to fire. Element Life insurance can be Fire insurance has Marine insurance used for both only the elements of has only the protection and protection and not the elements of investment. elements of protection. Class XI Business Studies www.vedantu.com 14  investment. Insurable Insurable interest Insurable interest on Insurable interest Interest must be present at the subject matter must exist at the the time of policy must be present both time the claim is implementation, but at time of effecting due or merely at it is not required policy as well as when the time of the when claims are due. claim falls due. loss. Duration A life insurance The average length of Marine insurance policy normally lasts fire insurance policy is for one longer than a year coverage is one year. year or the period and is purchased for of voyage or a period of time mixed. ranging from 5 to 30 years or for the rest of one's life. Indemnity The notion of A contract of Marine insurance indemnity does not indemnification is is a contract of apply to life what fire insurance is. indemnity. The insurance. The sum Only the exact amount insured can claim assured is paid either of loss can be claimed the market value on the happening of from the insurer by the of the ship and a certain event or on insured. The loss cost of goods maturity of the resulting from the fire destroyed at the policy. is covered up to the sea and the loss policy's maximum will be level. indemnified. Loss Loss is not Loss is measurable. Loss is Measurement measurable. measurable. Contingency There is an element The event, i.e., fire The event i.e., of Risk of certainty. The devastation, may not loss at the sea event i.e. death of a occur. No claim may may not occur and policyholder is be made in case no there may be no Class XI Business Studies www.vedantu.com 15  bound to happen. damage occurs. Hence claim. There is an Therefore a claim there is an element of element of will be present. uncertainty. uncertainty. 22. Explain in detail the principles of Insurance? Ans: Insurance is a service that protects you from certain sorts of risks that can occur as a result of unforeseeable circumstances. It provides confidence to individuals by offering a set amount of money in the event of death or damage to personal property. In exchange for this assurance, the insured must pay a premium. The concepts of insurance on which insurance contracts are built are as follows:  Principle of Absolute good faith: Both the insurer and the insured must believe in each other and the contract they have signed. For example, if Rahul has a heart condition, he should tell his insurance firm about it while purchasing a life insurance policy.  Principle of Insurable interest: The insurable interest requires that the owner of a particular insurance policy has an insurable interest in the subject matter of the insurance policy. For example, a wife having insurable interest in her husband’s life due to financial dependency, a person’s interest in his property etc.  Principle of Indemnity: The goal of an insurance contract, according to the indemnity principle, is to restore the insured to the same financial position as before the loss. to he or she For example, if a person loses Rs. 1 lakh in a fire, the insurance company will only accept a claim up to Rs. 1 lakh and not more.  Principle of Proximate cause: The proximate cause insurance principle states that the nearest or closest cause should be considered, and the insurance company will compensate only for the causes that have been mentioned in the insurance contract, or any proximate causes, and not the remote causes of damage. For example, if a person is injured in a fire, this should be included in the contract so that the individual may collect the insurance benefits.  Principle of Subrogation: Once the compensation is paid, the insurer gains ownership of the damaged item, preventing the insured from profiting from the sale of the damaged property. For example, if a person receives Rs. 1 Class XI Business Studies www.vedantu.com 16  lakh for a damaged stock, the stock's ownership will be transferred to the insurance company, and the person will no longer have control over the stock.  Principle of Contribution: If an individual purchases many insurance policies for the same item, the insurers will pool their resources to reimburse the insured for the real loss. If a person A insures his or her home for Rs. 2 lakh with insurance B and Rs. 1 lakh with another insurer, say C, then in the event of a loss of Rs. 90,000, insurer B and insurer C will pay A Rs. 90,000 in total and no more.  Mitigation: The insured shall treat the insured thing with the same care as he or she would if the insurance were not present. For example, if a person obtains fire insurance, he or she should take all reasonable steps to minimise property damage in the event of a fire, just as he or she would have done if the insurance had not been purchased. Class XI Business Studies www.vedantu.com 17