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MP Board Class 12th Business Studies Important Questions Chapter 12 Consumer Protection

Consumer Protection Important Questions

Consumer Protection Very Short Answer Type Questions

Question 1.
When is consumer’s right day is celebrated ?
Answer:
On 15th March consumer’s rights day is celebrated.

Question 2.
Ahmad wants to buy a press (iron). As a aw are consumer how can he convince you about the quality of press ?
Answer:
Ahmad should check I.S.I. mark while purchasing press.

Question 3.
Reeta wants to purchase one packet of juice. She is an aware customer. How can she connived ?
Answer:
Reeta should see F.RO. mark.

Question 4.
Amrit has complained against ‘Amrit Volvo Limited’ in state commission. But he was not satisfied with orders of it. Tell where Amrit can complaint against the commission.
Answer:
Amrit can appeal in the National Commission.

Question 5.
Anjana wants to purchase a golden ring, what she should see on the ring to check quality of ring ?
Answer:
She should see Halmark.

Question 6.
What role does “the right to be heard” play for a consumer ?
Answer:
According to this right if any misbehavior or michchief is done with consumer then he can appeal to the court and has right that his complaint to be heard. The consumers right to be heard includes legal hearing to get redress.

Question 7.
Why is consumer protection important for a consumer ? Give one reason.
Answer:
Consumer protection is important for the protection of unfair practices of producers and sellers.

Question 8.
Write the names of two right under the consumer protection act of 1986.
Answer:

1. Right to safety
2. Right to be informed.

Question 9.
Where is the international organisation set up for standardization ?
Answer:
At the international level the organisation (ISO) was set up in Geneva.

Question 10.
W’hat is Eco-mark scheme ?
Answer:
This scheme has been introduced by the ministry of environment and forest. It signifies that the products fulfill the environmental norms. This scheme is useful for toilet soap, detergents, paints, packaging material, food products, edible oil, etc.

Question 11.
What do you mean by Lok Adalat ?
Answer:
Lok Adalat are those centers where aggrieved parties can approach directly with their grievances. Lok Adalat give patient hearing discuss the issue and give their decision on spot. It is economical and effective system.

Question 12.
What do you mean by public support ?
Answer:
Business needs public support, without it no other business can run successfully. Business needs financial support by time to time like financial institution, banks, government employees, customer etc. Business had provide better quality of product to the society. If we exploit the public it means we destroy our self. We need people to purchase our goods.

Question 13.
What sort of precautions should be observed by consumers ?
Answer:
Consumers must take following precautions :

1. Must acquire all the informations regarding goods purchased or service choosed.
2. Consumer must know name of article, name of manufacturer, instructions of its use etc.
3. Consumer must assure himself about the safety of the product.

Question 14.
What do you mean by public relation ?
Answer:
Public relation means to maintain relation among various people. Newspapers, government press are the sources of it.

Question 15.
What do you mean by consumer ?
Answer:
Under the consumer protection Act 1986 consumer means any person who for consumption purpose: .

1. Buys goods on deferred payment
2. Hires any service for payment
3. Hires any service on deferred payment.

Question 16.
State any two problems of consumer.
Answer:
Two Problems of consumers are as follows :

1. Adulteration of foods (Use of unpermitted colour)
2. Sales of medicines after expiry date.

Question 17.
What do you mean by redressal forum ?
Answer:
Three tier grievances redressal machinery or forum is established through consumer forum.

1. District forum
2. State commission
3. National commission.

Question 18.
Who can be the president of district forum ?
Answer:
The president of consumer forum can be the officiating or retired judge.

Question 19.
Who can appeal before the court for complaint ?
Answer:
Following can complaint:

1. A consumer.
2. A recognized consumer organisor.
3. A consumer or more than one consumer.
4. Central government.
5. State government.

Consumer Protection Short Answer Type Questions

Question 1.
Explain the importance of consumer protection.
Answer:
Importance of consumer protection :

1. Providing legal protection to customers
2. Unorganized consumers
3. ignorance of consumers
4. To protect from exploitation
5. Help in the growth of business
6. Social responsibility of business to protect the interest of owners and other
7. Makes aware of consumers about their rights
8. Speedy disposal of complaints
9. Protection from pollution.

Question 2.
Explain the different rights of consumers.
Answer:
he rights of consumers are as follows :

1. Right to safety
2. Right to be informed
3. Right to be heard
4. Right to receive goods at competitive price
5. Right to be released
6. Right to consumer education
7. Right to consideration
8. Right to healthy environment.

Question 3.
Discuss the ways and means of consumer protection in India.
Answer:
The following ways and means are popular for consumer protection in India :

1. Lok Adalat: Lok Adalat is a place where aggrieved parties can approach directly with their grievances. It gives patient hearing, discuss the issue and give their decision on the spot. It is effective, economic and fast.

2. Public Interest Litigation : It refers to the system which provide legal representation to the poors, consumers, minorities and other weaker groups who are not in a position seek legal remedy of their own public interest litigation can be filled either by aggrieved person or any other person who belongs to weaker group.

3. Consumer Welfare Fund: This fond has been established for promoting the welfare of consumer.

4. Redressal Forums and Consumer Protection Councils: The Consumer Protection Act, 1986; a three tier judicial machinery has been established to settle consumer disputes :

1. District forum
2. State commission
3. National commission.

It provide simple, speedy and economical redressal of consumers disputes.

Question 4.
Explain the importance of non-government organisations (NGOs) for consumer protection.
Answer:
The importance of NGOs in the field of consumer protection are as follows :

1. Generates consumers awareness and provides education to consumers.
2. Organises protests against hording and adulteration.
3. Filing suit on behalf of consumers when needed.
4. Collecting various information and data related with products and using this for consumer protection.
5. Helping government in activities related with consumer protection.

Question 5.
Explain the importance of consumer protection on the point of view of business.
Answer:

1. Satisfaction and welfare of consumers: Consumer protection is important because it ensures to satisfy the needs of consumers and their welfare.

2. Key to survival and growth of business : A business can survive and grow only when it aims at safeguarding the interests of shareholders in general and consumers in particular.

3. Goodwill and image : For building favorable image and goodwill a business undertaking is expected to supply right product of right quality in right quantity at right time and right place to the consumers.

4. Creating and retaining consumers : Customer is the soul of business. A business without customer is meaningless like a body without soul. The main motto of a business must be creating and retaining customers. It is possible only when the customers are satisfied in all respects. .

Question 6.
What do you mean by consumer’s right or rights of consumer ?
Answer:
The consumers of America are more attentive and aware than consumers of India. Compared to India the consumers of America are having more rights and their complaints are settled immediately. President Kennedy laid more stress over consumer rights. He supported the following rights :

1. Right to safety.
2. Right to choice.
3. Right to be informed.
4. Right to be heard.

Other rights have been also given to consumers. For consumer protection International Organization of Consumer Union have been set up.

Question 7.
Who can file a complaint in a consumer court ?
Answer:
A complaint can be made by :

1. Any consumer.
2. Any registered consumer’s association.
3. The Central Government or any State Government.
4. One or more consumers, on behalf of numerous consumers having the same interest.
5. A legal heir or representative of a deceased consumer.

Question 8.
What kind of cases can be filed in a state commission ?
Answer:
A complaint can be made to the appropriate state commission when the value of the goods and services, along with compensation claim exceed 20 lakes but does not exceed 1 crore. The appeals against the orders of a district form can also be filed before the state
commission.

Question 9.
Explain the ways of consumer protection.
Answer:
The consumer protect act has provided three tier judicial machinery for redressing the grievances of consumers.


Question 10.
What is consumer education ? What is the need of consumer education ?
Answer:
It is considered that the consumer is the king of the market. But in the present day consumers are exploited by producers and sellers. They create an illusion in the minds of the consumers through advertisement, publicity and propaganda, so protect the interest of the consumers, consumer education or consumerism has become the need of the hour. Consumerism is an organised social and environmental force which aims at protecting the interest of consumers at large by organizing, writing and awakening the consumers.
Need of consumer educations : The main objectives of consumer education are as under:

1. Awareness about the quality of the product
2. Protection of consumers
3. Information about prices
4. Restriction on exploitation of consumers
5. Awareness of rights
6. Development of consumer organisation
7. Ability to buy appropriate goods
8. Abstaining from buying harmful products
9. To get compensation in case of cheating by sellers
10. To make complaint about the grievances.

Question 11.
What are the salient features of Consumer Protection Act 1986 ?
Answer:
It is the duty of the government to ensure protection to consumers of the country. The government of India has passed various acts for protecting consumer’s interest. The consumer protection act 1986 is one of the most important acts. The salient features of this act are :

1. This act covers all goods and services. It is a comprehensive act.
2. This act does not nullify the provisions of other acts passed for consumer’s protection. It is complementary to all those acts which have been passed in the past.
3. This act provides for establishing consumer forums, at central as well as state level. The main motto of such forums is to

protect consumer’s interest and extend consumer’s right.

Question 12.
How can you say that the scope of consumer protection in wide ?
Answer:
Following points are in support of the answer :

1. It gives information to the consumer’s right and responsibility.
2. It assist consumers to remove their complaint.
3. It provides legal protection to the consumer.
4. It is applicable to all the goods and services.
5. In it all the private and public organisations are

Question 13.
What are the responsibilities of a consumers ?
Answer:
A consumer must be aware about these responsibilities while purchasing, using and consuming goods and services.

1. Consumer must be aware of all their rights.
2. Consumer must be careful while purchasing a product.
3. He should file complaint for the redressal of genuine grievance.
4. Consumer must buy a standardized goods.
5. He should ask for a cash memo on purchase of goods and services.

Question 14.
Explain the responsibilities of business towards consumers.
Answer:
The responsibilities of business toward consumers are as follows :

1. The sell product at reasonable prices
2. To sell quality products
3. To settle complaints of consumers
4. To sell products of high standard and certified by Indian Standards Institute
5. Not to be misleading advertisements
6. Proper packaging of products
7. To collect information about needs, interest, etc. of consumers
8. To provide after sales services.

Question 15.
Write the characteristics of district forum.
Answer:
District Consumer Forum:

1. Establishment: According to consumer protection act, state government can set up one or more district fortifier in each district.

2. Composition: It consists of a president and two other members one of which must be a woman.

3. Term : Every member shall hold office for a term of 5 years or up to the age of 65 years, whichever is earlier and shall not be eligible for reappointment.

4. Jurisdiction : It has jurisdiction to entertain complaints where the value of goods and services and compensation does not exceed Rs. 20 lakhs.

Question 16.
What precautions should be taken by consumer while purchasing goods ?
Answer:
Consumers should keep in mind few things while purchasing products. They are as follows:

1. Consumer should be cautious : Consumer should be cautious while purchasing products. He should insist on getting informations like quantity, quality, price of product, etc.

2. Consumer should exercise his rights : Consumer must be aware of all his rights and must use those rights while purchasing the products and services from sellers.

3. Filing complaint for redressal : Consumers should make the complaints to the authority for genuine grievances. The consumer should be prepared to take action to enforce fair and just demands.

4. Consumer must be aware of misleading advertisements : Through advertisements the seller provides various information about product to consumer, consumers should not believe on these advertisements. He should compare the actual product usage with advertisement. If there is anything false than it should be reported to concerned authorities.

5. Consumer should not compromise on quality : He should never compromise on quality. Whenever he is purchasing products he should look for quality marks on products like ISI, Agmark, Woolmark, FPO, etc., printed on them.

Question 17.
What do you mean by standardization of products ?
Answer:
Standardization of products : These are done to assure the quality of products. The ISI stamp on goods is placed by the Bureau of Indian standards. This caters to industrial and consumer goods. These goods can be trusted to confirm to specific standards. Agmark is meant for agricultural products.

At the international level the international organization for standardization (ISO) located in Geneva sets common standards. The FAO and WHO provide food standards.

Question 18.
What do you mean by legislation concerning consumer rights ?
Answer;
Legislation concerning consumer rights : The consumer protection act 1986 provides for consumer disputes redressal at the state and national level. With the help of this law the agencies can solve grievances in a speedy, simple and inexpensive manner. A separate department of consumer affairs was set up at the state and central government. A three tier system of consumer courts at the National, State and District levels were set up. These agencies have done good work by handling lakhs of cases.

Question 19.
What do you mean by unfair trade practice ? Give some example of it.
Answer:
In unfair means of trade practice a trader adopt the defective and harmful methods to earn profit.
Example :

1. To provide wrong information about the product.
2. Not to follow the fixed standards.
3. Black marketing hording.
4. Sell products on high rate.

Question 20.
What do you mean by indian standard beauro Write any two activites of it
Answer:
It was established in 1986.
Major activities :

1. To establish quality of goods and services
2. To standardize goods under VIS standardization.

Question 21.
What do you mean by Malpractices ?
In order to earn more and more profites the seller perform more profites practices like selling defective and substandard goods, charging exhorbitant prices, negligence as to the safety standard etc. Thus, to protect consumers from these business malpractices consumer protection is essential.

Question 22.
What do you mean by Moral jurisdiction ?
Answer :
Moral Justification: It is the moral duty and responsibility of business to protect the consumers. The sellers should not perform activities like adulteration, black marketing, hoarding, profiteering, etc. By doing so they can discharge their moral responsibility.

Question 23.
Explain the importance of consumer protection from the point of view of business.
Answer:
A business can not survive without paying attention on protection the consumers interest and adequately satisfying them. This is important because of the following reasons:

1. Long term interest of business : Business firms should aim at long term profit maximisation through customer satisfaction, Satisfied customers not only lead to repeat sales but also provide good feedback to prospective customers and thus help in increasing the customer base of business.

2. Business uses Society’s Resources : Business organization uses resources which belong to the society, thus they have .a responsibility to supply such products and render such services which are in public interest.

3. Social responsibility : A business has social responsibility towards various interest groups. Business organizations make money by selling goods and providing services to consumers. Thus, consumers form an important group among the many stakeholders of business and like other stakeholders, their interest has to be well taken care of.

4. Moral justification : The moral duty of any business is to take care of consumer’s interest and securing them from exploitation. Thus, a business must avoid insecure loss, exploitation and unfair trade practices like defective and unsafe products, adulteration, false and misleading advertising hoarding, black marketing etc.

5. Government intervention : A business engaging in any form of exploration time trade practices would invite government intervention or action. Thus, it is advisable that business organization voluntarily resort to such practices, where the customers need and interests will be taken care of.

Question 24.
“Though laws and acts are there still consumers are exploited.” Why ?
Or
”Why there is need of consumer protection ? Write any four causes.
Answer:
The importance of consumer protection are as follows :

1. Consumer’s Ignorance: Today every person is limited to his own work and services and is not interested in other informations that’s why consumer is ignorant about the products which he consumes. Thus, due to this ignorance they are exploited by the sellers and became a poppet. So it becomes necessary that they should be educated about their rights.

2. Social Responsibility : Every person whether he is a trader or an officer first of all is the member of society. As a member of society he is having some responsibilities and duties but every person runs away from responsibilities and works for earning more profits by any means. Thus, consumer protection is necessary to make them aware of their social responsibility.

3. Unorganised Consumers: In India generally the consumers are unorganised because they belong to different castes, religions and sections of society. Due to lack of unity and organization among consumers the sellers make advantage of it. Thus, consumer protection is necessary to make the consumers organised.

4. Settlement of Consumers Disputes : Due to the continuous exploitation of consumers by the sellers they files the complaints to the concerned departments or forums.

These disputes should be settled speedily so that consumers should have faith on law and order. In order to solve the disputes of consumers various acts specially consumer protection act has been enacted.

5. Makes Consumer Aware: Due to continuous exploitation of consumers, consumer protection act 1986 was passed. Thus, consumer have been granted some rights according to the provisions of this act, consumer protection is necessary to make consumers aware about these rights.

Consumer Protection Long Answer Type Questions

Question 1.
Explain in brief any four responsibilities of consumer to safeguard their intrest.
Answer:
The six responsibilites of consumer to safeguard their interest are as follows :

1. To exercise his right properly : Every customer should be well aware of his rights. The consumer who knows these right properly should also make other consumer aware of these rights who are either less informed or ill informed.

2. Taking precautions : Taking proper precaution without taking shelter of legal action is also a responsibility of consumer. It is also a way of protection.

3. Filling complaint for redressal: The consumer should invariably file complaint to the appropriate authority for redressal of genious grievances. He should raise his voice and protest against all sorts of exploitation by trade and industry.

4. Quality and quantity consciousness : The consumer should always make it a point to buy such product which have always quality certification such as ISI, FPO, ISO etc.

5. Escaping misleading advertisement : The consumer should see that he is not tempted by ingenious and misleading advertisement with overstated claim of product and services.

6. Taking cash memo : In case goods are purchase in cash, the consumer should compel the dealer to give cash memo and if goods are purchased on credit basis their bill of purchase must be demanded.

Question 2.
What are various ways in which the objective of consumer protection can be achieved ? Explain the role of consumer organizations and NGOs in this regard ?
Answer:
There are various ways in which the objective of consumer protection can be achieved:

(i) Self regulation by business : Socially responsible firms follow ethical standards and practices in dealing with their customers. Many firms have set up their customer service and grievance cells to redress the problems and grievance of their consumers.

(ii) Business associations : The associations of trade, commerce and business like federation of India Chambers of Commerce of India (FICCI) and conference of Indian Industries (CII) have laid their code of conduct which lays down for their members the guidelines in their dealing with the customers.

(iii) Consumer awareness : A consumer, who is well informed about his rights and the reliefs, would be in a position to raise his voice against any unfair trade practices or exploitation:

(iv) Consumer Organization : Consumer originations plays an important protecting role in educating consumers about their rights and them. These organizations can force business firms to avoid malpractices and exploitation of consumers.

(v) Government: The government can protect the interests of the consumers by enacting various legislations. The legal framework in India encompasses various legislation which provide protection to consumer, the most important of these regulations is the Consumer Protection Act, 1986. The Act provided for a three-tier machinery at the District, State and National levels for redressal of consumer grievance.

Question 3.
Explain the role of consumer organizations and NGO in protecting and promoting consumer’s interest.
Answer:
Consumer organization and NGOs perform several functions for the protection and promotion of interest of consumers. In India, these associations are performing lots of functions some of them are :

1. Education the general public about consumer rights by organizing training programmers, seminars and workshops.
2. Publishing periodicals and other publications to impart knowledge about consumer problems, legal reporting, reliefs available and other matters of interest.
3. Carrying out comparative testing of consumer products in accredited laboratories to test relative qualities of competing brands of publishing the test results for the benefit of consumers.
4. Encouraging consumers to strongly protest and take an action against unscrupulous, exploitation and unfair trade practices of sellers.
5. Providing legal assistance to consumers by providing aid, legal advice etc. in seeking legal remedy.
6. Filling complaints in appropriate consumers courts on behalf of the consumers.
7. Taking an initiative in filling cases in consumers court in the interest of the general public, not for any individual.

Question 4.
What are the rights of consumer in India ?
Answer:
Following are the rights of the consumer under the act of 1986 :

(1) Right to Safety : The consumer has a right to be protected against goods and services which are hazardous to life, e.g., sometimes we purchased the food items of low quality which causes severe problems. Thus, in this case, we should purchased good quality and FPO labelled products.

(2) Right to be informed : The consumer has a right to have complete information about the product, which he intends to buy including its ingredients, date of manufacture, price, quantity, directions for use etc. Under the legal framework of India manufactures have to provide such information on the package and label of the product.

(3) Right to Choose : The consumer has the freedom to choose from a variety of products. The marketers should offer a wide variety of products and allow the consumer to make a choice and choose the product which is most suitable.

(4) Right to be Heard : The consumer has a right to file a complaint and to be heard in case of dissatisfaction with a good or a service. It is because of this reason that many enlightened business firms have set up their own consumer service and grievance cells.

(5) Right to Seek Redressal: The consumer Protection Act provides a number product, of reliefs to the removal of defect consumer including replacement of the in the product, compensation paid for any loss or injury suffered by the consumer etc.

(6) Right to Consumer Education : The consumer has a right to acquire knowledge about products. He should be aware about his rights and the reliefs available to him in case of a product service falling short of his expectations many consumer organisation and some enlightened businesses are taking an active part in educating consumers in this respect.

Question 5.
Enumerate the various Acts passed by the Government of India which help in protecting the consumer’s interest ?
Answer:
The Indian legal framework consists of a number of regulations which provide protection to consumers. Some of these regulations are as under:

(1) The Consumer Protection Act, 1986 : The Act provides safeguard to consumers against defective goods, deficient services, unfair trade practices etc.

(2) The Contract Act, 1982 : The Act lays down the conditions in which the promises made by parties to a contract will be binding on each other.

(3) The Sale of Goods Act, 1930 : The Act provides some safeguards and reliefs to the buyers of the goods in case, the goods purchased do not comply with express or implied conditions or warranties.

(4) Essential Commodities Act, 1955 : The Act alms at controlling, production, supply, distribution and price of essential commodities.

(5) The Agricultural produce Act, 1937 : The Act prescribes grade standards for agricultural commodities and livestock products.

(6) The Prevention of Food Adulteration Act, 1954 : The Act aims to check adulteration of foods articles and ensure their purity, so as to maintain public health.

(7) The Standards of Weights and Measures act, 1976 : It provides protection to consumers against the malpractice of under-weight or under-measure.

(8) The Trade Marks Act, 1999 : The Act prevents the use of fraudulent marks on products and thus provides protection to the consumers against such products.

(9) The Competition Act, 2002 : The Act provides protection to the consumers in case 01 practices adopted by business firms which hamper competition in the market.

(10) The Bureau of Indian Standard Act, 1986 : The bureau has two major activities : Formulation of quality standards for goods and their certification through the BIS certification scheme. The bureau has also set up a grievance cell, where consumers can make a complaint about quality of products carrying the ISI mark.

Question 6.
Explain the redressal mechanism available to consumers under the Consumer Protection Act 1986.
Answer:
For the redressal of consumer grievances, the Consumer Protection Act provides for setting up of a three-tier enforcement machinery at the District, State and the National levels.

(i) District Forum: A complaint can be made to the appropriate District Forum when the value of goods or services, along with the compensation claimed, does not exceed 20 lakhs. In case the aggrieved party is not satisfied with the order of the District Forum, he can appeal before the State Commission within 30 days.

(ii) State Commission : A complaint can be made to the appropriate State Commission when the value of the goods or services, along with the compensation claimed, exceeds 20 lakhs but does not exceed 1 crore. The appeals against the orders of District Forum can also be filed before the State Commission. In case the party is not satisfied with the order of the State Commission, he can appeal before the National Commission within 30 days of the passing of the order by State Commission.

(iii) National Commission : A complaint can be made to the National Commission when the value of the goods or services, along with the compensation claimed exceeds 1 crore. The appeals against the orders of a State Commission can also be filed before the National Commission. An order passed by the National Commission in a matter of its original justification is appealable before the supreme court. This means that only those appeals, where the value of goods + services in question, along with the compensation claimed, exceeded I crore and where the aggrieved party was not satisfied with the order of the National Commission, can be taken to the Supreme Court of India.

What are the responsibilities of a consumer ?
Answer:
A consumer should keep in mind the following responsibilities while purchasing, using and consuming goods and services :

1. (1) Be aware about various goods and services available in the market, so that an intelligent and wise choice can be made.
2. (2) Buy only standardised goods as they provide quality assurance. Thus, look for ISI mark on electrical goods. FPO mark on food products and Hallmark on jewellary etc.
3. (3) Learn about the risks associated with products and services.
4. (4) Read labels carefully, so as to have information about prices, weight, manufacturing and expiry dates etc.
5. (5) Assert yourself to get a fair deal.
6. (6) Be honest in your dealings. Choose only from legal goods and services.
7. (7) Ask for a cash-memo on purchase of goods and services. This would serve as a proof of the purchase made.
8. (8) File a complaint in an appropriate consumer forum in case of a shortcoming in the quality of goods purchased or services availed.
9. (9) Form consumer societies which would play an active part in educating consumers and safeguarding their interests.
10. (10) Respect the environment, avoid waste, littering and contributing to pollution.

Question 8.
Explain how the complaint shall be made to the district forum ?
Answer:
Manner in which complaint shall be to made to the district forum : A complaint in relation to any goods sold or delivered or against services should be filed by the consumer. It can be filed by any recognized consumer association or by the central or state government.

One copy is send to the opposite party, directing him to give his version of the case within a period of 30 days when the opposite party on receipts of the complaint referred to him, denies the allegations contained in the complaint or fails to take any action. He represents his case within the time given by the district forum, the district forum shall proceed to settle the consumers dispute.

After following the procedure, examining the statements of the complaint, the opposite party and witness of both, the district forum passes necessary orders and relief if any. The district forum is authorized to pass order to remove the defect points out to replace the goods with new goods, to pay the compensation.

Any person aggrieved by an order made by the district forum may prefer an appeal against such order to the state commission with the date of 30 days.

Question 9.
Explanation some measures for the protection of consumer by Indian government.
Answer:
Following are the measures taken by Indian government:

(1) Lok Adalat: Lok Adalat are those centers where aggrieved parties can approach directly with their grievances. Lok Adalat give patient hearing discuss the issue and give their decision on spot. It is economical and effective system.

(2) Filling Petition for the Public Welfare : Under it legal actions are taken for the protection of those people who don’t have any representatives. In this disputes poor, environment, minorities, etc. are included.

(3) Eco friendly products : Environment and forest ministry has started Eco mark plans. Under it a big pot of mud is the mark which is used for such products which are eco friendly. In the beginning some goods like soaps, detergents, packaging material, food materials etc. are included in there products. These goods are not harmful for environment.

(4) Consumer protection council: Under the consumers act 1986 one legal mechanism was formed on 3 tier level under it all the exploitations of consumers are settled. State governments established consumer protection councils for the settlement of disputes.

(5) Giving award for fighting against consumer exploitation : For the encouragement of youths, some awards are given to those who fight against consumer exploitation.

(6) Publicity measures : 15th March is celebrated as world consumer day. In 1955 in New Delhi a function was held in which publicity measures were taken. On television every week programmed are organized. Short films are also made in favor of it.

MP Board Class 12 Business Studies Important Questions

MP Board Class 12th Business Studies Important Questions Chapter 7 Directing

Directing Important Questions

Directing Objective type Questions

Question 1.
Choose the correct answer :
Question 1.
Out of the following which is not a part of direction :
(a) Motivation
(b) Communication
(c) Supervision
(d) Delegation
Answer:
(d) Delegation

Question 2.
Principle of motivation which was sequenced as per necessity, was formulated by :
(a) Ford Louis
(b) Scott
(c) Abraham Maslow
(d) Peter F Drucker.
Answer:
(d) Peter F Drucker.

Question 3.
Out of the following which is monetary motivation :
(a) Promotion
(b) Stock encouragement/incentives
(c) Post/security job
(d) Employee share/co-partnership.
Answer:
(d) Employee share/co-partnership.

Question 4.
Grapevine is :
(a) Formal communication
(b) Barrier/obstacle in communication
(c) Lateral communication
(d) Informal communication.
Answer:
(d) Informal communication.

Question 5.
The software company established by Narayan murthy :
(a) Infosys
(b) Wipro
(c) Satyam
(d) HCL.
Answer:
(a) Infosys

Question 6.
On the path of leadership, specify the handles faced by a leader :
(a) Mistakable behaviour leader
(b) Leader who is unaware of human tendency
(c) Unforeseeable leader
(d) All the above.
Answer:
(d) All the above.

Question 7.
Direction starts from :
(a) Top level
(b) Middle level
(c) Lower level
(d) All the levels
Answer:
(a) Top level

Question 8.
Communication means:
(a) Distribution of work
(b) To formulate information each other
(c) Control of work
(d) To motivate the employee
Answer:
(b) To formulate information each other

Question 9.
When a message is converted into a format it is known as :
(a) Medium
(b) Feed back
(c) encoding
(d) De coding
Answer:
(d) De coding

10. Out of the following, which is not a monetary motivation :
(a) To stop/with hold increase in salary
(b) Increase in salary
(c) Bonus
(d) All the above.
Answer:
(a) To stop/with hold increase in salary

Question 2.
Fill in the blanks :

1. Direction is the function of …………….
2. Direction flows from top……………. to……………. level of management.
3. …………….refers to instructing, guiding, communicating and inspiring people in the organization to achieve the desired goal.
4. Deduction in salary of employee is motivation.
5. The act of stimulating someone to set a desired course of action is known as …………….
6. Supervisor works as a link between……………. and …………….
7. Written communication is more …………….
8. Verbal communication is exchange of words mode through …………….
9. Monetary motivation gives …………….to the employees on the achievement of goals.
10. In negative motivation employees are……………. if the task is not accomplished with in the given time.
11. Motivation is …………….

Answer:

1. Management
2. Top, bottom
3. Direction
4. Negative
5. Motivation
6. Management ,worker
7. Reliable
8. Conversation
9. Rewarded
10. Punished
11. Internal peace.

Question 3.
Write the answer in one word/sentence :

1. Which method of communication is suitable in case of emergency ?
2. What is the name of informal communication ?
3. Which type of communication spreads rumours and creates misunderstanding ?
4. What do you mean by economic security ?
5. What is the ability to influence subordinate called ?
6. What are the main elements of direction ? ,
7. How do manager start the work in organization ?
8. Fill the left reasons :
   Direction = Supervision +……………. + Leadership + Motivation.
9.  Direction has three elements, supervision, leadership and motivation, which is the fourth element ?
10. Give four examples of incentives.
11. What does post means in organization in reference to management ?
12. Who is a leader ?
13. Write one example of non-monetary motivation.
14. Which function of management in called functional management ?
15. On what the desire to do some specific work by a person depend ?
16. What is profit sharing ?
17. Food, clothing and housing are of what type of wants ?
18. Write one advantage of informal communication.

Answer:

1. Informal communication
2. Grapevine network
3. Informal type of communication
4. By economic security we mean to secure the employment and to make arrangement for old age
5. Leadership ability
6. The main elements of direction are as follows :
   1. Leadership
   2. Motivation
   3. Supervision
   4. Communication
   5. Co-ordination
   6. Training
   7. Command
7. Manager starts the work by direction
8. Direction = Supervision + Communication + Leadership + Motivation
9. Communication is the fourth element
10. Facility of servant, Education of children, Car,  Free housing
11. In organization post means position or place of a person in organization
12. A leader is a person responsible to ensure that all the followers develop positive attitude, posses required skills and knowledge to perform effectively and with harmony
13. Promotion
14. Direction
15. On motivation
16. Profit sharing is a type of incentive where company decides that if it earns profit over and above a fixed percentage then the excess profit earned will be shared among employees
17. Economic wants
18. By informal communication workers get psychological satisfaction.

Question 4.
Write true or false :

1. Direction is needed at all levels of management.
2. Supervision, leadership, motivation a communication are important elements of direction.
3. Direction and supervision is synonyms.
4. The motivation theory which classifies needs in hierarchical order is developed by Abraham Maslow.
5. Leadership is required for only less salary workers.
6. Written communication requires direct contact between both parties.
7. If employees are efficient, then training is not required.
8. Leader uses informal means to show his influence.
9. By communication we mean exchange of ideas.
10.  All managers are leaders.

Answer:

1. True
2. True
3. False
4. True
5. False
6. False
7. False
8. False
9. True
10. True.

Question 5.
Match the columns :

Answer:
1. (g)
2. (a)
3. (b)
4. (c)
5. (d)
6. (e)
7. (f)

Directing Very Short Answer Type Questions

Question 1.
What is the function of management known ? Which directs the organization, provides guidance, suggestions and motivations
Answer:
Direction.

Question 2.
Name two principles of direction.
Answer:

1. Unity of command
2. Leadership.

Question 3.
Which element of direction means observing the subordinates at work to ensure that they are working according to the schedules and plans and to help them in solving problems related to work ?
Answer:
Supervision.

Question 4.
How is sound important during the process of communication ? Give example.
Answer:

1. Loud voice
2. Problem in internet connection
3. Disturbance in telephone connection.

Question 5.
Give an example of psychological constraint.
Answer:
Lack of concentration.

Question 6.
Which are positive motivations ?
Answer:
Salary or wages incrementalist, recognition, reward, pension, leave salary etc.

Question 7.
Which are negative motivations ?
Answer:
Threat, punishment.

Question 8.
What is lateral informal communication also known as ?
Answer:
Grapevine communication.

Question 9.
Salary, allowances and bonus are what type of motivation ?
Answer:
Financial motivation.

Question 10.
Which communication spreads rumours and develops misunderstanding ?
Answer:
Informal communication.

Question 11.
What is the aim of direction ?
Answer:
Execution.

Question 12.
How does the management stats/begins its work in an organization ?
Answer:
A management formulates guidelines and directions to begin a work in an organization.

Question 13.
How does motivation work as an inspiration to do a task ?
Answer:
Motivation enhances the level of ability of employees and inspires them to achieve the goal. ‘

Question 14.
Among whom does the leadership shows the relationship ?
Or
The leadership shows the relationship among whom ?
Answer:
The leadership shows the relationship between the leader and followers.

Question 15.
What is the principle of follow up ?
Answer:
The principle of follow up states that the management must supervise its employees to check whether their employees are following the directions given to them.

Question 16.
What are dependency elements to find the status of an employee in the organization ?
Answer:

1. Rights of the individual
2. Responsibility
3. Other benefits.

Question 17.
When does motivation start ?
Answer:
Motivation starts when his desires or wants are unsatisfied because motivation is a psychological element.

Question 18.
When does tension start ?
Answer:
Tension starts when our wants are not satisfied.

Question 19.
When is a person tension free ?
Answer:
A person is tension free when all his needs are satisfied.

Question 20.
“Direction starts function of management”. Explain.
Answer:
Direction starts functioning because it prepares base for other functions of man-agement.

Question 21.
How many elements of direction are there ?
Answer:
There are four elements of direction :

(a) Supervision
(b) Motivation
(c) Leadership
(d) Communication.

Question 22
What is a motive ?
Answer:
Motive literally means stimulating a person for willingness to work.

Question 23.
What is motivation ?
Answer:
Motivation means to provide someone with a motive. It is a complex force inspiring a person to work, to use his capacities willingly for achieving certain objectives. It is a process of arousing action, sustaining the activity in progress and regulating the pattern of activity.

Question 24.
What is motivator ?
Answer:
It is a technique to motivate people in an organization.

Question 25.
How many types of motivators are there ?
Answer:
Motivators are of two types :
(a) Positive
(b) Negative.

Question 26.
In what type of communication rumours are there ?
Answer:
In informal communication rumours are found.

Question 27.
What do you mean by coaching leadership ?
Answer:
Coaching leadership involves teaching and supervising followers.

Question 28.
How many types of communications are there ?
Answer:
There are three types of communication :
(a) Verbal communication
(b) Written communication
(c) Formal communication.

Question 29.
What do you mean by verbal communication ?
Answer:
Verbal communication is that communication in which exchange of words is made through spoken words.

Question 30.
Why a good leader should have the quality of initativeness ?
Answer:
To take opportunity of having profit.

Question 31.
Food, housing and clothings are what type of wants ?
Answer:
Physical wants.

Question 32.
Love, affection and friendship are what type of wants ?
Answer:
Social wants.

Directing Short Answer Type Questions

Question 1.
What is direction ? Write definition
Answer:

After planning, organizing and staffing, for the achievement of managerial objectives directing is one of the most important factor, without proper direction the other functions of management are not having any importance. Through direction only the work of planning, organizing and motivation work can be completed. Directing provides movement to the organization.

Meaning of direction : The word direction literally means moving into action i.e., activating human resources towards attaining the objectives of the business of the business. Direction is the answer to the questions like how the work should begin ? or how the employees should be led ? Direction is the practical aspect of management involving motivation, supervision, communication and effective leadership of human resources.

Definitions : Some eminent scholars had given the following definitions :
According to Kooatg and O’Donnel : “Direction is a complex function that includes all those activities, which are designed to encourage a subordinate”.

Question 2.
Is direction important function of management do you agree give your points in case of difference in opinion.
Answer:
No, I don’t agree. According to me, Direction is the most important function of management because

1. Starts the task
2. Way of communication
3. Creates balance in the organization
4. Assimilates the efforts of the employees.

Question 3.
Distinguish between leader and manager.
Answer:
Differences between Leader and Manager:

Question 4.
Write any four functions of direction.
Answer:
Following are the functions of direction :

1. Order: The main function of direction is to give orders to his subordinates.

2. Supervision: The supervisor observes the subordinates at work to ensure that they are working according to schedules and plans.

3. Guidance and training : Guidance and training subordinates is essential. This is done by direction process.

4. Co-ordination : The another function of direction is to maintain co-ordination among the various workers of organization.

Question 5.
Distinguish between Leader and Boss.
Answer:
Differences between Leader and Boss :

Leader

1. High level leaders are present to control leaders.
2. Leader always uses the word ‘we’ in his organization.
3. Social responsibility is having an important place in leadership.
4. Leader guide their followers through motivation.
5. Leaders cannot make their followers work through fear or negative motivation.
6. There is no place for punishment of followers in leadership.
7. Suggestions or opinions are invited from followers if necessary in leadership and it is also accepted by the leaders.

Boss

1. No one is above the boss in an enterprise.
2. Boss always uses the word ‘I’ in his organization.
3. There is no place for social responsibility in bossism.
4. It guide their subordinates and employees through orders.
5. It make their subordinates work through fear and negative motivation.
6. For the errors committed by the subordinates there is provision of punishment in bossism.
7. Suggestions or opinions are generally not invited from subordinates and the decision is taken by the management.

Question 6.
Explain the Importance/Elements of direction.
Answer:
Direction is one of the important function of management. On the basis of elements oi direction it is also called as operating management. The elements of direction are as follows:

1. Leadership : Leadership may be defined as the process of influencing the behaviour of other members of the group to attain the objectives of enterprise. Leadership is the ability of the manager to induce subordinates to work with confidence and zeal. According to Tead, “Leadership is that combination of qualities by the possession of which one is able to something done by others, chiefly because through this influence they become willing to do so. “In this way the qualities of leadership is also found in direction.

2. Motivation : Motivation is a Latin word, meaning to move. Human motives are internalized goals within individuals. Motivation is the process of creating organizational conditions which will compel employees to strive to attain company’s goals.
Although motivation has been defined by different persons in different ways, they all have the same meaning. All these management experts have said to arouse dedication towards work, desire, interest etc.

3. Supervision: Supervision means observing the subordinates at work to ensure that they are working according to the schedules and plans and to help them in solving problem related with work. Supervision is a work of higher ability and knowledge. Supervisors provides necessary guidelines to the subordinates for the effective completion of work. Thus, supervision is an element of direction.

4. Communication : Although communication is the secondary function of management, its importance cannot be undermined. That is why some management experts have put it in the primary function of management. Communication is an exchange of facts, ideas, opinions or emotions by two or more persons. Coordination also consists of the qualities of direction.

5. Coordination : Due to the effect of modem contrast views and will to work freely, coordination has been an important task of management. It is called as mutual understanding also. Coordination aims at an orderly arrangement of group effect for the achievement of desired ends. Coordination also consists of some elements of direction.

6. Training : Training is the base of healthy management. Training is a process by which effort is mode to increase the knowledge and skill of employees for the accomplishment of a specific job. It imparts the practical knowledge of work which is given by high level officials. Proper guidelines are given by high official to trainee in process of training. Thus training also consists of some qualities of direction.

7. Command : For the completion of work order or command is given by superiors to subordinates. The subordinates complete the work according to the command given by superiors. Thus, command is also a kind of direction.

Question 7.
How many types of motivations are there ?
Answer:
There may be two broad categories of motivation. They are positive motivation or reinforcement or negative motivation.

1. Positive motivation : It is the process of attempting to influence others to do your will. They may be further subdivided into two category. These are :

1. Monetary and
2. Non-monetary motivation.

a. Monetary : When finance is directly related to motivation, is known as monetary motivation. Thus, motivation in the form of money is monetary motivation. Example of monetary motivation are bonus, extra allowance, a share in profits, increase in wages etc.

b. Non-monetary motivation : When a person is satisfied in any other way a part from money then it is called non-monetary motivation. Non-monetary motivation is not at all connected with money. Non-monetary motivation are the psychic rewards or the rewards of enhanced position that can be secured in the work organization,

2. Negative motivation : Negative motivation is a motivation that prohibits a person from doing some act which may be detrimental to the organization.
Example of negative motivation are :

1. Deducting salary
2. Suspension
3. Issue of show cause notices
4. Rebukes, monetary penalization
5. Penal transfer and so on.

Question 8.
Write the functions of a supervisor
Answer:
Functions of a supervisor is as follows :

1. Supervise the work: Supervisor is a major branch whose main work is to organised, direct and supervise the work.
2. Co-ordination : It is another important work of the supervisor to make bring and maintain co-ordination in the branch.
3. To achieve the goal: Directors set the goal for the branch and it is the job of the supervisor to work accordingly and achieve the goal.
4. Maintain departmental accounts: Supervisor has to maintain records of expenses,incomes of the department, expenses made on the employees etc.

Question 9.
Explain the elements of communication process. :.
Answer:
The element of communication process are :

1. Sender: Individual who conveys information sender is a source of communication.
2. Message : It is the content of information intended to be communicated.
3. Encoding : It is the process of converting the message into communication.
4. Media: It is the path through which encoded message is transmitted to the receiver.
5. Decoding : it is the process of converting encoded symbols of the sender.
6. Receiver : The person who receives communication message of the sender.
7. Feedback : Information given by receiver to indicate his understanding of the information.
8. Noise: It is the hindrance or obstruction to communication. It may be the sender, receiver or the message itself.

Question.10
“Motivation is the act of stimulating someone”. Explain.
Answer:
Motivation is something that motivates a person into action and continue him in the course of action willingly to get the results expected of him. It refers to the way in which desires and aspirations direct, control or explain the behaviour of human beings. It also refers to carrying out the task properly and with loyalty to the group that has accepted the task.

The success of management depends on efficiency. In turn, the efficiency of employees depends upon their professional capability and desire to work. In the absence of desire to work, the professional capabilities will not be tapped to its fullest potential. So it is said that motivation is the act of stimulating someone.

Question 11
Explain the importance of supervision.
Answer:
The importance of supervision can be justified from the following points :
1. Supervision is a motive power : Effective direction and supervision motivates the employees to work hard for the enterprise. Without motive power the work cannot be accomplished within the time limit. Thus for the completion of work in time direction plays an important role.
2. To maintain discipline : If proper discipline is not maintained in the organization than enterprise cannot prosper. Since production is a team work therefore disciplined efforts of all the individuals under the command of supervisor is necessary.
3. Improves communication : A situate of quarrel or dispute arises in an organization due to lack of communication “but through supervision directions are given by top level management and in return feedback is given by employees. So supervision improves communication in an organisation.
4. Better utilization of resources : The available resources of organisation like mate-rial, machinery, employees are properly utilized under supervision. All these resources are monitored closely by the supervisors which helps in completion of effective work within the time limit.
5. Feedback : Supervision maintains contact with his subordinates. This helps in receiving the suggestions, ideas, complaints etc. of employees. It facilitates the process of
reviving feed back and helps to take many

Question 12.
Distinguish between : Monetary motivation and Non-monetary motivation. ‘
Answer:
Differences between Monetary and Non-monetary Motivation
Monetary Motivation

1. It is suitable in case of workers.
2. Monetary incentives are measured in terms of money.
3. Monetary motivation includes salary or wages, allowances, bonus, rewards, profit sharing etc.
4. Monetary motivation helps in satisfying lower level needs like food, shelter and clothing.

Non-monetary Motivation

1. 1.It is suitable in case of managers.These incentives cannot be measured in terms of money.
2. 2.Non-monetary motivation includes status, job security, recognition, reward or punishment, responsibility etc.
   Non-monetary motivation helps in satisfying high level needs like love, affection, recognition, status or self system needs like position, fame etc.

Question 13.
Why a leader should have the quality of communication ?
Answer:
A leader should have a quality of communication because of the following reasons:

(1) A leader is a source of information for all the members of his group. Subordinates get the information of their officers through leaders only.

(2) Leader sends the problems of his subordinates to the higher level officers. For this leader should have good communication quality.

(3) To establish friendly relation among the members and the sub ordinate and officers a leader should have quality of communication.

Question 14.
Write the characteristics of leadership.
Answer:
Following are the characteristics of leadership :

1. Existence of followers : The first characteristic of leadership is the existence of followers and followers should accept the leader. If the number of followers will increase than it will also increase the importance of leader.

2. Continuous process : Leadership is not needed on any particular occasion but it is needed all the time. In the day to day business activities effective and continuous leadership is required.

3. Influencing process : Leadership means bringing to under one’s own influence. It is that process through which the people in a group are influenced in such a way that followers automatically start using their ability for the betterment of organization.

4. Develops relationship and Confidence : Leaders develop close relations with the followers. Leader is also required to gain confidence otherwise he will be changing decisions which will be very tough to be followed.

5. Related to particular situation : Leaders always work according to situations because if they are not going to work according to perfect situation, then difficulties will arise.

Question 15.
Explain the terms motive, motivation and motivator.
Answer:

1. Motive : Motive literally means stimulating a person for willingness to work. It is an internal desire which gives strength person to move forward.
2. Motivator : It is a technique which is used to motive people in an organization. For example bonus, promotion, etc.
3. Motivation : Motivation is a psychological phenomenon that inspires a person to perform maximum task and provides maximum satisfaction.

Question 16.
Explain the characteristics of motivation.
Answer:
Following are the characteristics of motivation :

1. Continuous process : Whatever be the motivation, after some times, its effect gradually diminishes. Therefore, in order to maintain a worker’s interest in his job, the process of motivation should be continuous. Motivation is affected by time, place and circumstances. Therefore, these should be kept in mind while motivating.

2. Psychological effect: The famous management expert, McFarland, says, “The concept of motivation is mainly psychological by which the mind is inspired with a fresh idea to do some work”.

3. Motivation is related to human being : Motivation is done by man for man. A company, firm or an organization cannot be motivated. Therefore, motivation is related with human beings. However, even the animals can be motivated.

4. Motivation wholly influences a person : Motivation influences not only a man’s ears, nose, eyes and hands but it affects the whole body of a person and the willingness to work can only be inspired when the whole body of a person is influenced.

5. Important task of management : Motivation is an important function of management by which the human force can be molded in the desired direction. By motivation, the worker is inspired to work which in turn increases his working capacity. For these reasons, motivation has become the important function of management.

6. Motivation is an inspiration : Motivation has a human nature. Inspiration comes from within a man. This inspiration is intrinsic which results in increased working capacity of a man. Thus, motivation is an internal inspiration.

Question 17.
What do you mean by transaction ?
Answer:
Transactional leadership : This is a leadership that maintains or continues the status quo. It is also the leadership that involves an exchange process, whereby followers get immediate, tangible rewards for carrying out the leader’s orders. Transactional leadership can sound rather basic, with its focus on exchange.

Being clear, focusing on expectations, giving feedback are all important leadership skills. According to Boundiess.com, transactional leadership behaviors can included : clarifying what is expected of followers’ performance, explaining how to meet such expectations and allocating rewards that are contingent on meeting objectives.

Question 18.
Write the meaning of facilitative leadership.
Answer:
Facilitative leadership: Facilitative leadership is too dependent on measurements and outcomes-not a skill, although it takes much skill to master. The effectiveness of a group is directly related to the efficacy of its process. If the group is high functioning, the facilitative leader uses a light hand on the process.
On the other hand, if the group is low functioning, the facilitative leader will be more directives in helping the group run its process. An effective facilitative leadership involves monitoring of group dynamics. Offering process suggestions and interventions to help the group stay on track.

Question 19.
Write the features of supervision.
Answer:

1. Supervision is done at all three levels of management.
2. It is the main part of direction function of management.
3. It is a continuous process.
4. It ensures if the work is going on smoothly or not.
5. Its main aim is to utilize the resources properly.

Question 20.
Decribe the importance of leadership in organization.
Answer:
The role of leadership is very important in any organization the importance of leadership is clear from the following facts :

1. A good leader defines and explains the objectives of the group to his followers in order to achieve the targets.

2. A good leader develops the spint of cooperation among his followers. He can easily resolve the internal dispute and differences among the followers.

3. A good leader persuade his followers to accept and carry out the desired changes in the present dynamic environment of the structure and working of an enterprise.

4. A competent leader serves as the proper representative of his followers. He protects the interest of his followers and acts as a spokesman.

Question 21.
Explain the term ‘Motivation’ and ‘Leadership’.
Answer:
Motivation : In motivation, there is a psychological element. This element stimulates the mind of a person for willingness to work in. Motivation is a human element of management and it cannot be used like we make a machine to work by the push of a button. A person works only when his willingness to work is stimulated. Motivation is also called encouragement. The term ‘Motivation’ is derived from the work ‘Motive’ which literally means’ stimulating a person for willingness to work. Different management experts have defined motivation differently. Henri Fayol calls it ‘Command’, Koontz and Donnell ‘Direction’ and Likert calls it ‘Heart of Management’. What is mean by them is to maintain the worker’s interest, devotion and spirit to work ?

Leadership : Leadership is the ability to awaken in order the desire to follow a common objective. Leadership is the quality of behavior of individuals, whereby they guide people or their activities in organizing efforts.

Question 22.
Write the characteristics of formal communication.
Answer:
Following are the characteristics of fonnal communication :

1. Formal communication is generally written.
2. Communication of messages is through scalar chain.
3. While moving from one person to another communication has to pass through a definite channel.
4. The channel of communication in this type’is not established automatically.
5. It is the result of authorities granted and duty assigned by the organization.

Question 23.
Write the characteristics of supervision.
Answer:
Characteristics are as follows :

1. It is a main part of direction.
2. It is an universal process which is done at all levels of management.
3. It is a continuous process which is required all the time.
4. It ensures if the work is done properly or not.

Question 24.
Write the characteristics of informal communication or grapevine network.
Answer:
Characteristics of Informal Communication :

1. It is a direct and verbal communication.
2. It moves in a zig-zag manner like a grapevine.
3. It is the result of mutual relationship among employees.
4. It spreads rumours and creates misunderstanding.
5. It is difficult to trace its source and direction of flow.
6. It is not possible to fix responsibility with respect to informal communication.
7. It may involve work related matters or social matters.

Question 25.
Write the advantages of formal communication.
Answer:
Advantages :

1. It is an orderly and systematic type of communication.
2. This system is less expensive for communicating messages.
3. It can be used as reference in the future.
4. In this system written messages are complete and clear.
5. It is generally written so it helps in resolving disputes.
6. Organization can be controlled effectively through formal communication.

Question 26.
Write the defects of formal communication.
Answer:
Disadvantages:

1. The suggestions and complaints of employees are overlooked by the officers.
2. The process of formal communication is time taking hence message is delayed.
3. Time and money is invested a lot in formal communication.
4. It is not suitable for small enterprises.
5. There is lack of personal contact in formal communication.
6. It overloads higher authorities with work.

Question 27.
What are the defects of informal communication ?
Answer:
Disadvantages:

1. It spreads rumours and develops misunderstanding.
2. There is lack of secrecy in this type of communication.
3. It is not possible to fix the responsibility with respect to informal communication.
4. It is difficult to trace its source and direction of flow.
5. There is no proof for sending information in this communication.
6. It is unreliable and unauthentic type of communication.
7. It is not possible to trace the origin of informal communication.

Question 28.
What are the advantages of informal communication ?
Answer:
Advantages :

1. It travels faster than formal communication because it is not required to follow scalar chain.
2. It is one of the simple, easier and cheap system of communication.
3. Quick feedback is ascertained in this type of communication.
4. This method is suitable in case of emergency.
5. It establishes better human relations.
6. There is more freedom in informal communication which helps the solution of difficult problems.
7. It satisfies the social needs of workers.

Question 29.
Write the types of communication on the basis of media, direction and method.
Answer:

1. communication on the basis of media :

1. Formal
2. Informal.

2. Communication on the basis of direction :

1. Towards low
2. Towards high
3. Parallel
4. Slanting.

3. On the basis of method ,:

1. Oral
2. Written
3. Indicator.

Directing Long Answer Type Questions

Question 1.
Give a detailed account of non-monetary incentives that an organization can adopt in motivating employees.
Answer:
Incentives may be extrinsic, intrinsic, monetary and non-monetary which are given as under:

1. Job security : Job security implies that an employee would continue to work for the organization, enjoying economic and social security through health and welfare programs like providing security against sickness, unemployment, disability, old age and death.

2. Opportunities of promotion: Every person desires to promote his career till he reaches the highest authority level and for this he works with full interest and dedication. So, it is the responsibility of the employer that he should make suitable arrangements for promotional prospects. Efficient, able and experienced employees should be given the benefit of promotion.

3. Reward and punishment : Rewards refer to appreciation or recognition and the efficiency of the worker, whereas punishment serves as a negative motivation. In other words, it prohibits a person from performing undesirable actions.

4. Status : Status refers to the social rank of a person. Management often iris to satisfy egoistic needs by establishing status symbols and distinction in its organization. Individuals try hard to gain this status symbol.

5. Favourable work environment : Both physical and mental environment in the organization should be conducive to good work. In the absence of a good work environment, the worker gets disturbed and is not able to put in his / her best. The management should try to remove the irritants which creep in and spoil the environment.

6. Recognition : Recognition satisfies human need for esteem by others and for self-esteem. This recognition may be shown in the form of praise or a pat on the back of the employees or a recommendation for a pay raise, promotion or assignment of more interesting work.

Question 2.
What are the essential qualities of an effective leader ?
Or
Discuss any four qualities of a good leader.
Answer:
The essential qualities of an effective leader are as follows :

1. Intelligent :This is one of the most important quality of a leader. He should be intelligent enough to find out the problems and suggest the solution. Without intelligence a person cannot become a good leader. An intelligent leader can take perfect decisions for the enterprise.

2. Attractive personality : Leader should have such type of personality so that followers or subordinates should get attracted towards him. His work and behaviour should also attract the followers.

3. Self confidence : An effective or good leader should have strong will power and self confidence to lead the followers. He should be brave to face the difficult and extreme situations.

4. Knowledge of rules and regulations : A good leader should have the complete knowledge of rules and regulations related with work. To perform the work systematically he should have the knowledge of rules and it should be communicated to the followers also

5. Honest: Leader should always work with honesty because if they are not performing the work honestly then it is going to effect their reputation and the followers will not support the leader.

6. Forward looking : A good leader should always be forward looking. He should make the plans after studying the previous plans, future plans are made. He should have the quality of forecasting.

7. Scientific outlook : An efficient leader should have scientific outlook. He should not be superstitious. All the information should be collected regarding a problem and it should solved one by one with patience.

Question 3.
Distinguish between : Formal communication and informal communication.
Answer:
Differences between Formal Communication and Informal Communication

Question 4.
Eplain Maslow’s need hierachy theory of Motivation and its assumptions.
Answer:
Since motivation is highly complex, many researchers have studied about motivation from several dimensions and developed some theories. These theories help to develop understanding about motivation phenomenon. Among these, Maslow’s Need Hierarchy Theory is considered fundamental to understanding of motivation. Let us examine it in detail.
Abraham Maslow, a well-known Psychologist in a classic paper published in 1943, outlined the elements of an overall theory of motivation.

His theory was based on human needs. He felt that within every human being, there exists a hierarchy of five needs. These are:

(i) Basic Physiological Needs : These needs are most basic in the hierarchy and corresponds to primary needs. Hunger, thirst, shelter, sleep and sex are some examples of these needs. In the organisational context, basic salary helps to satisfy these needs.

(ii) Safety/Security Needs: These needs provide security and protection from physical and emotional harm. Examples: job security, stability of income, Pension plans etc.,

(iii) Affiliation/Belonging Needs : These needs refer to affection, sense of belonging , acceptance and friendship.

(iv) Esteem Needs : These include factors such as self-respect, autonomy status, recognition and attention.

(v) Self Actualization Needs : It is the highest level of need in the hierarchy. It refers to the drive to become what one is capable of becoming. These needs include growth, self-fulfillment and achievement of goals.

Maslow’s theory is based on the following assumptions:

1. People’s behaviour is based on their needs. Satisfaction of such needs influences their behaviour.
2. People’s needs are in hierarchical order, starting from basic needs to other higher level needs.
3. A satisfied need can no longer motivate a person; only next higher level need can motivate him.
4. A person moves to the next higher level of the hierarchy only when the lower need is satisfied.

Maslow’s Theory focuses on the needs as the basis for motivation. This theory is widely recognised and appreciated. However, some of his propositions are questioned on his classification of needs and hierarchy of needs. But, despite such criticism, the theory is still relevant because needs, no matter how they are classified, are important to understand the behaviour. It helps managers to realise that need level of employee should be identified to provide motivation to them.

Question 5.
What do you mean by styles of leadership ? How many types are there ?
Answer:
Some leaders cannot work comfortably with a high degree of followers’ participation indecision making. Some employers lack the ability or the desire to assume responsibility. Furthermore, the specific situation helps determine the most effective style of interactions. Sometimes leaders must handle problems that require immediate solutions without consulting followers.

1. Autocratic Leadership: Autocratic leadership style is centered on the boss. In this leadership the leader holds all authority and responsibility. In this leadership, leaders make decisions on their own without consulting subordinates. They reach decisions, communicate them to subordinates and expect prompt implementation. Autocratic work environment does normally have little or no flexibility. In this kind of leadership, guidelines, procedures and policies are all natural additions of an autocratic leader. Statistically, there are very few situations that can actually support autocratic leadership.

2. Decmocratic Leadership : In this leadership style, subordinates are involved in making decisions. Unlike autocratic, this headship is centered on subordinates’ contributions. The democratic leader holds final responsibility, but he or she is known to delegate authority to other people, who determine work projects.
The most unique feature of this leadership is that communication is active upward and downward. With respect to statistics, democratic leadership is one of the most preferred leadership, and it entails the following: fairness, competence, creativity, courage, intelligence and honestly.

3. Laissezfaire Leadership: Laissezfaire leadership gives authority to employees. According azcentral, depaftments or subordinates are allowed to work as they choose with minimal or no interference. According to research, this kind of leadership has been consistently found to be the least satisfying and least effective management style.

4. Strategic Leadership : Strategic leadership is one that involves a leader who is essentially the head of an organization. The strategic leader is not limited to those at the top of the organization. It is geared to a wider audience at all levels who want to create a high performance life, team or organization.
The strategic leader fills the gap between the need for new possibility and the need for practicality by providing a prescriptive set of habits. An effective strategic leadership delivers the goods in terms of what an organization naturally expects from its leadership in times of change. 55% of this leadership normally involves strategic thinking.

5. Transformational Leadership : Unlike other leadership styles, transformational leadership is all about initiating change in organizations, groups, oneself and others.

Transformational leaders motivate others to do more than they originally intended and often even more than they thought possible. They set more challenging expectations and typically achieve higher performance.

Question 6.
Explain the functions of supervisor.
Answer:
For any activity of the organisation, supervisor is responsible. Supervisor per-forms all the basic functions of management like planning, organizing, directing etc. The functions of supervisor is mentioned in American act. The functions are as follows:

1. Planning the work: Supervisor is one of the important officers of an organisation. He is responsible for the work of organisation. He has to chalk out the daily and weekly programme and present it before the higher officials. Supervisors should be effective planners.

2. Organising the section : Supervisor is required to distribute the work of his department and also regroup the identical functions. He has to seek the effective cooperation and coordination of employees. He works for making the foundation of organization strong.
3. Motivation: Motivation is a power which encourages the employees to work hard. Supervisor motivates employees and creates team spirit. Supervisors create interest of employees towards work of enterprise.

4. Training and Instructions : The labours and lower level employees are having direct and close relationship with supervisors. The preliminary work of training is provided by supervisors. Instructions and guidelines are also given time to time by the supervisors.

5. Achieving the targets : The most important duty of the supervisor to achieve the targets of his department. The supervisors uses the best possible resources of the organisation to achieve the organisational goals.

Question 7.
What do you mean by Financial motivation ? Explain the various type of it,
Answer:
Meaning : When a person is motivated to work with monetary methods, it is called monetary motivation. Thus, a person is satisfied with money. This is also called financial motivation. Under this method, the employer spends money on the various satisfaction needs of the employees by keeping in mind their essential needs.
The following methods have been included in monetary motivation which are all positive:

1. Salary or Wages : An employee is motivated to put in more work when he is paid sufficient wages according to the nature and importance of the job assigned.

2. Allowances and Bonus: The employer grants various allowances to workers. Thus, the employees can be provided satisfaction by granting them necessary allowances depending on the place of work and also by sanctioning one or two bonus during a year. Bonus is like a reward which keeps the employees cheerful and happy.

3. Gratuity and Pension: This two benefits are available after completion of service. The employees are fully satisfied and work harder with loyalty when they are notified during the tenure of service about the facility of pension and gratuity. The employees work with complete devotion when their future is thus secured.

4. Premium and Holiday Salary: Premium means share in economies due to increase in production. When the employees is granted free bonus, gifts and earned leave, he is motivated to work even during leave period. When there is a benefit of overtime allowances in addition to this, it has a positive effect on the performance of the employees.

5. Fringe Benefits and Reward : Fringe benefits are facilities provided free by employers in the absence of which the employees have to bear the expenses e.g., house, car, furniture, domestic servants etc. When they get these fringe benefits, the employees are motivated for higher work as they are satisfied with the comforts of life. Similarly, rewards or gifts granted at the time of Holi, Diwali and other festivals, are also added source of satisfaction for the employees,

6. Contribution to Provident Fund : This is a fund involving contributions by both the employer and employees which is deposited in the employee’s account in equal monthly installments. In order to motivate the employee for higher work and satisfy his needs, the employer can increase his contribution the fund.

Question 8.
What do you mean by Negative motivation. Explain some of them.
Answer:

Negative motivations may be both monetary and non-monetary. These have negative nature in human behaviour. These encourage extracting work by fear of force as opposed to welfare of human beings. Such motivations are considered suitable for ‘Management by Force’. There is no place for such negative motivations in today’s efficient and competent management system. However, sometimes it becomes necessary to resort to these motivations also. The negative motivations are :

1. Deduction of Salary : A portion or percentage of salary is deducted by way of monetary punishment when an employees does not work properly or to his full capacity. The employees tries to work efficiently for fear of deduction from salary. This negative monetary motivation.

2. Demotion: To post a worker in lower post downgrading him from his original post is called demotion. Workers try to perform efficiently as they are afraid of demotion. This is a negative monetary motivation.

3. Fear: By scaring employees that they will be drive out of job or complaint will be made against them with the top management or by threatening them with any other bodily harm, management compels employees to work harder. This is a negative monetary motivation.

4. Physical Punishment : This is a negative motivation which is applied on workers in the lower level where only physical labour is done. This is a negative motivation.

5. Removal from Job : Removal from job results in unemployment and therefore, the workers try to work harder and with greater efficiency for fear of unemployment. This motivation is adopted in many small or large industries and this is particularly adopted in case of unsuitable and inefficient workers.

6. Insult: Insult is a big blow to those employees who have high self-pride therefore, such employees always try to work efficiently and to their full capacity. This practice is prevalent in private organizations and is negative in nature.

Question 9.
Write the difference between direction and supervision.
Answer:
Differences between Direction and Supervision
The differences between direction and supervision are as follows

Question 10.
Describe the principles of direction.
Answer:
The principle of direction are as follows :

1. Principle of maximum contribution : According to this principle. The employees should be motivated in such manner that they should give their maximum contribution to the enterprise.

2. Principle of Harmony of objectives: According to this principle there should be harmony among the individual objective of employees and objective of enterprise. Both should work together and should not create hurdles.

3. Principle of unity of command : This principle requires that the employees should receive orders from one superior only for any action or activity. It means workers in a department are required to be accountable to one superior for complying with the orders for performing a job. Multiplicity of command lead to misunderstandings and confusion in the enterprise.

4. Principle of effective communication : According to this principle the hurdles of communication are removed and it is monitored whether sent message is received in the same manner and understood in the same form or not.

5. Principle of Informal organization : Informal organization is used to remove the demerits of formal organization and to creat an environment of free communication. Its aim is to develop an attitude of taking initiative among employees.

6. Principle of leadership : The subordinate should be provided effective leadership by top level executives and through its personality the leader should bring positive (creative) changes in the employees.

Question 11.
Explain briefly the importance of directions.
Answer:
The importance of directing is clear from the following facts :

1. Initiating activities : All the activities of a business enterprise are initiated through directing. The motto of directing is to activate the sub-ordinates to work to achieve the desired goals.

2. Improving efficiency : Motivation and leadership from part of directing which persuade the sub ordinates to work to the best of their ability and contribute maximum to achieve the pre-determined objectives of an enterprise.

3. Facilitating change : The present business environment is subject to frequent charges. An enterprise has to adjust and mould itself according to such changes.

4. Stabilization and Growth : Efficient directing ensures the stability and growth of a business enterprise if can lend it to right direction. Directing helps as making maximum use of ability the efficiency.

Question 12.
Explain importance of supervision.
Answer:
In the older days supervision was not having a lot of importance but nowadays supervision is a must in all the enterprises. The supervision makes the best possible utilisation of physical resources and also directs human effects to desired goals . Supervision exists at every level, location and operation throughout the organization. Top level management supervises the work of middle level while middle level managers supervises the employees. Supervision is the process of checking and comparing the performance of personnel in the organization. The importance of supervision can be justified from the following points :

1. Supervision is a motive power: Effective direction and supervision motivates the
employees to work hard for the enterprise. Without motive power the work cannot be accomplished within the time limit. Thus for the completion of work in time direction plays an important role.

2. To maintain discipline : If proper discipline is not maintained in the organization than enterprise cannot prosper. Since production is a team work therefore disciplined efforts pf all the individuals under the command of supervisor is necessary.

3. Improves communication : A situate of quarrel or dispute arises in an organization due to lack of communication but through supervision directions are given by top level management and in return feedback is given by employees. So supervision improves communication in an organisation.

4. Better utilisation of resources : The available resources of organisation like material, machinery, employees are properly utilized under supervision. All these resources are monitored closely by the supervisors which helps in completion of effective work within the time limit.
5. Feedback : Supervision maintains contact with his subordinates. This helps in receiving the suggestions, ideas, complaints etc. of employees. It facilitates the process of receiving feedback and helps to take managerial decisions.

Question 13.
Write the importance of motivation.
Answer:

1. Development of Human Relations : The thought of establishment of cordial human relations is the keystone of an ideal business enterprise. It will never be easy to achieve the objective in an organization unless cordial relations between management and workers’ groups are established. Human relations can be established by creating an atmosphere of cordial relations between management and labour though motivation. In any organization, it should be accepted that the worker is ‘first human being and then worker’.

2. Achievement of goals within time : The success of any enterprise depends not only in achieving the goals but also achieving them within time. A manager may arrange good quality material and the best machines to produce the product, but the machines and material cannot be properly utilized if the employees working there do not have full dedication and willingness to work. Therefore, motivation is necessary to achieve the goals’

3. Increase in Production : Motivation results in improvement in efficiency as the employees work with increased zeal which in turn results in increased production.

4. Full Utilization of Efficiency: It will not be out of place to agree that “Full utilization of efficiency cannot be achieved without motivation”.

5. For better Organization : To basis of any organization is that it should be better organized. A perfect organization can be established only by satisfying human needs and the basis of human satisfaction is motivation. E.F.L. Breach says, “Organization is the reflection of motivation”.

6. Reduction in Absenteeism : The growing awareness and, for some other reasons, the labour absenteeism etc. is becoming a problem to every organization. The main reason behind absenteeism is monotony. To change this monopoly into zeal and dedication can be achieved only by motivation. Therefore, absenteeism can be prevented by motivation.

Question 14.
What is meant by managerial leadership? Explain briefly the qualities of a good leader.
Answer:
Leadership may be defined as the process by which influence is made on the behaviour and performance of others in group efforts towards the achievement of specific goals in a given situation. The leader influences the followers in such a way that they willingly strive towards the fulfillment of common objectives.

Definitions : “Leadership is the ability of a manager to induce subordinates to work with confidence and zeal. ” —Koontz and O’ Donnell
“Leadership is the activity of influencing people to strive willingly for mutual objectives. ” —George R. Terry
“Leadership in interpersonal influence exercised in a situation and directed through communication process, towards the attainment of a specified goal or goals. ”
Qualities of a Good Leader :

1. Sound Physique : A good leader must have good health and physical fitness. He requires tremendous stamina and vigor for hard work.

2. Intelligence : A leader should be intelligent enough to examine problems in the right perspective. He should have the ability to assess the pros and cons of his actions in a particular situation.

3. Objectivity : A leader should have and objective outlook, free from bias and prejudice. He should form his opinion and judgement on the basis of facts alone. He needs an open mind, is willing to listen to others and adopt new ideas.

4. Flexibility : A leader should be flexible or open minded i.e., he should be ready to absorb new ideas as may be demanded by the situation. He should be prepared to accommodate other view points and alter his decision if need be.

5. Self-Confidence : Self-Confidence is essential to motivate the subordinates and boast up their morale. He should have confidence in himself whenever he takes any decision or initiates any cause of action.

6. Sense of Responsibility : A leader should be prepared to shoulder the responsibility for the consequences of any steps he takes. He should be aware of the duties and obligations associated with the position held by him.

Question 15.
Distinguish between verbal and written communication.
Answer:
Differences between Verbal and Written communication

Question 16.
Write the importance of direction.
Answer:
Following are the importance :

1. Direction initiates action : The employees cannot start their work until they are not informed about what to do ? And how to do ? This work is performed by the manager through direction. Thus, direction initiates action in as organization.

2. Helpful in making plans : One of the elements of direction is communication through which the contact is made between different levels of management. Necessary modifications and changes can be brought in plans with the help of direction.

3. Means of motivation : For the achievement of organizational objectives, direction motivates the employees to contribute to the best of their abilities. Motivated employees work with full dedication and with a full of belonging.

4. Necessary at ail levels of management : Direction is performed at all the three levels of management. Direction is required more at the lower level, less at medium level and lesser at top level of management.

5. Provides stability : Direction brings stability and balance is the organization. Stability is brought through effective supervision, motivation, leadership and communication.

6. Facilitates changes : Through effective communication and leadership enterprise can cope with the changing conditions of environment. Effective direction induces the employees to accept changes and challenges.

Question 17.
Distinguish between Monetary motivation and Non-monetary motivation.
Answer:
Differences between Monetary and Non-monetary Motivation

Monetary Motivation

1. It is suitable in case of workers.
2. Monetary incentives are measured in terms of money.
3. Monetary motivation includes salary or wages, allowances, bonus, rewards, profit sharing etc.
4. Monetary motivation helps in satisfying lower level needs like food, shelter and clothing.
5. Monetary motivation provides financial burden to the organization or enterprise.
6. As the monetary incentives are measured in terms of money thus it is visible.
7. Labour unrest and disputes arises due to the.denial of monetary incentives.
8. It not only fulfils the physiological needs but also the need for social status and power.

Non-monetary Motivation

1. It is suitable in case of managers.
2. These incentives cannot be measured in terms of money.
3. Non-monetary motivation includes status, job security, recognition
4. reward or punishment, responsibility etc. Non-monetary motivation helps in satisfying high level needs like love, affection, recognition, status or self esteem needs like position, fame etc.
5. Non-monetary motivation does not provide any financial burden to the organization.
6. As the Non-monetary incentives are not measured in terms of money thus it is invisible.
7. Labour unrest and disputes does not arise due to the denial of non-monetary incentives.
8. It satisfies the emotional and psychological needs of employees.

Question 18.
Distinguish between Leader and Boss.
Answer:
Difference between Leader and Boss
leader

1. High level leaders are present to control leaders.
2. Leader always uses the word ‘we’ in his organization
3. Social responsibility is having an important place in leadership.
4. Leader guide their followers through motivation.
5. Leaders cannot make their followers work through fear or negative motivation.
6. There is no place for punishment of followers in leadership.
7. Suggestions or opinions are invited from followers if necessary in leadership and it is also accepted by the leaders.

Boss

1. No one is above the boss in an enterprise.
2. Boss always uses the word ‘I’ in his organization.
3. There is no place for social responsibility in bossism.
4. Boss guide their subordinates and employees through orders.
5. Boss make their subordinates work through fear and negative motivation.
6. For the errors committed by the subordinates there is provision of punishment in bossism.
7. Suggestions or opinions are generally not invited from subordinates and the decision is taken by the boss himself.

Question 19.
Explain the process of communication.
Answer:
Communication refers to an art of transferring facts, ideas, feelings etc. from one person to another and making him understand them. Communication is the soul of modem large scale enterprises. Communication is a systematic process of creating mutual understanding through creation of messages.
Communication process is required at all stages. According to Kootz O’Doonel, communication process is:

Necessity → Need → Tension Process/act → Satisfaction.
At first when there is necessity of something, then it converts to need. To fulfill this need a person is tension and to get rid of this tension he acts and follows a process and when he achieves the desired target he is satisfied.

Communication helps to make the employee realize the necessity and need to attain the goal. For this motivation and encouragement is given to attain the desired target by which satisfaction is achieved.
This leads to growth of employee and achievements of goals of the organization.

This leads to growth of employee and achievements of goals of the organization.

Question 20.
Describe the barries of an effective communication
or
Discuss any four barriers of the effective communication.
Answer:
The barriers or obstacles to an effective communication are as follows :

1. Barriers to organizational structure : The structure of any organization also affects the communication system. If the organization is big having various level then there will be various obstacles because due to many levels. The message or information will have to move through their levels. Due to many levels correct in information to the right person at right time through right medium becomes difficult.

2. Barriers to language : Language communication is an easy medium of communication. Different languages are spoken in different regions. Technical terms of language causes difficulties in understanding the language is same.

3. Barriers to status : In formal organization there is a formal relation between the officers and employees of top level and lower level. The emotions and behaviours of officers towards employees also effects effective communication.

4. Shortage of time: Due to shortage of time effective communication is not properly performed. Generally its should be kept in mind while sending information that receiver should have enough time to work on the information.

5. Geographical distance : Geographical distance is also an obstacle in the way of communication. Fax, Internet, Satellite system has solved this problems of geographical distance but these facilities are limited to cities and this facility is used by a specific class. These facilities cannot be used by a common man as it is expensive.

MP Board Class 12 Business Studies Important Questions

MP Board Class 12th Accountancy Important Questions Chapter 9 Analysis of Financial Statements

Analysis of Financial Statements Important Questions

Analysis of Financial Statements Objective Type Questions

Question 1.
Choose the correct answer:

Question 1.
Under which financial analysis, data of two or more than two years are written together for comparative study :
(a) Horizontal analysis
(b) Vertical analysis
(c) Cash analysis
(d) Ratio analysis.
Answer:
(a) Horizontal analysis

Question 2.
The analysis in which one figure is compared with an other figure and which shows the relationship between the two is called:
(a) Break even analysis
(b) Ratio analysis
(c) Trend analysis
(d) General analysis.
Answer:
(b) Ratio analysis

Question 3.
Break even point depicts:
(a) Profit
(b) Loss
(c) No profit no loss
(d) Gross profit.
Answer:
(c) No profit no loss

Question 4.
Analysis of reasons for changes in cash is:
(a) Fund flow statement
(b) Cash flow statement
(c) Trend Analysis
(d) None of these.
Answer:
(b) Cash flow statement

Question 5.
The main objective of financial statement analysis is:
(a) To know about profitability
(b) To check the financial statement
(c) To satisfy various interest holders
(d) To full fill the formalities.
Answer:
(a) To know about profitability

Question 2.
Fill in the blanks:

1. The point at which total cost is equal to total revenue is called ……………
2. The analysis depicting the changes in working capital during the year is called ……………
3. The method of financial analysis in which the relationship between various items of balance sheet and profit /
4. loss account is established is called …………… analysis.
5. Only such information are included in financial statement which can be expressed in terms of ……………
6. The analysis which is used to judge the trend of operations of an enterprise and computed in relation to a base year is called ……………

Answer:

1. Break even point
2. Fund flow analysis
3. Vertical
4. Money
5. Trend analysis.

Question 3.
Match the columns:

Answer:

1. (b) Disclosing natural relationship by comparative study of mathematical expression
2. (a) To represent the changes in working capital
3. (c) Cash flow analysis and use of cash
4. (e) Break even as point.
5. (d) Trend analysis no profit and no loss

Question 4.
Write true or false:

1. Liquidity ratio refers to establishing relationship between current assets and current liabilities.
2. Fund flow statement does not represent the changes in working capital.
3. The point at which total cost is equal to total revenue is called break even point.
4. The position of cash balance and various uses of cash cannot be known through cash flow analysis.
5. The trend various items can be expressed in terms of percentage through trend analysis.

Answer:

1. True
2. False
3. True
4. False
5. True.

Question 5.
Write the answer in one word/sentence:

1. The method of reviewing and analysing financial statements for a specific period.
2. The other name of vertical analysis is.
3. The analysis which represent the trends of various items in form of percentages is called as.
4. The ratio which discloses relationship between current assets and current liabilities is called.
5. The point at which total cost is equal to total revenue is called.

Answer:

1. Vertical analysis
2. Common size analysis
3. Trend analysis
4. Liquidity ratio
5. Break even point.

Analysis of Financial Statements Very Short Answer Type Questions

Question 1.
What do you mean by analysis of financial statements ?
Answer:
Analysis of financial statements is a process in which the data of various head are compared so as to,-find out a relationship in an effective manner by classifying them in a simple form so that significant result may be obtained regarding financial strength or weakness of the company. The process of analysis and interpretation of financial statements help in deriving important conclusions and knowledge about business operations.

Question 2.
Write three characteristics of analysis of financial statements ?
Answer:
The following are the three characteristics of financial statements :

1. To represent the complex data present in financial statements in a simple form.
2. To divide the various items of financial statements under clear and appropriate heads.
3. To compare various items so as to find out changes among them and help in taking out appropriate inferences.

Question 3.
What do you mean by comparative statements ?
Answer:
The statements is which figures for two or more year are places side-by-side to facilitate comparison are called comparative statements. The figures pertaining to production, expenditure, sale profit etc. are shown comparatively side by side so as to draw conclusions about the profit earning capacity liquidity profitability and financial soundness of the concerning  business.

Question 4.
What is fund flow Statement?
Answer:
Fund flow statement is a statement prepared in a summary form which brings into light the cause of changes in working capital during the year. Such statements comprises the sources of funds, uses of funds and the changes in net working capital. This statement also reach the various sources from where the firm received funds and the areas in which these funds were utilized.

Question 5.
What is cash flow analysis ?
Answer:
Cash flow analysis shows inflows and outflows of cash in a concern during a particular accounting period. Cash means cash and cash equivalents, while flow means movement of cash. It explains reasons for the changes in cash position of an enterprise. This analysis helps the managers / directors to find out why there was scarcity of cash in business despite. The firm earned profit and why there is cash balance available despite the firm incurred loss.

Question 6.
What is break even point analysis ?
Answer:
The term break even point refers to that point at which the total cost are just equal to total sales. A business concern neither earns profit nor suffers a loss at this point. It is also called Neutral point.

Question 7.
Name the different tools of financial analysis.
Answer:
The following tools or devices are used for financial analysis :

• Comparative financial statement.
• Trend analysis.
• Common size statement.
• Fund flow statement.
• Cash flow statement.
• Ratio analysis.
• Break even point analysis.

Question 8.
What do you mean by liquid assets ?
Answer:
Liquid assets refers to that assets which can be converted into cash without any diminution in the value of asset for example cash in hand, cash at bank (these two assets are itself liquid), bill receivable and short investment. For calculating liquid asset from current asset stock and prepaid expenses left out.

Analysis of Financial Statements Short Answer Type Questions 

Question 1.
Explain objectives of financial statement analysis.
Answer:
The following are the main objectives of financial statement analysis.

1. Knowledge of earning capacity or profitability of business:
The main object of analysis is to know whether there is appropriate profit on invested capital or not. It enables computation of earning capacity of the business and estimation of future earning capacity as well.

2. Knowledge regarding solvency:
The financial analysis helps to determine the short-term as well as long form solvency of the concern.

3. Knowledge of financial position:
Analysis of financial statement enables us to know the financial strength of the business enterprise. Through analysis of financial statement we can ascertain whether requisite funds will be available for purchasing fined assets from integrate resources of business or not.

4. To know about capability of payment of interest and dividend:
Through analysis of financial statement we can easily ascertain the capability of business under taking to pay interest and dividend regularly. We can ascertain whether there is sufficient profit for this purpose.

5. Knowledge of trend of business:
Analysis of financial statements help us to make a comparative study of balance sheets of business of various years. The trends of purchase, sale gross profit etc. can be easily compared with that of previous year. Such compression help us to investigate the weakness, irregularity and remedial measures can be taken for improvement.

6. Valuable information for management:
One of the principal objective of the analysis of financial statement is to know the weakness or drawbacks of the undertaking. This analysis makes valuable data and information available to the management for further decision and planning.

Question 2.
Explain the importance of analysis of financial statements.
Answer:
Financial analysis is usually significant to the following categories of persons:

1. Significance for management:
The management needs to know what progress of
business has been towards its objectives of profitability, economic soundness turned etc. it is from the analysis they can be made available. On the basis of facts of analysis the management is able to compare the business with other business. Financial analysis reveals the shortcomings which can be removed by making effective policies. ‘

2. Significance for investors:
Investors invest their money with the expectation of a good return. They take decision on the basis of information disclosed for profitability, solvency and trend of business. They can compare the business with other business and the analysis of current year with previous year of the same business and finalize their plans regarding investment.

3. Significance for creditors and debenture holders:
Short term creditors are interested to know liquidity position of the business. This can be obtained through solvency ratios. Similarly the long – term creditors particularly debenture holders want to know the timely return of interest on debentures and the security of money invested in the form of debentures. They can obtain the knowledge regarding long-term solvency of the company through the analysis of the financial statements.

4. Significance for Government:
Government has to take various decisions for the economic development of the country. Government frames the industrial policy. The financial analysis is helpful for the formation and execution of financial and economic policies of Government.

5. Significance for financial institutions:
Financial institutions play important role in industrial and commercial development. Bank, life insurance corporation, ICICI bank, HDFC bank. Industrial development bank advance mid term and long – term loan to business concerns. For deciding the rate of interest, return of loan etc. they take the help of analysis of financial statements.

6. Significance for others:
Financial analysis has importance to other categories of society. The employees are interested to know the profitability of concern. On this basis they can demand for increase in salary. Economists, researches, analysts, tax authorities also receives the useful information through analysis of financial statements of business concerns.

Question 3.
Explain the limitations of financial statement analysis.
Answer:
The following are the limitations of financial statement analysis:

1. Limitations of financial statements:
Financial statement themselves have a number of limitations and so the analysis of financial statements suffers from limitations. Financial statement in fact, are based on accounting concepts and communications and so the analysis of such statement clear not prove meaningful.

2. Affected by window dressing:
It is generally seen that window dressing is adopted in financial statements to conceal the bad aspect of financial position. It adversely affects then analysis of financial statements.

3. Based on past events:
Financial statements represents the record of part events and historical facts. It is based on previous year data and events. The result of financial analysis can not disclose the possibilities of future. Hence, the conclusions derived from them can not be used for the purpose of forecasting.

4. Ignores the changes in price level:
If price level changes are not taken into consideration, the results of analysis of financial statements may be misleading Ratios of different years will not be useful for comparison if the prices of commodities are different. The ratios may improve due to increase in prices whereas the actual efficiency remains unchanged. Correct results of two financial years can be obtained when the price one. Stable other set the result of analysis of financial statement may be misleading.

5. Effect of personal decision of analysts:
Analysis of financial statements are affected by personal decisions taken by accountants analysts themselves such as methods of charging depreciation valuation of stock, writing off revenue expense’s etc The rationality of such decisions depends upon the ability, honesty and experience of the analysts. Thus, financial statements and conclusions derived from then may be biased.

6. Ignores the qualitative element:
Analysis of financial statements does not measure the qualitative aspects of business concern. It disclose only those information which can be expressed in terms of money. It does not exhibit the skill, technical know how and efficiency of staff and management. Hence the analysis is one-sided measure. It shows one sided performance of a business undertaking.

7. Limited use of single year’s analysis of financial statements:
If analysis of financial statements is done for one year then from that analysis correct conclusion cannot be taken. Hence, it is necessary to analysis financial statements of few years.

Question 4.
Write the characteristics of analysis of financial statement
Answer:
Following are the characteristics of financial analysis:

• To present the accounting data in a simple and understandable form.
• To classify the items of profit and loss account and balance sheet in convenient and related groups.
• To make comparison between different groups to interpret different conclusions.
• Financial analysis clarify the changes in the financial items.
• There are various techniques for financial analysis.

Question 5.
Prepare comparative Income statement from the following particulars for the year ended 31st March 2017 and 31st March 2018.

Solution:
Comparative Income Statement

Question 6.
From the following details make out a comparative income statement:

Solution:
Comparative Income Statement

Question 7.
From the following in formation prepare a comparative statement for the year ended 31^st March 2008 and 31st March 2009.

Solution:
Comparative Income Statement For the year ended 2008 and 2009:

MP Board Class 12 Accountancy Important Questions

MP Board Class 11th Physics Solutions Chapter 1 भौतिक जगत

भौतिक जगत अभ्यास के प्रश्न एवं उनके उत्तर

प्रश्न 1.1.
विज्ञान की प्रकृति से संबंधित कुछ अत्यंत पारंगत प्रकथन आज तक के महानतम वैज्ञानिकों में से एक अल्बर्ट आइंस्टाइन द्वारा प्रदान किए गए हैं। आपके विचार से आइंस्टाइन का उस समय क्या तात्पर्य था, जब उन्होंने कहा था “संसार के बारे में सबसे अधिक अबोधगम्य विषय यह है कि यह बोधगम्य है?
उत्तर:
ब्रह्माण्ड अत्यन्त जटिल है एवं इसमें होने वाली घटनाएँ भी बहुत जटिल हैं लेकिन विज्ञान के अनेक नियम ऐसे हैं जो इन सभी घटनाओं की व्याख्या पूर्णत: करते हैं। अतः जब प्रथम बार कोई घटना देखते या सुनते हैं तब वह अबोधगम्य होती है लेकिन जब हम उस घटना से जुड़े सिद्धान्त नियम इत्यादि का गहन विश्लेषण करते हैं तो वह घटना हमारे लिए बोधगम्य हो जाती है। इस प्रकार भौतिक जगत से जुड़े प्रत्येक तथ्य की सुस्पष्ट व्याख्या विज्ञान विषय में उपलब्ध है। जब कभी भी हम किसी तथ्य से जुड़े वैज्ञानिक दृष्टिकोण को जानना चाहते हैं तो हम उसे जान लेते हैं। इसी कारण जटिलतम परिघटना भी हमारे लिए आश्चर्यजनक नहीं होती है। इस प्रकार हम कह सकते हैं कि आइंसटाइन का कथन तर्क संगत है।

प्रश्न 1.2.
“प्रत्येक महान भौतिक सिद्धान्त अपसिद्धांत से आरंभ होकर धर्मसिद्धांत के रूप में समाप्त होता है”। इस तीक्ष्ण टिप्पणी की वैधता के लिए विज्ञान के इतिहास से कुछ उदाहरण लिखिए।
उत्तर:
अपसिद्धान्त ऐसे तथ्य हैं जो स्थापित नहीं होते हैं जबकि धर्म सिद्धान्त से अर्थ स्थापित विचार हैं जिन पर सामान्यत: कोई प्रश्न नहीं उठता है। जैसे – प्रकाश – वैद्युत नियम प्रारम्भ में एक अपसिद्धान्त के रूप में आया था लेकिन अन्तत: यह एक धर्म सिद्धान्त के रूप में परिवर्तित हो गया था।

प्रश्न 1.3.
“संभव की कला ही राजनीति है”। इसी प्रकार “समाधान की कला ही विज्ञान है”। विज्ञान की प्रकृति तथा व्यवहार पर इस सुन्दर सूक्ति की व्याख्या कीजिए।
उत्तर:
सभी राजनीतिज्ञ, चाहे वे दुनिया के किसी भी भाग से सम्बन्धित हों, हमेशा कुछ भी कहने को तैयार रहते हैं। राजनीतिज्ञों के अनुसार, प्रत्येक कार्य, घटना इत्यादि सभी कुछ सम्भव है एवम् इसके पीछे जो कारण है वह सिर्फ उनके शब्दों का जाल होता है। इसी कला से वे जनता में अपनी प्रसिद्धि प्राप्त करते हैं। अर्थात् राजनीति सम्भव की कला है। जो कार्य किसी भी तरह होना सम्भव न हो उसे भी राजनीतिज्ञ अपनी बात के माध्यम से सम्भव बना सकते हैं। हालांकि विज्ञान में ऐसा नहीं होता है। विज्ञान में प्रश्न का तार्किक उत्तर उपलब्ध है जिसकी जाँच बार-बार की जा सकती है।

उदाहरण के लिए विज्ञान कहता है कि प्रकाश सरल रेखा में गमन करता है, तो इसका कारण एवम् इसकी जाँच हम कभी भी और कितनी ही बार कर सकते हैं। इसके अलावा वैज्ञानिक अध्ययन के बाद असम्भव एवम् जटिल प्रक्रियाओं को भी बोधगम्य कर सकते हैं। अर्थात् हम कह सकते हैं कि विज्ञान समाधान की कला है जबकि राजनीति सम्भव की कला है।

प्रश्न 1.4.
यद्यपि अब भारत में विज्ञान तथा प्रौद्योगिकी का विस्तृत आधार है तथा यह तीव्रता से फैल भी रहा है, परन्तु फिर भी इसे विज्ञान के क्षेत्र में विश्व नेता बनने की अपनी क्षमता को कार्यान्वित करने में काफी दूरी तय करनी है। ऐसे कुछ महत्वपूर्ण कारक लिखिए जो आपके विचार से भारत में विज्ञान के विकास में बाधक रहे हैं?
उत्तर:
भारत में विज्ञान के विकास में बाधा उत्पन्न करने वाले कुछ महत्वपूर्ण कारक निम्नलिखित हैं

1. हमारे देश में वैज्ञानिकों को लक्ष्यों की प्राप्ति करने के लिए शैक्षणिक स्वतन्त्रता प्राप्त नहीं है।
2. विदेशों में वैज्ञानिकों, इन्जीनियों, डॉक्टर्स इत्यादि का देशान्तर भ्रमण, क्योंकि विदेशों में उन्हें उत्कृष्ट सुविधाएँ, वेतन इत्यादि प्राप्त हो जाते हैं जबकि हमारे देश में इन सुविधाओं एवम् उच्च वेतन का प्राप्त करना आज भी सम्भव नहीं है।
3. हमारे देश में अनुसन्धान एवम् तकनीक के प्रबन्धन में प्रशासनिक हस्तक्षेप की अधिकता भी विज्ञान के विकास में बाधा है।
4. हमारे देश में अनुसन्धानकर्ताओं एवम् उद्यमियों के मध्य सामंजस्य स्थापित नहीं है।

प्रश्न 1.5.
किसी भी भौतिक विज्ञानी ने इलेक्ट्रॉन के कभी भी दर्शन नहीं किए हैं। परन्तु फिर भी सभी भौतिक विज्ञानियों का इलेक्ट्रॉन के अस्तित्व में विश्वास है। कोई बुद्धिमान परन्तु अंधविश्वासी व्यक्ति इसी तुल्यरूपता को इस तर्क के साथ आगे बढ़ाता है कि यद्यपि किसी ने देखा’ नहीं है परन्तु ‘भूतों’ का अस्तित्व है। आप इस तर्क का खंडन किस प्रकार करेंगे?
उत्तर:
किसी भी भौतिक विज्ञानियों ने इलेक्ट्रॉन के कभी दर्शन नहीं किए हैं, परन्तु फिर भी सभी भौतिक विज्ञानियों का इलेक्ट्रॉन के अस्तित्व में विश्वास है। इसका मुख्य कारण है कि इस कण के अस्तित्व के पक्ष में बहुत – से प्रमाण उपलब्ध हैं जैसे विद्युत धारा का प्रवाह, अणुओं की विभिन्न आकृतियों एवम् आकारों का होना, विभिन्न रासायनिक यौगिकों में ध्रुवणता होना, क्षम का होना इत्यादि। जबकि भूतों का कोई भी भौतिक प्रभाव नहीं होता है, जिसे प्रायोगिक रूप से सत्यापित कर सके। अतः हम कह सकते हैं कि इन दोनों की पारस्परिक तुलना एक निरर्थक कार्य है।

परश्न 1.6.
जापान के एक विशेष समुद्र तटीय क्षेत्र में पाए जाने वाले केकड़े के कवचों (खोल) में से अधिकांश समुरई के अनुश्रुत चेहरे से मिलते जुलते प्रतीत होते हैं। नीचे इस प्रेक्षित तथ्य की दो व्याख्याएँ दी गई हैं। इनमें से आपको कौन – सा वैज्ञानिक स्पष्टीकरण लगता है?

1. कई शताब्दियों पूर्व किसी भयानक समुद्री दुर्घटना में एक । युवा समुरई डूब गया। उसकी बहादुरी के लिए श्रद्धांजलि के रूप में प्रकृति ने अबोधगम्य ढंगों द्वारा उसके चेहरे को केकड़े के कवचों पर अंकित करके उसे उस क्षेत्र में अमर बना दिया।

2. समुद्री दुर्घटना के पश्चात् उस क्षेत्र के मछुआरे अपने मृत नेता के सम्मान में सद्भावना प्रदर्शन के लिए उस हर केकड़े के कवच को जिसकी आकृति संयोगवश समुरई से मिलती-जुलती प्रतीत होती थी, उसे वापस समुद्र में फेंक देते थे। परिणामस्वरूप केकड़े के कवचों की इस प्रकार की विशेष आकृतियाँ अधिक समय तक विद्यमान रहीं और इसीलिए कालान्तर में इसी आकृति का आनुवंशत: जनन हुआ। यह कृत्रिम वरण द्वारा विकास का एक उदाहरण है।

(नोट : यह रोचक उदाहरण कार्ल सागन की पुस्तक “दि कॉस्मॉस” से लिया गया है। यह इस तथ्य पर प्रकाश डालता है कि प्रायः विलक्षण तथा अबोधगम्य तथ्य जो प्रथम दृष्टि में अलौकिक प्रतीत होते हैं वास्तव में साधारण वैज्ञानिक व्याख्याओं द्वारा स्पष्ट होने योग्य बन जाते हैं। इसी प्रकार के अन्य उदाहरणों पर विचार कीजिए)
उत्तर:

1. दिए गये प्रश्न में दोनों कथनों में से कथन
2. प्रेक्षित तथ्य का वैज्ञानिक स्पष्टीकरण देने में पर्याप्त रूप में समर्थ है।

प्रश्न 1.7.
दो शताब्दियों से भी अधिक समय पूर्व इंग्लैण्ड तथा पश्चिमी यूरोप में जो औद्योगिक क्रांति हुई थी उसकी चिंगारी का कारण कुछ प्रमुख वैज्ञानिक तथा प्रौद्योगिक उपलब्धियाँ थीं। ये उपलब्धियाँ क्या थीं?
उत्तर:
सन् 1750 से अर्थात् औद्योगिक क्रान्ति से पूर्व, कुछ सरल यन्त्र एवं मशीनें ही प्रचलन में थीं, जिनके कार्य करने की दर काफी कम एवम उत्पादित माल का स्तर काफी खराब था लेकिन औद्योगिक क्रान्ति के परिणामस्वरूप कुछ नवीन मशीनों का विकास हुआ जिनके द्वारा उत्पादन लागत में कमी आई एवम् वैमार माल की उत्कृष्टता में उन्नति हुई। औद्योगिक क्रान्ति की प्रमुख वैज्ञानिक एवम् प्रौद्योगिकीय उपलब्धियाँ निम्नवत् हैं

1. स्पिनिंग गेनी (Spinning Genny) सन् 1764 में हारग्रीव्ज ने इस मशीन का आविष्कार किया। इससे कटाई – कार्य में तेजी आई।
2. भाप इंजन (Steam Engine) सन् 1769 में जेम्सवॉट ने इसका आविष्कार किया। इसकी सहायता से औद्योगिक इकाइयों को देश के भीतरी भागों में समुद्री किनारों से दूर स्थान प्राप्त हो सका था।.
3. पावरलूम (Powerloom) सन् 1785 में कार्ल-राइट ने इसका आविष्कार किया। यह माप शक्ति चालित मशीन है। इसे चलाकर कपड़ों की बुनाई का कार्य किया जाता था।
4. विस्फोटक पदार्थ की खोज से ना सिर्फ आर्मी में सहायता मिली बल्कि इससे खनिज विस्फोट में भी सहायता मिली है।

प्रश्न 1.8.
प्रायः यह कहा जाता है कि संसार अब दूसरी औद्योगिकी क्रांति के दौर से गुजर रहा है, जो समाज में पहली क्रांति की भाँति आमूल परिवर्तन ला देगी। विज्ञान तथा प्रौद्योगिकी के उन प्रमुख समकालीन क्षेत्रों की सूची बनाइए जो इस क्रांति के लिए उत्तरदायी हैं।
उत्तर:
विज्ञान तथा प्रौद्योगिकी के उन प्रमख समकालीन क्षेत्रों की सूची निम्नवत् है जो इस क्रांति के लिए उत्तरदायी हैं, जो समाज में पहली क्रांति की भाँति आकूल परिवर्तन ला देगी

1. जैव प्रौद्योगिकी
2. सुपर कम्प्यूटर
3. सूचना प्रौद्योगिकी
4. विद्युत दुर्बल बल के सिद्धान्त का विकास
5. प्रकाशिक तन्तु।

प्रश्न 1.9.
बाईसवीं शताब्दी के विज्ञान तथा प्रौद्योगिकी पर अपनी निराधार कल्पनाओं को आधार मानकर लगभग 1000 शब्दों में कोई कथा लिखिए।
उत्तर:
माना कि एक हवाई जहाज 500 प्रकाश वर्ष दूर स्थित तारे की ओर गतिमान है। माना यह हवाई जहाज विद्युत मोटर जिसमें अतिचालक तार लगा है, में संचित धारा से चलता है। ब्रह्माण्ड में, माना कि एक क्षेत्र ऐसा है जहाँ इतना अधिक ताप है, जिस कारण मोटर के विद्युत तारों का अतिचालक गुण नष्ट हो जाता है। इस स्थिति में, एक अन्य हवाई जहाज जिसमें द्रव्य तथा अद्रव्य भरा है, पहले हवाई जहाज को चलाता है जिस कारण यह तारे की ओर गतिमान रहता है।

प्रश्न 1.10.
‘विज्ञान के व्यवहार’ पर अपने ‘नैतिक दृष्टिकोणों’ को रचने का प्रयास कीजिए। कल्पना कीजिए कि आप स्वयं किसी संयोगवश ऐसी खोज में लगे हैं जो शैक्षिक दृष्टि से सेचक है परन्तु उसके परिणाम निश्चित रूप से मानव समाज के लिए भयंकर होने के अतिरिक्त कुछ नहीं होंगे। फिर भी यदि ऐसा है तो आप इस दुविधा के हल के लिए क्या करेंगे?
उत्तर:
प्रत्येक वैज्ञानिक खोज, प्रकृति के रहस्यों को प्रदर्शित करती है एवम् इन रहस्यों के सत्य को समाज के सामने रखता है। सत्य एक सापेक्षिक पद है। सत्य का प्रदर्शन इस प्रकार होना चाहिए कि कोई भी खोज जो मानव समाज के नैतिक मूल्यों को हानि पहुँचा सकती हो, उसे एकदम रोक देना चाहिए। जैव – प्रौद्योगिकी मानव-कल्याण हेतु बहुत उपयोगी है लेकिन जीवित प्राणियों की क्लोनिंग नीति-असंगत है। इस अनुसंधान को आगे बढ़ाने से पूर्व हमें समाज के सामने यह तथ्य रखना चाहिए कि क्या यह अनुसन्धान जारी रखना मानव के लिए भयंकर तो नहीं है। यदि ऐसा है तो अनुसन्धान को एकदम से रोक देना चाहिए।

इसके अलावा कोई खोज आज भयंकर हो लेकिन भविष्य में यह लाभप्रद सिद्ध हो सकती है। इसके लिए, सबसे पहले यह जरूरी है कि वैज्ञानिक खोज के गलत प्रयोग के सम्बन्ध में लोक विचार लेने चाहिए। यह सार्थक कदम किसी वैज्ञानिक खोज के गलत प्रयोग को रोक सकता है। अतः उन वैज्ञानिक खोजों जो समाज के नैतिक मूल्यों के लिए भयंकर साबित हो सकती हैं, को समाज की अच्छाई के लिए रोक देना चाहिए।

प्रश्न 1.11.
किसी भी ज्ञान की भाँति विज्ञान का उपयोग भी, उपयोग करने वाले पर निर्भर करते हुए, अच्छा अथवा बुरा हो सकता है। नीचे विज्ञान के कुछ अनुप्रयोग दिए गए हैं। विशेषकर कौन-सा अनुप्रयोग अच्छा है, बुरा है अथवा ऐसा है कि जिसे स्पष्ट रूप से वर्गबद्ध नहीं किया जा सकता। इसके बारे में अपने दृष्टिकोणों को सूचीबद्ध कीजिए

1. आम जनता को चेचक के टीके लगाकर इस रोग को दबाना और अन्ततः इस रोग से जनता को मुक्ति दिलाना। (भारत में इसे पहले ही प्रतिपादित किया जा चुका है।
2. निरक्षरता का विनाश करने तथा समाचारों एवं धारणाओं के जनसंचार के लिए टेलीविजन।
3. जन्म से पूर्व लिंग – निर्धारण।
4. कार्यदक्षता में वृद्धि के लिए कम्प्यूटर।
5. पृथ्वी के परितः कक्षाओं में मानव-निर्मित उपग्रहों की स्थापना।
6. नाभिकीय शस्त्रों का विकास।
7. रासायनिक तथा जैव-युद्ध की नवीन तथा शक्तिशाली तकनीकों का विकास।
8. पीने के लिए जल का शोधन।
9. प्लास्टिक शल्य क्रिया।
10. क्लोनिंग।

उत्तर:

1. अच्छा
2. अच्छा
3. बरा.
4. अच्छा
5. अच्छा
6. बुरा
7. बुरा
8. अच्छा
9. अच्छा
10. इसे स्पष्ट रूप से वर्गबद्ध नहीं किया जा सकता।

प्रश्न 1.12.
भारत में गणित, खगोलिकी, भाषा विज्ञान, तर्क तथा नैतिकता में महान विद्वत्ता की एक लंबी एवं अटूट परम्परा रही है। फिर भी इसके साथ एवं समान्तर, हमारे समाज में बहुत – से अंधविश्वासी तथा रूढ़िवादी दृष्टिकोण व परम्पराएँ फली – फूली हैं और दुर्भाग्यवश ऐसा अभी भी हो रहा है और बहुत – से शिक्षित लोगों में व्याप्त हैं। इन दृष्टिकोणों का विरोध करने के लिए अपनी रणनीति बनाने में आप अपने विज्ञान के ज्ञान का उपयोग किस प्रकार करेंगे?
उत्तर:
हमारे देश में समाज में व्याप्त अन्धविश्वासी एवम् रूढ़िवादी दृष्टिकोण व परम्पराएँ दूर करने के लिए रणनीति बनाने में विज्ञान के ज्ञान का उपयोग निम्नवत् रूप में किया जा सकता

1. स्थानीय स्तर पर जनता को आपसी बातचीत, सभाओं, क्लबों इत्यादि के माध्यम से गलत एवम् असत्य विश्वासों को दूर करने के लिए जानकारियों का प्रचार करना लाभदायक होगा।

2. छात्रों को दी जाने वाली विद्यालयी शिक्षा के पाठ्यक्रम में दैनिक जीवन से जुड़े अनुभवों की स्पष्ट व्याख्या देने वाली पाठ्य सामग्री का समावेश अति आवश्यक है अर्थात् शिक्षा की दैनिक जीवन में व्यक्त विभिन्न घटनाओं की व्याख्या देने में समर्थ होना चाहिए। इस प्रकार शिक्षा का उद्देश्य तर्कसंगत हो जाएगा एवम् वह भविष्य में भी लाभदायक सिद्ध होगी।

3. इन्जीनियर्स, वैज्ञानिकों, शिक्षाविदों, एवम् डॉक्टर्स इत्यादि द्वारा विभिन्न परिघटनाओं के सही-सही कारणों एवम् अन्धविश्वासों व गलत धारणाओं को समाप्त करने के लिए प्रदान की गई जानकारियों के अलग – अलग कार्यक्रमों द्वारा शहरी व ग्रामीण जनता के सामने प्रस्तुत करना लाभदायक होगा।

4. समाचार पत्र, रेडियो, टेलीविजन, इण्टरनेट इत्यादि माध्यमों द्वारा लोगों में व्याप्त अपूर्ण ज्ञान, भ्रान्तियों, रूढ़िवादिता, अन्धविश्वास इत्यादि को समाप्त करने में किया जाना एक हितकारी प्रयास है। इस कार्य के लिए विभिन्न कार्यक्रमों जैसेनाटकों, क्विज, विचार-गोष्ठियों, वर्कशॉप, समर स्कूल, विन्टर-स्कूल आदि का आयोजन कर संकेत दें।

प्रश्न 1.13.
यद्यपि भारत में स्त्री तथा पुरुषों को समान अधिकार प्राप्त हैं, फिर भी बहुत-से लोग महिलाओं की स्वाभाविक प्रकृति, क्षमता, बुद्धिमत्ता के बारे में अवैज्ञानिक विचार रखते हैं तथा व्यवहार में उन्हें गौण महत्व तथा भूमिका देते हैं। वैज्ञानिक तर्कों तथा विज्ञान एवं अन्य क्षेत्रों में महान महिलाओं का उदाहरण देकर इन विचारों को धराशायी करिए, तथा अपने को स्वयं, तथा दूसरों को भी समझाइए कि समान अवसर दिए जाने पर महिलाएँ पुरुषों के समकक्ष होती हैं।
उत्तर:
प्राकृतिक रूप से स्त्री तथा पुरुषों में कुछ अन्तर अवश्य होते हैं। परन्तु जिम्मेदारी निभाने, कार्य करने, बुद्धिमत्ता तथा सोच समझने में स्त्री व पुरुष में कोई अन्तर नहीं होता है। जन्म से पूर्व एवम् जन्म के पश्चात् आहार के पोषक तत्वों का एक बड़ा भाग मानव मस्तिष्क के विकास में महत्वपूर्ण योगदान करता है। यह मस्तिष्क स्त्री अथवा पुरुष किसी का भी हो सकता है। जब हम स्त्रियों के प्राचीन इतिहास एवम् वर्तमान स्थिति का अध्ययन करें तो हम देखते हैं कि स्त्रियों की स्थिति हमेशा से ही सम्मानजनक. रही है एवम् उन्होंने अनेक उत्कृष्ट कार्य किए हैं। ये स्त्रियाँ हर कार्य करने में सक्षम हैं एवम् किसी भी रूप में पुरुषों से कम नहीं है। जब कभी भी स्त्रियों को अवसर मिलता है चौंकाने वाले परिणाम सामने आए हैं।

महर्षि अत्रि की पत्नी सती अनुसूइया, झाँसी की रानी लक्ष्मीबाई, रानी कर्मवती, नूरजहाँ, मैडम क्यूरी, सरोजिनी नायडू, कल्पना चावला, प्रिंसेज डायना, मार्गेट थ्रेचर, इन्दिरा गाँधी, श्रीमती भण्डानाइके, श्रीमती चन्द्रिका कुमार तुंगे, बछेन्द्री पाल इत्यादि अनेक नाम स्त्रियों के स्वर्णिम इतिहास का उल्लेख करते हैं। आजकल सानिया मिर्जा का नाम भी शीर्षस्थ स्थान पर है। इसका तात्पर्य है कि इन स्त्रियों को अवसर मिलने पर, इन्होंने अपनी अपूर्व क्षमता का परिचय दिया। आज हमारे देश में रक्षा सेवाओं के द्वार भी स्त्रियों के लिए खुले हुए हैं। इस क्षेत्र में भी स्त्रियों ने अपनी कार्यदक्षता सिद्ध की है।

अतः हम कह सकते हैं कि समान अवसर दिए जाने पर महिलाएँ भी पुरुषों के समकक्ष परिणाम देती हैं।

प्रश्न 1.14.
“भौतिकी के समीकरणों में सुन्दरता होना उनका प्रयोगों के साथ सहमत होने की अपेक्षा अधिक महत्वपूर्ण है।” यह मत महान ब्रिटिश वैज्ञानिक पी० ए० एम० डिरैक का था। इस दृष्टिकोण की समीक्षा कीजिए। इस पुस्तक में ऐसे संबंधों तथा समीकरणों को खोजिए जो आपको सुन्दर लगते हैं।
उत्तर:
डिरैक के कथन में कोई विसंगति नहीं है। भौतिकी में एक समीकरण जो प्रयोगों के साथ सहमत है, उसे निश्चित ही सरल एवम् बोधगम्य होना चाहिए। यही उसकी सुन्दरता की कसौटी है। इसका तात्पर्य है कि जो समीकरण सरल एवम् समझने योग्य होगी, वह सुन्दर मानी जाएगी। जैसे आइन्सटीन की द्रव्यमान ऊर्जा समतुल्यता समीकरण E = mc², द्रव्यमान के ऊर्जा तथा ऊर्जा के द्रव्यमान में स्थानान्तरण को समझाती है। यह समीकरण सरल एवम् समझने योग्य है। अर्थात् यह एक सुन्दर समीकरण है।

प्रश्न 1.15.
यद्यपि उपरोक्त प्रकथन विवादास्पद हो सकता है, परन्तु अधिकांश भौतिक विज्ञानियों का यह मत है कि भौतिकी के महान नियम एक ही साथ सरल एवं सुन्दर होते हैं। डिरैक के अतिरिक्त जिन सुप्रसिद्ध भौतिक विज्ञानियों ने ऐसा अनुभव किया, उनमें से कुछ के नाम इस प्रकार हैं : आइंस्टाइन, बोर, हाइसेनबर्ग, चन्द्रशेखर तथा फाइनमैन। आपसे अनुरोध है कि आप भौतिकी के इन विद्वानों तथा अन्य महानायकों द्वारा रचित सामान्य पुस्तकों एवं लेखों तक पहुँचने के लिए विशेष प्रयास अवश्य करें। (इस पुस्तक के अंत में दी गई ग्रंथ – सूची देखिए)। इनके लेख सचमुच प्रेरक हैं।
उत्तर:

प्रश्न 1.16.
विज्ञान की पाठ्य पुस्तकें आपके मन में यह गलत धारणा उत्पन्न कर सकती हैं कि विज्ञान पढ़ना शुष्क तथा. पूर्णतः अत्यंत गंभीर हैं एवं वैज्ञानिक भुलक्कड़, अंतर्मुखी, कभी न हँसने वाले अथवा खीसें निकालने वाले व्यक्ति होते हैं। विज्ञान तथा वैज्ञानिकों का यह चित्रण पूर्णतः आधारहीन है। अन्य समुदाय के मनुष्यों की भाँति वैज्ञानिक भी विनोदी होते हैं तथा बहुत-से वैज्ञानिकों ने तो अपने वैज्ञानिक कार्यों को गंभीरता से पूरा करते हुए अत्यंत विनोदी प्रकृति तथा साहसिक कार्य करके अपना जीवन व्यतीत किया है। गैमो तथा फाइनमैन इसी शैली के दो भौतिक विज्ञानी हैं। ग्रंथ सूची में इनके द्वारा रचित पुस्तकों को पढ़ने में आपको आनन्द प्राप्त होगा।
उत्तर:
गैमो एवं फाइमैन द्वारा रचित पुस्तक निम्नलिखित हैं

1. गैमो द्वारा रचित ‘Mr Tompkins in paperback : Cambridge Universing Press (1987)”

2.फाइनमैन द्वारा रचित “Surely you are joing : Mr. Reynman, Bantan Books (1986)”.
उपरोक्त पुस्तकों के पढ़ने पर ज्ञात होता है कि वैज्ञानिक भी अन्य मनुष्यों की भाँति ही विनोदी होते हैं। इनके अलावा सी० वी० रमन, होमी जे० भाभा, भी विनोदी स्वभाव के भौतिकवादी रहे हैं। हमारे देश के कुछ नेता जैसे-मुरली मनोहर जोशी, वी० पी० सिंह इत्यादि भी भौतिकविद् रहे हैं।

MP Board Class 11 Physics Solutions

MP Board Class 12th Accountancy Important Questions Chapter 8 Financial Statements of a Company

Financial Statements of a Company Important Questions

Financial Statements of a Company Objective Type Questions

Question 1.
Choose the correct answer:

Question 1.
Following are included in the financial statement of a commercial firm:
(a) Balance Sheet
(b) Profit & Loss statement
(c) Cash flow statement
(d) All of these.
Answer:
(d) All of these.

Question 2.
The General methods adopted for financial analysis are:
(a) Horizontal Analysis
(b) Vertical Analysis
(c) Ratio Analysis
(d) All of these.
Answer:
(d) All of these.

Question 3.
Annual Report of a company is issued for:
(a) Director
(b) Auditors
(c) Shareholders
(d) Management.
Answer:
(c) Shareholders

Question 4.
Comparative Analysis is also known as:
(a) Active Analysis
(b) Horizontal Analysis
(c) Vertical Analysis
(d) External Analysis.
Answer:
(b) Horizontal Analysis

Question 5.
Balance Sheet of a firm disclose the information related to financial condition for:
(a) A specific given period
(b) During a specific period
(c) A specific period
(d) None of these.
Answer:
(a) A specific given period

Question 6.
In which meeting is it compulsory for a company to produce it’s balance sheet and profit and loss account compulsory:
(a) Extra ordinary general meeting
(b) Debenture, holder’s meeting
(c) Annual general meeting
(d) Meeting of board of directors.
Answer:
(c) Annual general meeting

Question 7.
Which of the following is prepared in horizontal or vertical format:
(a) Profit and loss account
(b) Balance sheet
(c) Income and expenditure account
(d) Cash account.
Answer:
(b) Balance sheet

Question 8.
Which of the following capital is not included for totaling of balance sheet:
(a) Paid – up capital
(b) Issued capital
(c) Authorised capital
(d) Share capital.
Answer:
(c) Authorised capital

Question 9.
Which of the following liability is shown below the balance sheet separately :
(a) Current liability
(b) Fixed liability
(c) Contingent liability
(d) Overdraft.
Answer:
(c) Contingent liability

Question 10.
The amount of preliminary expenses and underwriting commission in shown under which heading and which side of balance sheet:
(a) Liability side
(b) Assets side under the head of miscellaneous expenses
(c) None of the sides
(d) None of these.
Answer:
(b) Assets side under the head of miscellaneous expenses

Question 2.
Fill in the blanks:

1. Generally analysis mean …………….. of data.
2. Meaning of formulation is …………….. of data.
3. Comparative Analysis is also known as …………….. analysis.
4. The General form of analysis is also known as …………….. analysis.
5. The actual inflow and outflow of cash in an organization / institution is known as …………….. analysis.
6. Underwriter is that person, firm or company who promises to …………….. the shares of a company.
7. The part of profit which is kept for unforeseen exigencies of future is called ……………..
8. The part of profit which is kept for distribution to shareholders is called as ……………..
9. The dividend which is proposed for distribution by company in the following year is called ……………..
10. The arrangement of employees provident fund is called as ……………..

Answer:

1. Simplification
2. Described
3. Horizontal
4. Vertical
5. Cash flow
6. Purchase
7. Reserve
8. Divisible profit
9. Proposed dividend
10. Provision.

Question 3.
Match the columns:

Answer:

1. (a) Underwriter
2. (c) Expenses incurred during formation of company
3. (b) External liability of a company
4. (e) The amount which has not been claimed by shareholders.
5. (d) Amount which is kept for distribution to share holders

Question 4.
Write true or false:

1. Cash flow statement is included in the financial statement of a commercial organization.
2. Comparative statement is a form of horizontal analysis.
3. Ratio analysis establish relation between two financial statements.
4. Financial analysis are used by the creditors only.
5. The financial analysis provide assistance to derive the accurate decision to the analyse.
6. Preliminary expenses are incurred during dissolution of a company.
7. Discount on issue of shares and debentures are shown is assets side of balance sheet.
8. Preliminary expenses are considered as capital expenditure.
9. The balance sheet of a company is prepared as per schedule VI and part I of company’s act 1956.
10. Preparation of balance sheet is not mandatory for a company.

Answer:

1. True
2. True
3. True
4. False
5. True
6. False
7. True
8. False
9. True
10. False.

Question 5.
Write the answer in one word / sentence:

1. Which are the two basic financial statement of a company ?
2. What are non current Assets ?
3. Give two examples of current liabilities.
4. What is contingent liabilities ?
5. Write two items of the heading ‘Provision’.
6. The capital beyond which the company cannot issue it’s shares.
7. The person who promotes a company ?
8. The capital which has been received by the company ?
9. What condition of a company is disclosed by balance sheet of company ?
10. Which type of expenditure is underwriting commission ?

Answer:

1. Profit & Loss A / c, Balance Sheet
2. Assets kept for more than one year
3. Creditors, Bills Payable
4. Liabilities which depend on the occurrence of certain event in fixture
5. Provision for Taxation, Provision for Divident
6. Authorised capital
7. Promoters
8. Paid-up capital
9. True and correct
10. Deferred Revenue expenditure.

Financial Statements of a Company Short Answer Type Questions

Question 1.
What do you mean by contingent liabilities ? Give two examples of it
Answer:
These are liabilities which will exist or not, it will depend on any future incident. They are not shown in the liability side of balance sheet. But they are shown below the balance sheet as a foot note. These are the claims of companies outside parties. It can’t be accepted as a loan.

Example:
Amount of bills discounted from the bank, partial payment of shares, etc.

Question 2.
Give the definition of financial statement and five examples of fixed assets.
Answer:
The financial statements are those statements which are prepared to ascertain the profit or loss during an accounting period and position of assets and liabilities at a certain date. These statements are the outcomes of the summarizing process of accounting and are the sources of information based on which conclusion are drawn about the profitability and financial position of a company definitions:

John N. Myer:
‘The financial statement provide a summary of account of a business enterprises, the balance sheet reflecting the assets, liabilities and capital as on a certain date and the income statement showing the results of operations during a certain period.”

As per the Companies Act 2013:
‘‘Financial statement will present a true and appropriate view of the positioning details to the company or companies when it will follow the schedule writing in Section 133 and in the prescribed format of Schedule III of the Act.”

Fixed Assets:
“These are those assets which are used in the business for long duration such as land and buildings, plant and machinery, Furniture, Vehicles, Livestock, Goodwill, Trademark, patent etc.

Question 3.
What do you mean by current assets ?
Answer:
Current assets:
Under this heading we include all such assets which are expected to be converted in cash within a year from the date of balance sheet. The items that come under this heading are divided into following two subheadings :
(A) Current assets
(B) Loans and advances.

(A) Current assets:
The items included in this subheading are as under:

1. Accrued interest on investment
2. Stores and spare parts
3. Loose tools
4. Stock in trade
5. Work-in-progress
6. Sundry Debtors:
   • Debts outstanding for more than six months
   • Other debts Less :  Provision for doubtful debts,
7. Cash and bank balance. In case of debtors, their particulars should also be given regarding their quality
8. such as; (i) Debts fully secured
9. Debts secured on personal security and
10. Debts considered doubtful or bad.

Question 4.
Differentiate between reserves and provisions.
Answer:
The various differences between reserves and provisions are as follows:

Question 5.
Write a short note on:

1. Preliminary expenses
2. Unclaimed dividend.

Answer:
1. Preliminary expenses:
While commencing a company, apart from the value of assets, other expenses which are incurred are called preliminary expenses. It includes expenses in acquisition of buildings, printing expenses of various documents, commission given for the transaction of assets, brokerage and other sundry expenses.

2. Unclaimed dividend:
That amount of declared dividend, where no claim has been made so far, is called unclaimed dividend. It should be paid within a year.

Question 6.
Rearrange the following items under three heads :

1. Fixed Assets
2. Current Assets
3. Loans and Advances.

Livestock, leasehold land, Cash in hand, Loose tools, Trademark, Work-in progress, Goodwill, Stores and spare parts, Plant, Trademark, Furniture, Interest accrued, Bills receivables, Vehicles, Bank balance, Debtors, Loans to subsidiaries, Land.
Solution:

Question 7.
Show how the assets and liabilities are arranged properly according to Section VI, Part-I of Companies Act of 1956 from the following information

Answer:

Question 8.
Under what headings the following items are shown in the Balance sheet of the company:

1. Goodwill
2. Unclaimed dividend
3. Provision for tax
4. Securities premium A/c
5. Loose tools.

Solution:
Balance Sheet of Company:

Question 9.
Under what headings will you show following items in balance sheet:

1. Goodwill
2. Bill receivable
3. Capital reserve
4. Sundry creditors
5. Building
6. Sundry Debtors
7. Debentures
8. Issued capital.

Answer:

1. Goodwill — Fixed assets.
2. Bills receivable — Current assets
3. Capital Reserve — Reserves and provisions
4. Issued capital — Share capital
5. Sundry creditors — Current liabilities
6. Building — Fixed assets
7. Sundry Debtors — Current assets
8. Debentures — Secured loan.

Financial Statements of a Company Long Answer Type Questions

Question 1.
What are the main items of liability side of balance sheet of a company ?
Answer:
Main Items of Balance Sheet and their Details: The main items of balance sheet as mentioned in the part I of the schedule VI of the Indian Companies Act 1956 is as under:

Main items of liability side:
In the balance sheet, the items of liabilities are mentioned under the following heads:

1. Share capital:
The share capital should be classified into following categories:

(i) Authorized capital:
This is the maximum amount of capital which a company can collect by way of issuing of shares. Under this heading the number and the nominal value of shares is given. This amount of capital is not included in the total of the liability side since only a part of the authorized capital is issued for subscription.

(ii) Issued capital:
It is that part of the authorized capital which has actually been issued to the public for subscription so far. It mentions each category of capital, i.e., equity or preference shares which has been issued. Issued capital can never be greater than the authorized capital.

(iii) Subscribed capital:
Subscribed capital is that part of issued capital for which the applications have been received from the public. Subscribed capital is also not included in the total of the liability side. To keep it separate from the total, double close lines are drawn below this amount.

(iv) Called-up capital: It is that part of subscribed capital which has actually been called from the public. The called-up capital can never exceeds the subscribed capital.

(v) Paid-up capital: It is that part of called-up capital which has actually been paid by the public in response to the calls made by the company.

2. Reserve and surplu:
Reserves are the part of profit which is accumulated out of undistributed profits. The reserves and surplus should be categorically mentioned in the balance sheet as:

• Capital Reserve
• Capital Redemption Reserve
• Share Premium Account
• Other specific reserves
• Proposed additions to reserves
• Sinking fund.

After making other necessary appropriations the balance of profit and loss account is also shown under this head.
In case of each of the above reserves, the additions and deductions made since last balance sheet must be disclosed clearly. The debit balance (if any) of the profit and loss account must be shown as deducted from unspecific free revenue reserve. The surplus of profit and loss account (after appropriation) should also be shown under this head.

3. Secured loans:
Loan obtained against pledge of assets as security or against guarantee of repayment made by the company is called secured loan. It includes debentures as per their condition of repayment, bank loans, loans and advances from subsidiary companies, other loans advances, etc. All secured loans must be shown under proper subheadings. Interest accrued and due on unsecured loans are to be included under the appropriate subheadings.

In addition to it the terms of redemption or conversion of loans should also be mentioned along with the earliest date of Redemption or conversion. Under this heading the loan taken from the directors, managing directors / agents, secretaries, etc. should be shown separately. Against each item of loan the security offered should be specified in the balance sheet.

4. Unsecured loan:
When a company borrows loan without giving any security, such loans are known as unsecured loans. The items included under this heading are; Fixed deposits, loans and advances from subsidiary companies, short-term loans and advances from banks or from others. Other loans and advances from banks. Here, by short-term loan we mean such loans which are due for repayment within a period of one year from the date of the balance sheet.

Unsecured loans from directors, managers, managing directors, secretary, treasures and managers should be shown separately. Interest due, but not paid on unsecured loans should be shown along with the concerned loan amount.

5. Current liabilities and provisions:
This item is divided into two main parts namely:

(i) Current liabilities:
All such liabilities which are payable within a period of one year are included under this heading. The items included in it are; bills payable, sundry creditors, advance income, outstanding expenses, unclaimed dividends, interest accrued but not due on loans, etc.

(ii) Provisions:
It is a charge against profit to meet certain known liability for which the exact burden cannot be ascertained with substantial accuracy. In case, such provision exceeds the actual liability the excess is treated as reserve. Provision is maintained even in the years of loss, since it is a charge against the profit.

Under this head the items like provision for taxation, proposed dividend, provision for contingencies, for P.F. of the employees, for other staff benefit schemes such as employees insurance and pension, etc. are included in it.

Question 2.
Explain the items which are shown on the asset side of balance sheet under the main heads of public limited company.
Answer:
The following items are included on the asset side of the balance sheet of a public limited company under the main heads:

1. Fixed assets:
Under this heading, fixed assets of the company are shown in their cost price. Appreciation or depreciation are added or deducted.

2. Investments:
To earn income securities are purchased for business purpose. They are shown under this heading.

3. Current assets, loans and advances:
This heading is also divided into two subheads:

(i) Current assets:
It means such assets which can be changed into cash within the year or immediately. Stock of goods, sundry debtors, etc. are entered in this head.

(ii) Loans and advances:
Under this heading, it is entered bills receivable, loans and advances from subsidiary companies etc. are shown.

4. Miscellaneous expenditure:
Under this heading, preliminary expenses, commission and brokerage on shares and debentures etc. are shown.

5. Profit and loss account:
When there is a debit balance of profit and loss A/c, it is shown under this heading.

Question 3.
Write the names of accounts which are shown on the assets side and liabilities side of balance sheet of a company under main heads in the horizontal form.
Or
Write some important items (only main headings) showed as Indian company’s Act 1956 schedule VI-I in balance sheet.
Answer:
Under the ahead heads, the items are shown on the assets and liabilities side of a company balance sheet:
Balance Sheet of a Ltd. Company:

Question 4.
Write some elements of sound or good financial statement
Or
Write the characteristic of an ideal financial statement.
Answer:
Elements of sound financial statement are as follows:

• Simplicity : It should be simple and easy to understand. The size of this kind of financial statement not so big.
• Accuracy: It should be accurate whatever the conclusion drawn from it are accusable and effective.
• Understandable: It should be easy to understand. Any body can understand.
• Easy: It should be easy to calculate. An average person can understand and able to calculate it.

Question 5.
Write short notes on following:
(A) Current liabilities and provisions
(B) Current assets, loans and advances.

Answer:
(A) Current Liabilities and Provisions: There are two parts under this head:
(a) Current Liabilities:
These are those liabilities which are repayable within one year. Current liabilities include bills payable, sundry creditors, advance payments, unclaimed dividends, etc. These are shown in part A.

(b) Provisions:
‘Provisions’ are shown in part B and they include provision for taxation, proposed dividend, provident fund, provision for insurance and pension schemes etc.

(B) Current Assets, Loans and Advances:
These are the assets which are likely to be converted into cash within a year from the date of the balance sheet. These are divided into two parts:

(a) Current Assets:
These include, (i) Interest accrued on investments, stores and spare parts, loose tools, stock-in-trade, works-in-progress, sundry debtors (Debts out standing for more than 6 months; other debts), cash and bank balance.

(b) Loans and Advances:
Cash loans given to different persons, advances against purchase of goods and various expenses by the company etc., are included in it. These items should be shown in the balance sheet under separate subheadings:

• Advances and Loans to Subsidiaries,
• Bills of exchange,
• Advances recoverable in cash or in kind for value to be received eg., Rates, Taxes, Insurance etc.
• Balance with customs, port trust etc.

Question 6.
Explain in details, the importance of financial statements.
Answer:
Following are the importance of financial statements for various parties:

1. Management:
The management uses accounting information to take various decision. The management has the responsibility to protect die owner’s investment and to increase its value by managing the business efficiently so that it earns maximum profit.

2. Investors:
The investor includes both long term and short term investors. The main purpose of these investors is to protect the appropriate money and earn enough income on it. For this they need much information about the company’s economic status, profit earing capacity, current value of shares.

3. Bank and other lending institutions:
As bank and financial institutions provide loan to the business they are interested in knowing the performance of the business to know whether it is making progress as projected to ensure the safety and recovery of the advanced I loan.

4. Employees and trade unions:
The employees and trade union gets financial status and financial information from these statements. The various facilities and employee’s demand depend on the financial condition of the business enter prize. Earning capacity are affected by wages, allowances, bonus etc.

5. Government and government agencies:
The government came to know about the economic development of the country from the financial statements. The government agencies studies the security of the interest of the shareholders. The government calculate the national income from the information collected through these statement and also ensures that the legal provisions in the articles are being followed or not.

Question 7.
Explain the limitations of financial statements.
Answer:
The limitation of financial statements are as follows:

1. Do not reflect current situation:
Financial statements are prepared on the basis of historical cost. Since the purchasing power of money is changing, the value of assets and liabilities shown in financial statements do not reflect current market situation.

2. Assets may not realize:
Accounting is done on the basis of certain conventions. Some of the assets may not realise the state value if liquidation is forced on the company. Assets shown in the balance sheet reflect only unexpired cost.

3. Bias:
Financial statements are the outcomes of the recorded facts, accounting concepts and convention used and personal judgement made in different situations by the Accountants. Hence, bias may be observed in the results and the financial position depicted in financial statements may not be realistic.

4. Aggregate information:
Financial statements show aggregate information but not detailed information. Hence they may not help the users in decision making sufficiently.

5. Vital information missing:
Balance sheet does not disclose information relating to loss of markets and cease of agreements which have an important impact on the enter prize.

6. No qualitative information:
Financial statements contain only monetary information but not qualitative information like industrial relations, industrial climate, labor relation, quality of work etc.

Question 8.
Draw the specimen of income statement and explain its elements.
Answer:
Profit and Loss A/c
For the year ending on of company Ltd.

MP Board Class 12 Accountancy Important Questions

In this article, we will share MP Board Class 12th Economics Important Questions Unit 3 उत्पादक व्यवहार एवं पूर्ति Pdf, These solutions are solved subject experts from the latest edition books.

MP Board Class 12th Economics Important Questions Unit 3 उत्पादक व्यवहार एवं पूर्ति

उत्पादक व्यवहार एवं पूर्ति Important Questions

उत्पादक व्यवहार एवं पूर्ति वस्तुनिष्ठ प्रश्न

प्रश्न 1.
सही विकल्प चुनकर लिखिए –

प्रश्न (a)
उत्पादन के साधन होते हैं –
(a) दो
(b) तीन
(c) चार
(d) पाँच
उत्तर:
(d) पाँच

प्रश्न (b)
स्थिर लागत को कहते हैं –
(a) परिवर्तनशील लागत
(b) प्रमुख लागत
(c) पूरक लागत
(d) अल्पकालीन लागत।
उत्तर:
(c) पूरक लागत

प्रश्न (c)
पूर्ति में उसी कीमत पर गिरावट आ जाती है जब –
(a) पूर्ति में कमी हो जाय
(b) जब पूर्ति में संकुचन हो जाय
(c) पूर्ति में वृद्धि हो जाय
(d) पूर्ति में विस्तार हो जाय।
उत्तर:
(a) पूर्ति में कमी हो जाय

प्रश्न (d)
उत्पादन का सक्रिय साधन है –
(a) पूँजी
(b) श्रम
(c) भूमि
(d) इनमें से कोई नहीं।
उत्तर:
(b) श्रम

प्रश्न (e)
अल्पकाल में उत्पादन प्रक्रिया में निम्नलिखित में कौन से साधन होते हैं –
(a) स्थिर साधन
(b) परिवर्तनशील साधन
(c) (a) और (b) दोनों
(d) इनमें से कोई नहीं।
उत्तर:
(c) (a) और (b) दोनों

प्रश्न 2.
रिक्त स्थानों की पूर्ति कीजिए –

1. अल्पकालीन उत्पादन फलन ……………………………… कहा जाता है।
2. पैमाने के प्रतिफलों का संबंध …………………………… काल अवधि से है।
3. उत्पादन की प्रति इकाई लागत को ……………………………. कहते हैं।
4. उत्पादन की एक इकाई की बिक्री में वृद्धि होने से आय में होने वाली वृद्धि को ……………………… कहते हैं।
5. एक उत्पादक तब संतुलन में होता है, जब उसका ………………………………. होता है।
6. पूर्ति का नियम, कीमत एवं वस्तु की पूर्ति के बीच ………………………………. संबंध बताता है।
7. दूध जैसी वस्तु के लिए पूर्ति लोच ……………………………….. होती है।

उत्तर:

1. परिवर्तनशील अनुपात के नियम
2. दीर्घ
3. औसत लागत
4. सीमांत लागत
5. लाभ
6. धनात्मक
7. शून्य।

प्रश्न 3.
सत्य/असत्य बताइए –

1. रिकार्डो का लगान सिद्धान्त उत्पत्ति ह्रास नियम पर आधारित है।
2. अविभाज्यता के कारण पैमाने के घटते प्रतिफल की अवस्था लागू होती है।
3. स्थिर लागत को पूरक लागत भी कहते हैं।
4. पूर्ण प्रतियोगिता की स्थिति में एक फर्म का MC वक्र, MR वक्र को जब ऊपर से काटता है तो उस ‘ समय उसको अधिकतम लाभ की प्राप्ति होती है।
5. पूर्ति तथा कीमत में विपरीत संबंध होता है।
6. शीघ्र नष्ट होने वाली वस्तुओं की पूर्ति बेलोच होती है।
7. उत्पत्ति के चार नियम प्रतिपादित किये गये हैं।

उत्तर:

1. सत्य
2. असत्य
3. सत्य
4. असत्य
5. असत्य
6. सत्य
7. असत्य।

प्रश्न 4.
सही जोड़ी बनाइए –

उत्तर:

1. (b)
2. (c)
3. (a)
4. (e)
5. (d).

प्रश्न 5.
एक शब्द/वाक्य में उत्तर दीजिए –

1. हस्तांतरण आय किस लागत को कहा जाता है?
2. स्थिर लागत और परिवर्तनशील लागत का योग किसके बराबर होता है?
3. कीमत में थोड़ी – सी गिरावट होने पर वस्तु की पूर्ति शून्य हो जाती है तो इसे किसकी पूर्ति की लोच कहा जाता है?
4. उत्पादन की एक अतिरिक्त इकाई बेचने से कुल आगम में जो वृद्धि होती है, उसे कहते हैं?
5. एक फर्म साम्य की दशा में कौन-सा लाभ प्राप्त करती है?

उत्तर:

1. अवसर लागत को
2. कुल लागत के
3. पूर्णत: लोचदार
4. सीमांत आगम
5. अधिकतम।

उत्पादक व्यवहार एवं पूर्ति लघु उत्तरीय प्रश्न

प्रश्न 1.
स्थिर लागत एवं परिवर्तनशील लागत में अन्तर स्पष्ट कीजिए?
उत्तर:
स्थिर लागत एवं परिवर्तनशील लागत में अन्तर –

स्थिर लागत –

1. “परिवर्तनशील लागत स्थिर लागतों का सम्बन्ध उत्पादन के स्थिर।
2. कुल स्थिर लागतों पर उत्पादन की मात्रा का। परिवर्तनशील लागतें उत्पादन की मात्रा से कोई प्रभाव नहीं पड़ता।
3. स्थिर लागतें उत्पादन बन्द कर देने पर भी शून्य परिवर्तनशील लागतें उत्पादन बन्द कर देने पर नहीं होती हैं।
4. स्थिर लागतों की हानि उठाकर भी अन्य काल| एक उत्पादक तभी उत्पादन जारी रखेगा, जब में एक उत्पादक, उत्पादन जारी रख सकता है।

परिवर्तनशील लागतों –

1. परिवर्तनशील साधनों से होता है।
2. परिवर्तनशील लागतें उत्पादन की मात्रा से कोई प्रभाव नहीं पड़ता।
3. परिवर्तनशील लागतें उत्पादन बन्द कर देने पर नहीं होती हैं।
4. एक उत्पादक तभी उत्पादन जारी रखेगा, जब में एक उत्पादक, उत्पादन जारी रख सकता है। उसे कम-से-कम परिवर्तनशील लागतों के बराबर कीमत अवश्य मिले।

प्रश्न 2.
लागत वक्रों की आकृति ‘U’ के समान होने के प्रमुख कारण लिखिए?
उत्तर:
लागत वक्रों की आकृति ‘U’ आकार की होने का सर्वाधिक महत्वपूर्ण कारण फर्म को प्राप्त होने वाली आंतरिक बचते हैं। आंतरिक बचतों को निम्नांकित चार भागों में बाँटा जा सकता है –

1. तकनीकी बचतें:
उत्पादन की तकनीक में सुधार पर बचतें प्राप्त होती हैं, उन्हें तकनीकी बचतें कहते हैं। आधुनिक मशीनों एवं बड़े आकार की मशीनों का प्रयोग करने के कारण उत्पादन अधिक मात्रा में होता है, तब प्रति इकाई लागत कम आती है।

2. श्रम संबंधी बचतें:
श्रम संबंधी बचतें श्रम विभाजन एवं विशिष्टीकरण का परिणाम होती हैं। जब उत्पादन बड़े पैमाने पर किया जाता है तो श्रम विभाजन एवं विशिष्टीकरण भी उतना ही अधिक संभव होता है। परिणामस्वरूप श्रमिकों की कार्य कुशलता में वृद्धि होती है जिससे प्रति इकाई उत्पादन लागत कम हो जाती है।

3. विपणन की बचतें:
कोई भी फर्म जब अपने उत्पादन की मात्रा को बढ़ाती है, तो विक्रय लागतें उस अनुपात में नहीं बढ़ती हैं, जिससे प्रति इकाई लागत में कमी आ जाती है।

4. प्रबंधकीय बचतें:
उत्पादन की मात्रा को बढ़ाने पर प्रबंध पर होने वाले व्ययों में कमी आती है, जिसे प्रबंधकीय बचतें कहते हैं। एक कुशल प्रबंधक अधिक मात्रा में उत्पादन का प्रबंध उसी कुशलता के साथ कर सकता है, जितना कि थोड़े उत्पादन का, तो फर्म की प्रति इकाई उत्पादन लागत कम हो जाती

प्रश्न 3.
औसत आय और सीमान्त आय में संबंध बताइए?
उत्तर:
औसत आय और सीमान्त आय वक्र में निम्न संबंध होते हैं –

1. जब तक औसत आय वक्र ऊपर से नीचे की ओर गिरता है, तब तक सीमान्त आय वक्र भी अनिवार्य रूप से औसत आय से कम होगी।
2. जब औसत आय वक्र तथा सीमान्त आय वक्र दोनों गिरते हुए होते हैं, तब यदि औसत आय वक्र के किसी बिन्दुं से OY अक्ष पर लम्ब डाला जाये तो सीमान्त आय वक्र सदैव उस लम्ब केन्द्र से गुजरेगा।
3. जब औसत आय वक्र मूलबिन्दु की ओर नतोदर होता है तब औसत आय वक्र में किसी बिन्दु से AY अक्ष पर डाले गये लम्ब को सीमान्त आय वक्र आधे से कम दूरी पर काटता है।
4. जब औसत आय वक्र मूलबिन्दु की ओर उन्नतोदर होता है तब औसत आय वक्र के किसी बिन्दु के OY अक्ष पर डाले गये लम्ब को सीमान्त आय वक्र आधे से अधिक दूरी पर काटता है।

प्रश्न 4.
एक उत्पादक संतुलन की स्थिति में कब होता है?
उत्तर:
एक उत्पादक संतुलन की स्थिति में तब होता है जब उत्पादक अधिकतम लाभ अर्जित कर रहा हो। एक उत्पादक अधिकतम लाभ वहाँ प्राप्त करता है जहाँ पर लाभ = TR – TC अधिकतम हो। जहाँ TR > TC होता है वहाँ पर फर्म (उत्पादक) को असामान्य लाभ प्राप्त होता है एवं जहाँ पर TR < TC होता है वहाँ पर हानि भी उत्पादक को ही होती है।

प्रश्न 5.
पूर्ति का क्या आशय है?
उत्तर:
किसी वस्तु की पूर्ति से आशय का सम्मानित एक वस्तु की विभिन्न कीमतों पर उत्पादक द्वारा बेची जाने वाली विविध मात्राओं से होता है। पूर्ति वास्तव में उस अनुसूची या तालिका को दर्शाती है जो वस्तु की उन मात्राओं को बताती है जिस पर एक उत्पादक विभिन्न कीमतों पर निश्चित समय पर विक्रय करने के लिए कार्य करता है।

प्रश्न 6.
पूर्ति अनुसूची से आपका क्या आशय है?
उत्तर:
पूर्ति अनुसूची एक तालिका है जो वस्तु की विभिन्न संचय कीमतों पर बिक्री के लिए प्रस्तुत की जाने वाली उस वस्तु की विभिन्न मात्राओं को दर्शाती है। पूर्ति अनुसूची भी दो प्रकार की हो सकती है व्यक्तिगत पूर्ति अनुसूची एवं बाजार की पूर्ति अनुसूची। व्यक्तिगत पूर्ति अनुसूची बाजार में किसी एक फर्म की पूर्ति अनुसूची होती है जबकि बाजार अनुसूची बाजार में किसी विशेष वस्तु का उत्पादन करने वाली सभी फर्मों की पूर्ति के योग को कहते हैं।

प्रश्न 7.
पूर्ति वक्र किसे कहते हैं?
उत्तर:
अनूसूची के रेखीय प्रस्तुतिकरण को पूर्ति वक्र कहा जाता है। किसी वस्तु की विभिन्न संभाव्य कीमतों पर बिक्री के लिए प्रस्तुत किए जाने वाले न लाभ न हानि की विभिन्न मात्राओं को दर्शाने वाला वक्र होता है। यह वक्र भी व्यक्तिगत पूर्ति वक्र एवं बाजार पूर्ति के रूप में विभाजित किया जा सकता है। व्यक्तिगत पूर्ति वक्र बाजार में एक फर्म की पूर्ति को रेखाचित्र में प्रस्तुत करता है जबकि बाजार पूर्ति वक्र किसी बाजार में सभी फर्मों की पूर्ति का योग होता है जिसे रेखाचित्र के रूप में प्रस्तुत किया जा सकता है।

प्रश्न 8.
पूर्ति के नियम की सचित्र व्याख्या कीजिए?
उत्तर:
यदि अन्य बातें समान रहें तो वस्तु की पूर्ति की मात्रा एवं उसकी कीमत में धनात्मक संबंध होता है। वस्तु की कीमत बढ़ने से पूर्ति की मात्रा बढ़ती है एवं वस्तु की कीमत घटने से पूर्ति की मात्रा कम होती है। एक उदाहरण द्वारा इसे निम्न प्रकार से स्पष्ट किया जा सकता है –

प्रश्न 9.
पूर्ति वक्र पर संचलन (Moments) एवं खिसकाव (Shifting) के कौन – से कारण हैं?
उत्तर:
जब वस्तु की कीमत में परिवर्तन होता है तो इस परिवर्तन के कारण पूर्ति वक्र पर संचलन दिखाई देता है। पूर्ति वक्र में खिसकाव तब होता है जब वस्तु की अपनी कीमत के अतिरिक्त अन्य कारकों में परिवर्तन दृष्टिगोचर होता है)। पूर्ति वक्र पर संचलन को जानने के लिए हमें पूर्ति के विस्तार एवं पूर्ति के संकुचन को जानना आवश्यक है पूर्ति वक्र में खिसकाव को वस्तु की पूर्ति में वृद्धि एवं वस्तु की पूर्ति में कमी के द्वारा जाना जाता है।

जब वस्तु की अपनी कीमत बढ़ने से पूर्ति की मात्रा बढ़ती है तो पूर्ति का विस्तार कहते हैं। इसके विपरीत होने पर संकुचन कहते हैं। हड्कि वस्तु की अपनी कीमत के अतिरिक्त अन्य कारण से पूर्ति की मात्रा में वृद्धि होती है तो इसे पूर्ति में वृद्धि कहते हैं। इसके विपरीत होने पर पूर्ति में कमी होती है।

प्रश्न 10.
पूर्ति की कीमत लोच से आप क्या समझते हैं?
उत्तर:
पूर्ति की कीमत लोच का तात्पर्य एक वस्तु की कीमत में परिवर्तनों के कारण वस्तु की पूर्ति की मात्रा की अनुक्रियाशीलता का मापन करती है। दूसरे शब्दों में, पूर्ति की कीमत लोच वस्तु की पूर्ति की मात्रा में प्रतिशत परिवर्तन तथा वस्तु की कीमत में प्रतिशत परिवर्तनों का अनुपात कहलाती है। इसे निम्न समीकरण की सहायता से स्पष्ट किया जा सकता है –
E _s = \(\frac { \triangle Q }{ \triangle P } \times \frac { P }{ Q } \)

प्रश्न 11.
पूर्ति की कीमत लोच को मापने की प्रतिशत विधि एवं ज्यामितीय विधि को संक्षेप में समझाइये?
उत्तर:
पूर्ति की कीमत लोच को मापने में प्रतिशत विधि एवं ज्यामितीय विधि का उपयोग किया जा सकता है परन्तु इनमें प्रतिशत विधि अधिक लोकप्रिय है।

ज्यामितीय विधि के अंतर्गत एक सीधी रेखा वाले पूर्ति वक्र पर कीमत लोच ज्ञात करने के लिए उसे बढ़ाते जाते हैं।

1. जब वृद्धि पर पूर्ति मूल बिन्दु पर मिलता है तो E_s < 1 होता है।
2. जब वृद्धि पर पूर्ति वक्र X अक्ष के धनात्मक भाग को काटता है तो E_s < 1 होता है।
3. जब वृद्धि पर पूर्ति वक्र X अक्ष के ऋणात्मक भाग पर काटता है तो E_s > 1 होता है।

प्रश्न 12.
पूर्ति की लोच को कौन – से घटक प्रभावित करते हैं?
उत्तर:
पूर्ति की लोच को निम्न घटक प्रभावित करते हैं –

1. समयावधि
2. वस्तु की प्रकृति
3. प्राकृतिक अवरोध
4. उत्पादन लागत
5. उत्पादन की तकनीक
6. उत्पादन की जोखिम सहन करने की शक्ति
7. प्रयोग किए जाने वाले आगतों की प्रकृति
8. उत्पादक की अभिरुचि एवं योग्यता।

प्रश्न 13.
औसत स्थिर लागत की विशेषताएँ बताइये।
उत्तर:
विशेषताएँ –

1. औसत स्थिर लागत, कुल स्थिर लागत को फर्म के कुल उत्पादन मात्रा से भाग दिये जाने पर प्राप्त होती है –
2. अल्पकाल में उत्पादन की मात्रा में परिवर्तन होने पर कुल स्थिर लागत अपरिवर्तित रहती है –
3. उत्पादन के बढ़ने पर औसत स्थिर लागत घटती है –
4. औसत स्थिर लागत को प्रति इकाई स्थिर लागत भी कहा जाता है।

प्रश्न 14.
उत्पादन लागत से आप क्या समझते हैं? स्पष्ट लागतों एवं अस्पष्ट लागतों में अंतर बताइए?
अथवा
उपयुक्त उदाहरण देते हुए स्पष्ट एवं अस्पष्ट लागतों में अंतर कीजिए?
उत्तर:
वे सभी व्यय जो किसी उत्पादक या फर्म द्वारा वस्तु के उत्पादन व्यय के रूप में किए जाते हैं, उत्पादन लागत कहलाते हैं।

1. स्पष्ट लागतें: वे सभी लागतें जिनका उत्पादक भौतिक रूप से भुगतान करता है, जैसे – मजदूरी देना, विक्रय लागत आदि।
2. अस्पष्ट लागतें: वे लागतें जिनका उत्पादक को किसी दूसरे व्यक्ति को भुगतान नहीं करना पड़ता जैसे – स्वयं की फैक्टरी या फर्म।

प्रश्न 15.
कॉब – डगलस के उत्पादन फलन को समझाइए?
उत्तर:
कॉब – डगलस का उत्पादन फलन:
यह फलन सामान्यतः निर्माण उद्योगों पर लागू होता है, इस फलन के अनुसार उत्पादन की मात्रा केवल दो साधनों श्रम और पूँजी की मात्रा पर निर्भर करती है।
सूत्र के रूप में – q = x₁^α, x₂^β

जहाँ α तथा β दो धनात्मक संख्याएँ हैं, फर्म निर्गत की q मात्रा का उत्पादन कारक एक का x₁ मात्रा तथा कारक दो की x₂ मात्रा को प्रयोग में लाकर करती है।

प्रश्न 16.
अल्पकाल एवं दीर्घकाल की संकल्पनाओं को समझाइये?
उत्तर:
अल्पकाल वह समयावधि है जिसमें उत्पादन के कुछ साधन स्थिर रहते हैं एवं कुछ परिवर्तनशील होते हैं। यही कारण है कि केवल परिवर्तनशील साधनों को बढ़ाकर उत्पादन को बढ़ाया जा सकता है। दीर्घकाल वह समयावधि है जिसमें उत्पादन के साधन चाहे वे स्थिर हों या परिवर्तनशील सभी परिवर्तनशील होते हैं। इसलिए उत्पादन के सभी साधनों की मात्राओं को बढ़ाया जा सकता है। दीर्घकाल में यहाँ तक कि उत्पादन के पैमाने को भी परिवर्तित किया जा सकता है। अल्पकाल में लागतें स्थिर एवं परिवर्तनशील होती हैं परन्तु दीर्घकाल में केवल परिवर्तनशील होती हैं।

प्रश्न 17.
अल्पकालीन सीमांत लागत वक्र ‘U’ आकार का क्यों होता है?
उत्तर:
जब किसी भी फर्म की उत्पादन प्रक्रिया शुरू की जाती है तब शुरुआत में सीमांत लागत घटती है, किन्तु यह साधन की निश्चित इकाइयों के अल्पकालीन सीमांत नियोजन तक ही घटती है। इसके बाद फर्म को साधन का समता प्रतिफल प्राप्त लागत वक्र होता है। अतः सीमांत लागत स्थिर होने लगती है अंत में साधन की इकाइयों का नियोजन बढ़ाने पर ह्रासमान प्रतिफल लागू हो जाता है इस स्थिति में सीमांत। लागत वक्र ऊपर उठने लगता है।

इस प्रकार उत्पादन प्रक्रिया के प्रारंभिक चरणों में सीमांत लागत घटती है इसके बाद स्थिर होती है तथा अंतिम चरणों में बढ़ने लगती है जिसकी वजह से सीमांत लागत वक्र अंग्रेजी के अक्षर ‘U’ जैसा होता है।

प्रश्न 18.
दीर्घकालीन सीमांत लागत तथा औसत लागत वक्र कैसे दिखते हैं?
उत्तर:
दीर्घकाल में एक फर्म उत्पादन प्रक्रिया में सभी साधनों को समायोजित कर सकती है। उत्पादन प्रक्रिया में उत्पादन का पैमाना बढ़ाने पर शुरू में पैमाने का वर्धमान प्रतिफल मिलता है। इस स्थिति में उत्पादन की समान मात्रा का उत्पादन करने पर अपेक्षाकृत कम लागत आती है। फर्म जब तक उत्पादन का वर्धमान प्रतिफल प्राप्त करती है तब तक सीमान्त औसत लागत दोनों घटती हैं। इसके बाद समता प्रतिफल प्राप्त होता है अतः समान उत्पादन के लिए समान लागत आती है जिससे औस उत्पादन व सीमान्त लागत दोनों स्थिर हो जाती हैं। अंतत: पैमाने का ह्रासमान प्रतिफल लागू होने पर सीमान्त व औसत लागत दोनों बढ़ती हैं। इसलिए सीमान्त व औसत लागत वक्रों का आकार अंग्रेजी के अक्षर U जैसा होता है।

प्रश्न 19.
निम्नलिखित तालिका, श्रम की कुल उत्पाद अनुसूची देती है। तद्नुरूप श्रम का औसत उत्पाद तथा सीमांत उत्पाद अनुसूची निकालिए –

उत्तर:
श्रम की औसत उत्पाद तथा सीमांत उत्पाद अनुसूची –

प्रश्न 20.
मान लीजिए, एक फर्म का उत्पादन फलन है –
q = 5 L\(\frac{1}{2}\) K \(\frac{1}{2}\) , K = 100, L = 100
समीकरण में मान रखने पर,
q = 5(100)^1/2 x (100)^1/2
q = 5\(\sqrt{100}\) x \(\sqrt{100 – 25}\)100
q = 5 x 10 x 10
q = 500
अतः अधिकतम सम्भावित निर्गत 500 इकाइयाँ होंगी।

प्रश्न 21.
लागत फलन की संकल्पनाओं को संक्षिप्त में समझाइए?
उत्तर:
लागत फलन:
लागत तथा निर्गत के बीच में तकनीकी संबंध को लागत फलन कहते हैं, लागत दो प्रकार की होती है –

(अ) अल्पकालीन लागत तथा
(ब) दीर्घकालीन लागत।

(अ) अल्पकालीन लागत:
अल्पकाल में केवल परिवर्ती साधनों को परिवर्तित किया जा सकता है, स्थिर साधनों को नहीं।

अल्पकाल में लागत की विभिन्न संकल्पनाएँ निम्नलिखित हैं –

1. कुल स्थिर लागत – जिन लागतों में उत्पादन की मात्रा में परिवर्तन होने पर कोई प्रभाव नहीं पड़ता।
2. कुल परिवर्ती लागत – जो लागतें उत्पादन की मात्रा में परिवर्तन के साथ – साथ परिवर्तित होती हैं।
3. कुल लागत – किसी वस्तु के उत्पादन की कुल मात्रा पर किया जाने वाला कुल व्यय।
4. औसत स्थिर लागत – कुल स्थिर लागत में कुल उत्पादित इकाइयों का भाग देकर औसत स्थिर लागत प्राप्त की जाती है।
5. औसत परिवर्ती लागत –  कुल परिवर्ती लागत में उत्पादित मात्रा की कुल इकाइयों से भाग देकर प्राप्त होने वाली लागत।
6. अल्पकालीन औसत लागत –  अल्पकालीन औसत लागत की गणना कुल लागत में उत्पादन मात्रा का भाग देकर अथवा औसत स्थिर लागत एवं औसत परिवर्तनशील लागत का योग करके की जा सकती है।
7. अल्पकालीन सीमान्त लागत – उत्पादन की मात्रा में एक इकाई की वृद्धि होने से कुल लागत में जो परिवर्तन आता है, उसे अल्पकालीन सीमान्त लागत कहते हैं।

सूत्र –

(ब) दीर्घकालीन लागत:
दीर्घकालीन लागत में सभी लागत परिवर्तनशील होते हैं। दीर्घकालीन लागत की संकल्पनाएँ निम्नलिखित हैं

1. दीर्घकालीन कुल लागत – कुल उत्पादन पर किये गये समस्त व्ययों के योग को दीर्घकालीन कुल लागत कहते हैं।
2. दीर्घकालीन औसत लागत – दीर्घकालीन कुल लागत में उत्पादन की मात्रा का भाग देकर दीर्घकालीन औसत लागत ज्ञात की जाती है।

सूत्र के रूप में –

प्रश्न 22.
फर्म के संतुलन की मान्यताएँ लिखिए?
उत्तर:
फर्म के संतुलन की मान्यताएँ निम्नांकित हैं –

1. फर्म के सिद्धांत में यह मान लिया जाता है कि उत्पादक का व्यवहार विवेकपूर्ण होता है। प्रत्येक उत्पादक अधिक से अधिक मौद्रिक लाभ अर्जित करने का प्रयत्न करते हैं।
2. उद्यमकर्ता प्रत्येक उपज को उत्पादन की एक दी हुई तकनीकी दशाओं में कम से कम लागत पर पैदा करने का प्रयत्न करता है।
3. एक फर्म द्वारा एक वस्तु का उत्पादन किया जाता है।
4. प्रत्येक उत्पत्ति के साधन की कीमत दी हुई होती है तथा निश्चित होती है।

उत्पादक व्यवहार एवं पूर्ति दीर्घ उत्तरीय प्रश्न

प्रश्न 1.
औसत स्थिर लागत, औसत परिवर्तनशील लागत और औसत कुल लागत को भलीभाँति समझाइए?
उत्तर:
अल्पकालीन औसत लागते तीन प्रकार की होती हैं

(अ) औसत स्थिर लागत:
(ब) औसत परिवर्तनशील लागत एवं
(स) औसत कुल लागत।

(अ) औसत स्थिर लागत:
औसत स्थिर लागत, कुल स्थिर लागत को फर्म के कुल उत्पादन मात्रा से भाग दिये जाने पर प्राप्त होती है। इसे प्रति इकाई लागत भी कहा जाता है। अर्थात्,

अल्पकाल में उत्पादन की मात्रा घटे या बढ़े, कुल स्थिर लागत अपरिवर्तित रहती है। कुल स्थिर लागत में कोई परिवर्तन नहीं होता है, किन्तु उत्पादन के बढ़ने के साथ-साथ औसत स्थिर लागत घटती चली जाती है। इसका प्रमुख कारण यह है कि उत्पादन की मात्रा बढ़ने से कुल स्थिर लागत, उत्पादन की अधिकाधिक इकाइयों में बँटने लगती है। अत: औसत स्थिर लागत क्रमशः घटने लगती है।

(ब) औसत परिवर्तनशील लागत:
कुल परिवर्तनशील लागत को फर्म के कुल उत्पादन की इकाइयों से भाग दिये जाने पर जो भजनफल प्राप्त होता है, उसे ही औसत परिवर्तनशील लागत कहते हैं। इसे प्रति इकाई परिवर्तनशील लागत भी कहते हैं । अर्थात्,

कुल परिवर्तनशील लागत उत्पादन की मात्रा कुल परिवर्तनशील लागत, उत्पादन की मात्रा में वृद्धि किये जाने से हमेशा बढ़ती जाती है। चूंकि अल्पकाल में उत्पादन के क्षेत्र में परिवर्तनशील अनुपातों का नियम’ लागू होता हैं, इसलिए औसत परिवर्तनशील लागत वक्र प्रारम्भिक अवस्था में गिरता है, क्योंकि उत्पादन वृद्धि नियम या लागत ह्रास नियम लागू होता है, किन्तु एक बिन्दु के पश्चात् उत्पत्ति ह्रास नियम या लागत वृद्धि नियम लागू होने के कारण यह तीव्र गति से ऊपर की ओर बढ़ने लगता है।

(स) औसत कुल लागत:
औसत कुल लागत से अभिप्राय, उत्पादन की कुल प्रति इकाई लागत से है। जब उत्पादन की कुल लागत को उत्पादित इकाइयों की संख्या से भाग दिया जाता है, तो औसत कुल लागत प्राप्त होती है। अर्थात

चूँकि कुल लागत, परिवर्तनशील लागत एवं स्थिर लागत का योग होती है, अतः औसत कुल लागत, औसत परिवर्तनशील लागत और औसत स्थिर लागत के योग के बराबर होती है।

प्रश्न 2.
कुल, औसत एवं सीमान्त आय को एक काल्पनिक तालिका तथा रेखाचित्र की सहायता से समझाइए?
उत्तर:
कुल आय, औसत आय तथा सीमान्त आय को निम्नलिखित तालिका की सहायता से स्पष्ट किया जा सकता है
तालिका – कुल आय, औसत आय तथा सीमान्त आय कुल आय औसत आय –

उपर्युक्त तालिका से स्पष्ट है कि अतिरिक्त इकाई बेचने के लिए कीमत में कटौती की जा रही है। जब फर्म, वस्तु की इकाई बेचती है, तो औसत आय, कुल आय और सीमान्त आय सभी ₹ 10 हैं, किन्तु जब वह वस्तु की दो इकाइयाँ बेचती है, तो वस्तु की कीमत में कटौती कर ₹ 9 प्रति इकाई कर देती है, इससे उसकी कुल आय ₹ 18 हो गयी है, जबकि सीमान्त आय 18 – 10 = ₹ 8 है। जब वस्तु की 3 इकाइयाँ बेची जाती हैं, तो कीमत में पुनः कटौती की जाती है। प्रति इकाई कीमत ₹ 8 किये जाने पर कुल आय 8 x 3 = ₹ 24 हो गयी है, जबकि सीमान्त आय 24 – 18 = ₹ 6 हो गयी है।

उपर्युक्त तालिका को निम्न रेखाचित्र की सहायता से भी स्पष्ट किया जा सकता है प्रस्तुत रेखाचित्र में Ox – आधार रेखा पर बेची जाने वाली इकाइयाँ तथा OY – लम्ब रेखा पर आगम को दिखाया गया है।

1. चित्र में TR कुल आय वक्र, AR औसत आय वक्र एवं सीमांत आय वक्र एवं MR सीमान्त आय वक्र है।

2. जब कुल आय वक्र TR,A बिन्दु तक बढ़ता जाता है तो सीमान्त आय MR धनात्मक होती है। चित्र से स्पष्ट है 15 कि MR रेखा C बिन्दु तक धनात्मक है।

3. जब कुल आय वक्र TR, A में B बिन्दु तक घटने आय वक्र – लगती है, तो सीमान्त आय वक्र MR ऋणात्मक हो जाता है। MR वक्र C बिन्दु के पश्चात् ऋणात्मक हो गया है।

4. जब औसत आय वक्र AR गिरने लगता है, तो सीमान्त आय वक्र MR भी गिरने लगता है किन्तु MR वक्र में गिरावट की दर AR में गिरावट की दर से अधिक है। चित्र से स्पष्ट है कि MR वक्र AR वक्र से नीचे है।

5. जब उत्पादन की मात्रा OC हो जाती है, तो इसके उत्पादन बढ़ने पर सीमान्त आय वक्र ऋणात्मक हो जाता है।

6. औसत आय वक्र AR बायें से दायें नीचे की ओर गिरता हुआ वक्र है। इसका अभिप्राय यह है कि वस्तु की अतिरिक्त इकाइयाँ बेचने के लिए मूल्यों में कटौती करनी पड़ती है। मूल्यों में यह कटौती सभी इकाइयों में की जाती है इसलिए AR औसत आय वक्र नीचे की ओर गिरता हुआ है।

7. सीमान्त आय वक्र MR भी बायें से दायें की ओर गिरता हुआ वक्र है, किन्तु सीमान्त आय वक्र में गिरावट की दर अधिक है। इसका कारण यह है कि अतिरिक्त इकाई बेचने के लिए वस्तु के मूल्य में कटौती करनी पड़ती है।

प्रश्न 3.
पूर्ण प्रतियोगिता की दशा में अल्पकाल में किसी वस्तु का मूल्य कैसे निर्धारित होता है? उदाहरण तथा रेखाचित्र द्वारा समझाइए?
उत्तर:
पूर्ण प्रतियोगिता में फर्म का साम्य:
पूर्ण प्रतियोगिता की स्थिति में प्रत्येक फर्म का व्यवहार पूरी तरह विवेकपूर्ण होता है, ऐसा हम मान सकते हैं। ये फर्मे अपने हित में अधिकाधिक लाभ अर्जित करने का प्रयास करती हैं। आधुनिक अर्थशास्त्री किसी वस्तु के मूल्य तथा उत्पादन निर्धारण को फर्म के साम्य के शब्दों में व्यक्त करते हैं:

एक फर्म साम्य की स्थिति में तब होगी जबकि उसके कुल उत्पादन में कोई परिवर्तन नहीं होता। एक फर्म अपने उत्पादन में परिवर्तन तब नहीं करेगी जब उसे अधिकतम लाभ प्राप्त हो रहा हो। अत: “एक फर्म का साम्य तथा एक फर्म द्वारा उत्पादित वस्तु की मात्रा और कीमत निर्धारण दोनों एक ही बात है।”

अल्पकाल में फर्म का साम्य:
अल्पकाल में समय की कमी होती है जिससे पूर्ति की मात्रा को घटायाबढ़ाया नहीं जा सकता, परन्तु माँग में होने वाले परिवर्तनों को रोका भी नहीं जा सकता। अत: अल्पकाल में एक फर्म को लाभ, सामान्य लाभ व हानि हो सकती है।

1. लाभ की स्थिति:
जब वस्तु की माँग अधिक होती है और पूर्ति को अल्पकाल में उसके अनुसार नहीं बढ़ाया जा सकता तो उस समय विशेष पर फर्म को लाभ मिलता है जैसा कि चित्र से स्पष्ट है।

चित्र में E बिन्दु पर MR = MC के है इसलिए E PM बिन्दु अधिकतम लाभ का बिन्दु है। यह फर्म के साम्य की E स्थिति को बताता है अतः
कुल उत्पादन = 0Q
कीमत (AR) = EQ या OP
प्रति इकाई लागत (AC) = RQ
प्रति इकाई लाभ = EQ – RQ = ER
कुल लाभ = प्रति इकाई लाभ x उत्पादन.
= ER x OQ = ER X PE,
(: 0Q = PE) = MPER

2. सामान्य लाभ की स्थिति:
अर्थशास्त्र में सामान्य लाभ उस स्थिति में होता है जब वस्तु की माँग और MC AC पूर्ति आपस में बराबर होती है अर्थात् फर्म द्वारा प्राप्त की गयी कीमत AR से वस्तु की औसत लागत AC पूरी हो जाये (AR = AC) तो वह सामान्य लाभ की स्थिति होगी। जैसा AR = MR कि चित्र से स्पष्ट है। चित्र में E बिन्दु अधिकतम लाभ का बिन्दु है। इस बिन्दु पर OQ कुल उत्पादन है, वस्तु की प्रति इकाई कीमत EQया OP है तथा प्रति इकाई लागत भी EQ है, अतः स्पष्ट है कि फर्म को केवल सामान्य लाभ ही प्राप्त हो रहा है।

3. हानि की स्थिति:
उत्पादन में कभी – कभी अल्पकाल में ऐसी स्थिति भी उत्पन्न हो सकती है जबकि फर्म को हानि का सामना करना पड़े, अर्थात् उसकी औसत आय (AR) की तुलना में औसत लागत (AC) अधिक हो। इस स्थिति को चित्र की सहायता से समझा जा सकता है। चित्र में MC, MR को नीचे से काटती है। E बिन्दु साम्य PM बिन्दु है। इस बिन्दु पर OQ कुल उत्पादन है, वस्तु की प्रति ल इकाई कीमत EQ या OP है, प्रति इकाई लागत RQ तथा। प्रति इकाई हानि (RQ – EQ) = RE है। कुल = RE x MR.

प्रश्न 4.
औसत लागत और सीमान्त लागत में संबंध को एक काल्पनिक तालिका एवं रेखाचित्र की सहायता से स्पष्ट कीजिए?
अथवा
औसत लागत तथा सीमांत लागत में क्या संबंध है? रेखाचित्र की सहायता से समझाइये?
उत्तर:
औसत लागत और सीमान्त लागत के संबंध को निम्नलिखित तालिका एवं रेखाचित्र की सहायता से स्पष्ट किया जा सकता है –
तालिका – कुल, औसत व सीमान्त लागत –

प्रस्तुत रेखाचित्र में OX – आधार रेखा पर उत्पादन की मात्रा तथा OY – लम्ब रेखा पर लागत को दिखाया गया है। AC औसत लागत वक्र एवं MC सीमान्त लागत वक्र है। दोनों का स्वरूप अंग्रेजी अक्षर ‘U’ के समान है, क्योंकि उत्पादन के क्षेत्र में परिवर्तनशील अनुपातों। का नियम लागू होता है। Pबिन्दु औसत लागत वक्र का न्यूनतम बिन्दु। है। सीमान्त लागत वक्र MC, औसत लागत वक्र AC को इसी न्यूनतम बिन्दु P पर नीचे से काटता है एवं कटाव बिन्दु के ऊपर तेजी से बढ़ने। लगता है। P बिन्दु के पूर्व जब औसत लागत वक्र AC ऊपर से नीचे उत्पादन की मात्रा की ओर गिर रहा है। चित्र से स्पष्ट है कि सीमान्त लागत वक्र MC औसत लागत वक्र AC से नीचे है। P बिन्दु के पश्चात् जब औसत लागत वक्र AC की ओर बढ़ने लगता है, तो सीमान्त लागत वक्र MC भी बढ़ने लगता है, किन्तु सीमान्त लागत वक्र में वृद्धि की दर अधिक है।

प्रश्न 5.
उत्पादन लागत से आप क्या समझते हैं? कुल लागत, स्थिर लागत तथा परिवर्तनशील लागत का अर्थ समझाइए?
उत्तर:
“अर्थशास्त्र में उत्पादन लागत का अर्थ उन सभी भुगतानों से है जो उत्पादन दर व्यय किये गये हैं। भले ही इसके उत्पादक द्वारा प्रदान की गई पूँजी, भूमि, श्रम आदि सेवाओं का पुरस्कार भी शामिल हो। साहसी का सामान्य लाभ भी इसमें सम्मिलित होता है। उत्पादन लागत में न केवल वित्तीय व्यय, बल्कि समय, सेवा तथा शक्ति के रूप में किये गये व्यय को भी सम्मिलित किया जाता है।

कुल लागत:
किसी फर्म को उत्पादन की एक निश्चित मात्रा उत्पादित करने के लिए जो कुल व्यय करना पड़ता है, उसे फर्म की कुल लागत कहा जाता है। उत्पादन में वृद्धि के साथ – साथ कुल लागतों में वृद्धि होती जाती है। कुल लागतों में सामान्यतः दो प्रकार की लागतें सम्मिलित की जाती हैं –

1. स्थिर या पूरक लागत तथा
2. परिवर्तनशील या प्रमुख लागत

अर्थात्
कुल लागत = स्थिर लागत + परिवर्तनशील लागत।

1. स्थिर या पूरक लागत:
स्थिर लागत से तात्पर्य, उत्पत्ति के स्थिर साधनों पर किये जाने वाले व्यय से होता है। उत्पत्ति के स्थिर साधन ऐसे साधनों को कहा जाता है जिन्हें अल्पकाल में घटाया या बढ़ाया नहीं जा सकता, वे उत्पत्ति के स्थिर साधन कहलाते हैं। ऐसे साधनों पर किया जाने वाला व्यय उत्पादन के सभी स्तरों पर समान रहता है। यदि किसी समय पर उत्पादने शून्य हो जाये, तो भी स्थिर लागत बनी रहेगी। यही कारण है कि स्थिर लागतों को पूरक लागतें, ऊपरी लागते, सामान्य लागतें एवं अप्रत्यक्ष लागतें भी कहते हैं।

स्थिर लागतों के अन्तर्गत निम्नलिखित लागतों को सम्मिलित किया जाता है –

1. फर्म की बिल्डिंग का किराया
2. स्थिर पूँजी एवं दीर्घकालीन ऋण पर ब्याज
3. बीमा शुल्क
4. मशीनों का घिसावट व्यय
5. प्रशासनिक ब्याज, जैसे – प्रबन्धकों एवं कार्यालयों के कर्मचारियों के वेतन
6. विद्युत् व्यय
7. व्यावसायिक कर, लाइसेंस फीस
8. फर्म के स्वामी के अवसर लागतों एवं सामान्य लाभ को भी सम्मिलित किया जाता है।

2. परिवर्तनशील या प्रमुख लागत:
परिवर्तनशील लागतों से अभिप्राय, ऐसे व्ययों से है, जो उत्पत्ति के परिवर्तनशील साधनों पर किये जाते हैं। उत्पत्ति के परिवर्तनशील साधन ऐसे साधनों को कहा जाता है, जिन्हें उत्पादन में परिवर्तन होने पर परिवर्तन करना पड़ता है। इस प्रकार, परिवर्तनशील लागतों से तात्पर्य, ऐसी लागतों से है, जिनमें उत्पादन में परिवर्तन होने पर परिवर्तन हो जाता है। परिवर्तनशील लागत को प्रमुख लागत एवं प्रत्यक्ष लागत भी कहा जाता है।

अल्पकालीन परिवर्तनशील लागतों में निम्न लागतें सम्मिलित की जाती हैं –

1. कच्चे माल का मूल्य
2. श्रमिकों की मजदूरी
3. ईंधन एवं विद्युत् शक्ति की लागते
4. परिवहन लागत
5. उत्पादन कर एवं बिक्री कर इत्यादि।

इस प्रकार स्पष्ट है कि कुल लागत, स्थिर लागत एवं कुल परिवर्तनशील लागत का योग होता है।

प्रश्न 6.
फर्म के संतुलन का क्या अर्थ है? फर्म के संतुलन की विशेषताओं को स्पष्ट कीजिये?
उत्तर:
फर्म के साम्य या संतुलन से आशय-फर्म के संतुलन से आशय उस अवस्था से है जिसमें परिवर्तन की अनुपस्थिति दृष्टिगोचर होती है। फर्म के साम्य के आधार पर किसी फर्म के द्वारा वस्तु के मूल्य निर्धारण एवं उत्पादन की मात्रा का निर्धारण किया जाता है साम्यावस्था में उत्पादन की मात्रा में कमी या वृद्धि से फर्म का कोई सारोकार नहीं होता है। यही कारण है कि फर्म को इस अवस्था में अधिकतम लाभ प्राप्त होता है। अतएव वह बिंदु जिस पर फर्म को अधिकतम मौद्रिक लाभ प्राप्त हो उसे फर्म का संतुलन कहते हैं। जहाँ TRTC अधिकतम हो।

फर्म के संतुलन की विशेषताएँ – फर्म के संतुलन की अवस्था की विशेषताएँ निम्नलिखित हैं –

1. वस्तु की कीमत या उत्पादन की मात्रा में कोई परिवर्तन नहीं:
संतुलन की स्थिति में फर्म अपनी कीमत या वस्तु के उत्पादन की मात्रा में किसी भी प्रकार की कोई परिवर्तन नहीं करती है अर्थात् परिवर्तन की अनुपस्थिति रहती है।

2. अधिकतम लाभ प्राप्त करना:
एक फर्म अपने संतुलन की स्थिति में अधिकतम लाभ प्राप्त करती है। अत: वह किसी भी प्रकार का जोखिम नहीं उठाना चाहती है।

3. फर्म की उत्पादन लागत न्यूनतम होना:
फर्म के संतुलन की स्थिति में फर्म न्यूनतम लागत पर उत्पादन को संभव बनाती है। उत्पादन लागत न्यूनतम हो जाने से लाभ बढ़ जाता है।

4. कुल लागत एवं कुल आगम तथा सीमांत विश्लेषण रीति का प्रयोग:
फर्म की साम्यावस्था कुल लागत एवं कुल आगम तथा सीमांत विश्लेषण रीति का प्रयोग करके प्राप्त की जा सकती है। एक फर्म के साम्य में उत्पादित वस्तु की मात्रा एवं कीमत निर्धारण में कोई अन्तर नहीं है।

प्रश्न 7.
उत्पादन फलन को परिभाषित कीजिए।पैमाने के वर्धमान, स्थिर तथा ह्रासमान प्रतिफल को समझाइए?
उत्तर:
उत्पादन फलन – यह उत्पादन के आगतों तथा अंतिम उत्पाद के बीच तकनीकी संबंध को बताता है।
q= f(x₁x₂)
यहाँ = उत्पादन की मात्रा, x₁ व x₂, कारक 1 व 2
पैमाने के प्रतिफल:
दीर्घकाल में उत्पादन के साधनों के समानुपात में बदलने से उत्पादन पर जो प्रभाव पड़ता है, वह पैमाने के प्रतिफल कहलाते हैं। यह दीर्घकाल से संबंधित है तथा सभी आगत परिवर्तनीय होते हैं।
पैमाने के प्रतिफल के तीन निम्नलिखित प्रकार हैं –

पैमाने के बढ़ते प्रतिफल की अवस्था:
जब सभी आगतों को एक ही अनुपात में बढ़ाने के फलस्वरूप उत्पादन में, आगतों में वृद्धि की अपेक्षा, अधिक अनुपात में वृद्धि होती है, तो। इस स्थिति को पैमाने के बढ़ते प्रतिफल की अवस्था कहा जाता है, जैसेमाना कि आगतों में 10% की वृद्धि करने पर उत्पादन में 12% की वृद्धि हो, ” तो यह पैमाने के बढ़ते प्रतिफल कहलाएँगे।

पैमाने के स्थिर प्रतिफल की अवस्था:
जब सभी आगतों में एक निश्चित अनुपात में वृद्धि करने के फलस्वरूप उत्पादन में भी उसी अनुपात में वृद्धि होती है, जिस अनुपात में आगतों में वृद्धि की गई थी। तो इसे पैमाने के स्थिर प्रतिफल की अवस्था कहते, उपरोक्त चित्रानुसार OP पैमाने की रेखा है। साधन X व Y की पहली इकाइयों पर उत्पादन 100 इकाइयों का था, जबकि दोनों इकाइयों की मात्रा 300 बढ़ाकर 2 – 2 करने पर उत्पादन 200 तथा 3 – 3 करने पर उत्पादन 300 इकाइयाँ । X – 200 हो जाती हैं। अत: AB = BC, यहाँ यह स्पष्ट है कि उत्पादक को पैमाने के। स्थिर प्रतिफल प्राप्त हो रहे हैं।

पैमाने के घटते प्रतिफल की अवस्था:
जब सभी आगतों में एक निश्चित अनुपात में वृद्धि के परिणामस्वरूप उत्पादन में वृद्धि, आगतों में की गई आनुपातिक वृद्धि की। अपेक्षा कम होती है, तो इस स्थिति को पैमाने के घटते हुए प्रतिफल की अवस्था कहा जाता है, जैसे – माना कि आगतों में 10% की वृद्धि की जाती है। इसके परिणामस्वरूप उत्पादन में 8% की वृद्धि होती है, तो इसे पैमाने के घटते प्रतिफल की अवस्था कहा जायेगा। उपरोक्त चित्रानुसार, x + y उत्पादन के साधन मिलकर पहले 100 इकाइयाँ उत्पादित करते हैं। फिर 2x + 2y मिलकर 180 इकाइयाँ उत्पादित करते हैं तथा 3x + 3y मिलकर 240 इकाइयाँ।

अतः इस प्रकार उत्पत्ति के साधनों की मात्रा दुगुनी तथा तिगुनी होने पर भी उत्पादन दुगुना या तिगुना न होकर कम बढ़ता है। अत: E बिन्दु तक पैमाने के घटते हुए प्रतिफल की प्राप्ति हो रही है, क्योंकि DE > CD > BC > AB है।

प्रश्न 8.
निम्नलिखित तालिका, श्रम का सीमांत उत्पादन अनुसूची देती है। यह भी दिया गया है कि श्रम का कुल उत्पाद शून्य है। प्रयोग के शून्य स्तर पर श्रम के कुल उत्पाद तथा औसत उत्पाद अनुसूची की गणना कीजिए?

उत्तर:
श्रम की कुल उत्पाद तथा औसत उत्पाद अनुसूची –

प्रश्न 9.
एक फर्म की अल्पकालीन सीमांत लागत अनुसूची निम्नलिखित में दी गयी है। फर्म की स्थिर लागत ₹ 100 है। फर्म के कुल परिवर्ती लागत, कुल लागत, औसत परिवर्ती लागत तथा अल्पकालीन औसत लागत अनुसूची निकालिए?

उत्तर:
फर्म की अन्य अनुसूची निम्नलिखित हैं –

प्रश्न 10.
मान लीजिए, एक फर्म का उत्पादन फलन है?
q= 2L² K² 
अधिकतम संभावित निर्गत ज्ञात कीजिए, जिसका फर्म उत्पादन कर सकती है, 5 इकाइयाँ L तथा 2 इकाइयाँ K द्वारा अधिकतम संभावित निर्गत क्या है, जिसका फर्म उत्पादन कर सकती है। शून्य इकाई L तथा 10 इकाई K द्वारा?
हल:
दिया है –
q = 2² K²
जहाँ L = 5,
K = 2
समीकरण में मान रखने पर,
q = 2(5)² x (2)²
q = 2(25)(4)
q = 200 इकाइयाँ
अत: अधिकतम सम्भावित निर्गत (उत्पादन) 200 इकाइयाँ होंगी। दूसरी स्थिति में, दिया है
L = 0, K = 10 समीकरण में मान रखने पर,
q = 2(0) x (10) या
q = 2 x 0 x 100
q = 0
अतः अधिकतम संभावित निर्गत (उत्पादन) शून्य होगा।

प्रश्न 11.
एक फर्म के लिए शून्य इकाई L तथा 10 इकाइयाँ K द्वारा अधिकतम संभावित निर्गत निकालिए, जब इसका उत्पादन फलन है?
q= 5L + 2K.
हल:
दिया है
q = 5L + 2K
L = 0, K = 10
समीकरण में मान रखने पर,
q = 5(0) + 2(10) या
q = 0 + 20 या
q = 20
अतः अधिकतम संभावित उत्पादन 20 इकाइयाँ होंगी।

MP Board Class 12th Economics Important Questions

MP Board Class 12th Business Studies Important Questions Chapter 8 Controlling

Controlling Important Questions

Controlling Objective Type Questions

Question 1.
Choose the correct answer :

Question 1.
Controlling is which level of management function :
(a) First
(b) Second
(c) Middle
(d) Last
Answer:
(d) Last

Question 2.
Control is related to :
(a) Result
(b) Work
(c) Effects
(d) All the above.
Answer:
(a) Result

Question 3.
Planning and Control are :
(a) Completely different
(b) Adverse to each other
(c) Similar to each other
(d) Interrelated activities.
Answer:
(d) Interrelated activities.

Question 4.
Out of the following which is not a technique of control:
(a) Exceptional control
(b) Budgetary control
(c) Cost control
(d) Punishable control.
Answer:
(d) Punishable control

Question 5.
Control is:
(a) Negative process
(d) Positive process
(c) Re-formative process
(d) None of these.
Answer:
(c) Re-formative process

Question 6.
What is the first step of controlling:
(a) Budget preparation
(b) To lay down proportion
(c) Evaluation of performance
(d) Identification of deviations.
Answer:
(a) Budget preparation

Question 7.
What is the aim of control:
(a) To estimate production
(b) Arrangement of financial resources
(c) Evaluation of actual performance
(d) All the above.
Answer:
(c) Evaluation of actual performance

Question 8.
Control Process is :
(a) Continuous
(b) Primary
(c) Planning
(d) Essential.
Answer:
(a) Continuous

Question 2.
Fill in the blanks :

1. The work of……………….. is to see whether the works are in conformity to plans or not.
2. ………………..is forward looking……………….. and is backward looking.
3. In control process it is……………….. that all the work is processing/done as per plans.
4. Effective control is related to ………………..
5. In control standard work is compared with………………..
6. ………………..steps are taken in controlling process.
7. In control process……………….. points are marked.
8. Control is useful in controlling ………………..
9. Control process of business enterprise is helpful for……………….. operations of business.

Answer:

1. Control
2. Planning, Controlling
3. Evaluating test
4. Results
5. Actual work,
6. Corrective
7. Weak
8. Wastage
9. Skilled.

Question 3.
Write the answer in one word/sentence :

1. In controlling actual performance is compared with.
2. Name the remedial measures taken to correct deviations in process of control.
3. Write the technique of control.
4. Name the technique of control in which the exceptional works are only informed to managers ?
5. Which technique of control is adopted for departments related with finance ?
6. To determine the work standard is which step of control ?
7. Write one advantage of control by exception.
8. What is Budgeting ?
9. What do you mean by control through budgeting ?
10. On what function of management control depends ?

Answer:

1. Standard performance
2. Corrective action
3. Auditing
4. Exceptional control
5. Auditing
6. To determine the work standard is the 1st step of control
7. By control by exception time is saved
8. Budgeting is a process by which budget is controlled.
9. by controlling through budgeting we mean the comparison between the budget provision and the actual goals set
10. control depends on planing

Question 4.
Write true or false :

1. Control is the primary function of management.
2. In control actual performance is compared with standard performance.
3. Control is the last function of management.
4. Control provides security from risk.
5. Control does not need at all levels of management.
6. Deviation is always positive.
7. Control should be rigid.
8. Control is both positive and negative.
9. Control is a continuous process.
10. Control can be done for present and future activities only.

Answer:

1. True
2. True
3. True
4. True
5. False
6. False
7. False
8. True
9. False
10. True.

Question 5.
Match the columns :

Answers:

1. (e)
2. (c)
3. (b)
4. (a)
5. (d)
6. (g)
7. (f)
8. (j)
9. (h)
10. (i)

Controlling Very Short Answer Type Questions

Question 1.
“Planning is of no use without control.” Explain.
Answer:
Planning and controlling both are interdependent and interrelated activities. They are complementary and supplementary to each other.
The close relationship between planning and controlling can be justified on the following points:

1. Planning is the origin of controlling
2. Both are interrelated
3. Planning is theoretical whereas controlling is practical.

Question 2.
What is control by exception ?
Answer:
A good control system should focus managerial attention on exceptional deviations. This is called ‘Control by exception’. It means if things are going smoothly, management should not interfere. Management should interfere only in exceptional circumstances.

Question 3.
Why is control incomplete without planning ?
Answer:
Control is fully dependent upon planning because it is the work of controlling to see whether the work is in conformity to plans or not, if not give directions for correction.

Question 4.
What is deviation in control ?
Answer:
The difference between actual performance and standard performance is deviation in control.

Question 5.
Ravi Ltd. wants to produce stapler pins in huge quantity. As per the policy of the company 44% of the production can be spoiled. Since last 5 lots 8 to 10% production is spoiled. The reason is the repair in the machine. What will be your suggestion for corrective action ?
Answer:
Current machine repair must be monitored or new machine must be purchased.

Question 6.
Why is control a blank exercise without planning ?
Answer:
Control is fully dependent upon planning because it is the work of controlling to see whether the work is in conformity to plans or not, if not give directions for correction.

Question 7.
What is feedback in control ?
Answer:
A feedback is a common and powerful tool of control process. It helps to take the system output into consideration, which enables the system to adjust the performance by corrective actions.

Question 8.
Define control.
Answer:
Definitions : According to Henri Fayol, “In an undertaking, control consists in verifying whether everything occurs in conformity with the plan adopted, the instructions issued and the principles established.”

Question 9.
Why do you need control ?
Answer:
In the current scenario of industrial revolution technological advancement, market and taste of customers are frequently changing, In this era the management has to work efficiently and effectively to meet the qualitative and quantitative standards. Therefore, control is must.

Question 10.
What is physical standard proportion ?
Answer:
Physical standard proportion includes number of tasks, labour, hours and other physical units.

Question 11.
What is monetary standard proportion ?
Answer:
Monetary standard proportion includes per unit cost, per unit sale, labour expenses and distribution expenses etc.

Question 12,
What do you mean by budget ?
Answer:
A budget is a financial plan for a defined period of time, usually a year, it may also include planned sales, volumes and revenues, resource quantities, cost and expenses, assets, liabilities and cash flows.

Question 13.
How does control improves the future plans ?
Answer:
Control improves future plans by suggestions from past experiences.

Question 14.
What is Budgetary control ?
Answer:
Budgets are quantitative statements of objectives, plans and programmed of an organization. Budgetary control regulates, all these important aspects for better functioning

Question 15.
How are planning and control interrelated and how does they provide to each other ?
Answer:
Relationship Between Planning and Control: Planning and controlling both are interdependent and interrelated activities. They are complementary and supplementary to each other.
The close relationship between planning and controlling can be justified on the following points:

1. Planning is the origin of controlling
2. Both are interrelated
3. Planning is theoretical whereas controlling is practical
4. Planning is meaningless without controlling and controlling is blind without planning
5. Controlling ensures realizing planned goals efficiently and provides basis for improvement in future plans
6. Planning is looking ahead and controlling is looking back.

Interrelation between planning and controlling can be understood from the following

Question 16.
What do you understand by negative and positive deviation ?
Answer:
Negative Deviation : This occurs when the actual performance is less than the standard preformance.
Positive Deviation : This occurs when the actual performance is more than the standard performance.

Question 17.
How can control helpful to curtail the dishonest attitude of employees ?
Answer:
Controls can keep constant or steady watch on those employees and can be helpful to curtail dishonest behavior of employees.

Question 18.
Write one point of difference between planning and control.
Answer:
Planning is forward looking and controlling is backward looking.

Question 19.
Give two examples of qualitative standards in the control process.
Answer:

1. Relationship with employees
2. Ability of management.

Question 20.
Why should proportion/standard flexible and can be changed anytime ?
Answer:
The internal and external environment keeps changes very frequently so the standards must be flexible.

Question 21.
What is the last step of process of control ?
Answer:
Taking corrective action in the last step of process of control.

Question 22.
What do you mean by management information mechanism ?
Answer:
Management information mechanism is a technique which provide information and assistance to managerial decisions.

Question 23.
“Control is universal.” Explain why ?
Answer:
Control is universal because it is found at all levels of management. Controlling work is neither related to top level nor to lower level but it is required at all levels. In all organizations (Religious, Social, Political etc.) the need of control is felt.

Question 24.
Why is it said that planning is essential for control ?
Answer:
Determination and establishing standards are the first step of control. The object
of establishing standard is to know what consideration are expected from any work and how and through whom the consideration will be achieved. For all this planning is essential.

Question 25.
What do you mean by control ?
Answer:
Control is related to checking whether everything occurs in conformity with the standards stipulated in the plan. It measures and evaluates performance and brings to light the variations if any.

Question 26.
Write names of any four specific methods of control.
Answer:
The four methods are :

1. Budget control
2. Cost control
3. Production control
4. Quality control
5. Material control.

Question 27.
What are the general methods of control ?
Answer:
General methods of control:

1. Actual inspection
2. Control through auditing
3. Control through motivation
4. By sending notices
5. Return on investment.

Question 28.
Why is control backward looking ?
Answer:
Control is backward looking because in control we see the performance backward which is already performed by the workers and its comparison is done through plan

Question 29.
What is the relation between planning and controlling ?
Answer:
Planning and controlling both are interdependent and interrelated activities. They are complementary and supplementary to each other.
The close relationship between planning and controlling can be justified on the following points :

1. Planning is the origin of controlling.
2. Both are interrelated.
3. Planning is theoretical whereas controlling is practical.

Question 30.
What is control through example ?
Answer:
Under this system of control, the manager himself places an example before his employees by being punctual, working for specific period, good behavior etc. This method is very effective.

Question 31.
Explain the cost control.
Answer:
By exercising cost control as per unit production cost can be ascertained and can find out the method of minimizing the cost in future so as to complete with the other items in the market, e.g., cost raw material, labour cost, direct expenses and indirect expenses etc.

Question 32.
What does control ensure ?
Answer:
Control ensures whether the actual work is going on according to the targets ! determined or not.

Question 33.
How is control full of objectives ?
Answer:
Control is full of objectives because it ensures whether the predetermined objectives of organizations are fulfilled or not by effective and efficient utilization of resources.

Controlling Short Answer Type Questions

Question 1.
Explain two aspects of control.
Answer:
The two aspects of control are :

1. Political control
2. Managerial control

1. Political control means to inspect the impact and implementation of rules and plans of the organization.
2. Managerial control means to focus on the managerial and other activities of the organization.

Question 2.
What are points that should be kept in mind while preparing standards/proportion ?
Answer:

1. Standards must be capable of measuring,
2. Standard should be such which can be achieved with some efforts.
3. Standards should be easy and clear.
4. Standards must be flexible.
5. While setting standards the deviation limits must be specified.

Question 3.
Explain, briefly, the features of a good control system.
Answer:
A good control system must fulfill the following requirements :

1. Suitability: The control system should be appropriate to the nature and need of the organization. A control system that is good to small organization may be inadequate for a big organization.

2. Objectivity : The control system should focus on the objectives of the organization. The determination of standard measurement of performance and corrective actions thereby, should be objective and impersonal. Subjective and arbitrary control cannot be effective. .

3. Simplicity: A good control system should be clear, easy to understand and operate. Unless the control system is understood fully by those responsible for its operation, it cannot be successful.

4. Economical: A good control system is one which is economical in terms of time and money. Small units may not be able to afford huge cost of control.

5. Flexible : A good control system must be flexible because business conditions are not stable. If the system of control can work only on the basis of one specific plan, it becomes useless if the plan breaks down and another has to be substituted. According to Theo Haimann, “A good control system must keep pace with continuously changing pattern of a dynamic business world. ”

6. Promptness : The control system should be such that actual result and all deviations from standards are quickly reported to the concerned officers. Delay in reporting will make control ineffective. Speed is also required in initiating the corrective actions.

Question 4.
Explain the meaning of control process.
Answer:
Control is a universal and important function of management. It is the power to direct, order or restrain. Managerial control seeks to achieve conformity to plan as closely as possible. It is applied to all activities of the organization like purchases, sales, finance, marketing, personnel management etc.

Meaning: Control is the most important element of management. It is concerned with verifying whether actions are in conformity with the standard stipulated in the plan. It measures and evaluates performance and brings to light the variations, if any, for the purpose of necessary action by the management and to prevent the recurrence of such variations in future. Controlling as a function of management means the measurement and correction of performance of activities of subordinates in order to make sure that enterprise objectives and plans devised to attain them are accomplished.

Question 5.
How should a newly appointed foreman should manage the process of control ?
Answer:
A newly appointed foreman should manage the process of control:

1. Setting of Standard/Proportion.
2. Measurement of performance.
3. Comparison of actual performance with standard performance:
4. Analysis of deviation.

Question 6.
The ideal control system inspects every aspect of performance. Explain.
Answer:
An ideal control system is one which focuses on important aspect of performance. There may be thousands of jobs related to control but the prime focus must be control on the prime aspects as it is difficult to control all. If we keep controlling all the aspects then we face the problem of control delay, increase in cost and the important points are neglected.

Question 7.
Write the advantages of control by exception.
Answer:
Advantages of control by exception :

1. It concentrates attention of managers towards important things.
2. It differentiates between the important and ordinary problems.
3. It saves the efforts of managers.
4. There is no wastage of time and energy of managers in solving daily problems.

Question 8.
What do you mean by control ? How does control stimulates action ?
Answer:
Meaning of control:Control is related to checking whether everything occurs in conformity with the standards stipulated in the plan. It measures and evaluates performance and brings to light the variations if any

Control stimulate action : An effective control system stimulates action by spotting the variations from the original plan and highlighting them for the people who can set things right. Control helps in detecting the deviation and their causes. It enables the management to act quickly.

Question 9.
What things should be kept in mind while determine standards ?
Answer:
While determining standards following things should be kept in mind :

1. Standard should be accurate.
2. Standard should be lawful.
3. Determined standard should be able to acquire.
4. Standard should be according to planning.
5. Standard should be such which can be measured.

Question 10.
Explain the setting up standards as first step of control.
Answer:
Determination and establishment of standards are the first step of control. The object of establishing standard is to know what consideration are expected from any work and how and through whom the consideration will be achieved. What will be different levels of activating in work and what will be the expenditure ? For all this, a policy is prepared, which is called planning, without planning and policies, work cannot be estimated and standards cannot be established. In this way, for control planning is important.

Question 11.
Controlling is a Dynamic Process”. How its help in achieving the objectives ?
Answer:
Controlling involves view of standard as well a corrective action which may lead to changes in other managerial functions. The control system has to be adapted to the changing conditions and requirement of organization.

Controlling ensures that results of operations conform as closely as possible, to the predetermined objectives. Every organization draw up a plan of action at periodical intervals. The plan indicates the expected behavior and activities of people working in different units of the organization. By keeping a close watch over performance at various levels, controlling tries to correct the deviation between actual results and desired results. Mistakes are located promptly and appropriate remedial actions are initiated. Thus, it helps in achieving the objectives laid down in the plan of action.

Question 12.
Define Net Working Capital.
Answer:
Net Working Capital: It represents the excess of current assets over current liabilities. Current assets include cash in hand, cash at bank, stock, debtors, bills receivables etc. while current liabilities consists of accounts payable, outstanding bills payable, bank overdraft, and outstanding expenses etc. Net working capital is a qualitative concept and it reveals the soundness of current financial position. Working capital may be classified as follows:

1. Permanent or regular working capital
2. Temporary or variable working capital
3. Seasonal working capital and
4. Special working capital.

Controlling Long Answer Type Questions

Question 1
Describe the salient features of control.
Or
Explain main characteristics of control.
Answer:

1. Control is a management function : Controlling work is done by the line officer and line officer may take advice and help from different experts and colleagues.

2. At all levels of management: Controlling work is neither related to top level nor to the lower level but it is required at all levels. At top level, controlling work is done by the chief manager and at the lower level foreman or other officer does the work of control.

3. Continuous process : Control is a regular activity, required at all levels. It is not an activity in isolation. The management has to be continuously vigilant to ensure that the management is in the right track. If control is withdrawn midway, then it may affect performance and subsequently, the efficiency of the organization.

4. Control is futuristic or Forward looking : The object of control is to wipe away present errors and defects so that no hindrance or defect may arise in future. Necessary steps are to be taken for this before hand. Whatever, faults have occurred in the past, should be examined and care is taken so that it should not be repeated in future.

Question 2.
“Planning and controlling are interrelated.” Explain.
Answer:
Relationship Between Planning and Control: Planning and controlling both are interdependent and interrelated activities. They are complementary and supplementary to each other.
The close relationship between planning and controlling can be justified on the following points:

1. Planning is the origin of controlling
2. Both are interrelated
3. Planning is theoretical whereas controlling is practical
4. Planning is meaningless without controlling and controlling is blind without planning
5. Controlling ensures realizing planned goals efficiently and provides basis for improvement in future plans
6. Planning is looking ahead and controlling is looking back.

Interrelation between planning and controlling can be understood from the following

1. Controlling without planning is blind: Control uses the standards of performance provided by planning as a base of evaluation and comparison.

2. Planning without controlling is meaningless : Controlling monitors the progress of plans implemented, discovers deviation and initiates corrective measures to ensure that activities conform to plans.

3. Planning seeks consistent, integrated and articulated programmed while controlling seeks to compel events to conform to plans.

4. Planning involves thinking and analysis to prescribe and appropriate course of action while controlling checks it prescribed decisions have been translated into desired action and verifies their accuracy and objectivity.

Conclusion : To conclude we can say that planning based on facts makes controlling easier and effective and controlling improves future planning. Therefore, planning is a prerequisite for controlling and the two are inseparable twins of management.

Question 3.
Explain the limitations of control.
Answer:
Though control is essential in every organization, it does suffer from limitations. The following are the main limitations :

1. External factors : Though an effective external control is possible, the management virtually cannot exercise any control over external factors such as government policies, technological changes etc. All these affect planning.

2. Expensive: Control requires deputation of large personnel at various level to analyse deviations. This become an expensive affair for small organization.

3. Problems in fixing standards : There are various areas in management like employee morale, R & D, customer reactions, human relations etc. where standards for performance cannot be set in quantitative terms. In the absence of standards, control is ineffective.

4. Resistance : It is an accepted fact that control techniques are always looked upon as an interference in work by subordinates. Hence, full cooperation for effective control may not be obtained from the subordinates.Thus, these are some of the limitations of control

Question 4.
What are the types of standard ?
Answer:
Types of standard : Standards can be divided into the following parts :

1. Physical standard : In it, determination of work is made about per hour, per day, per week, per unit etc.

2. Monetary standard : In it, standard is determined about per unit labor cost, per unit material cost, per unit factory cost. These standards can be measured in money.

3. Tangible standard : In it, standard is determined about per day production cost, per article production cost, per day production quantity and standard of fixed units.

4. Intangible standard : In it, to increase the morale of employees, to increase efficiency and to appreciate good work etc. are determined. Intangible standards cannot be measured in quantity. It can be felt by experience.

5. Revenue standard : In it, such standards are included which can be measured in terms of sales value, e.g., for transport company, income per passenger.

6. Capital standard : The standard capital ratio is two units of capital to one unit of borrowing. Standard of it in capital expenditures are determined for this different ratios are
determined as current ratio, ratio of loan with the owners capital etc. The capital standard should be increased or decreased looking to the size, nature of business.

Question 5.
What are various core areas of control and its methods ?
Answer:
The core areas of control are :

1. Policy control: Real policy and control policy always vary which leads to deviation.
2. Employee control: Management gets divided into sub-section management departments to have control on employees.
3. Wage and salary control: Management controls the wage and salary of employees through the evaluation of their work.
4. Capital control : The prime task of control is to monitor whether the usage of capital is for achieving the goal or not. If not then corrective measures are taken.
5. Cost control: Control on various production departments to check and have optimum utilization of resources results in cost control.
6. Inventory control: In production sufficient inventory must be available. There usage, purchase and storage must be properly monitor and corrective actions must be taken.
7. Comprehensive control: Under this all the plans are collectively.

Question 6.
What are the various principles of control ?
Answer:
The various principles of control are :

1. Principle of security of goal: Control process should be such which understands the difference between plans and actual deviation of tasks and take corrective actions.
2. Principal of ability: Control process should be such which should be in expensive and should also take care of subordinates without hampering the image and confidence of management.
3. Principle of priority : Control process should prioritize the activities and should focus on the important activities. If there is any deviation then they must be rectified.
4. Principle of responsibility : Control is the responsibility of management and it cannot be taken lightly.
5. Principle of flexibility : Control process must have lot of flexibility to amend easily if need be.
6. Principle of revaluation : For effective control the control process must evaluated at regular intervals to incorporate the changing situations.

Question 7.
What are the essential factors of effective control system ?
Answer:
Essential Factors of Efficient Control System : Following are the essential factors of efficient control system:

1. Suitability : The control system must suit the requirements of an organization. It should be designed after considering the nature, size and functions of organization.

2. Flexibility : The control system should have the flexibility to adjust itself to the changing requirements of the organization. It should not be very rigid and strict.

3. Simple and understandable : The controlling system must be simple and easily understandable to the officials and employees of organization. Controlling system can be effectively applied if it is simple and understandable.

4. Economical: Controlling system should be economical with regard to time and money. It should be within the means of the enterprises.

5. Efficient control techniques: An effective and efficient control system should use efficient control techniques. Through these techniques the uncertainties in business can be easily tackled

Question 8.
Explain the methods of control.
Answer:
(A) General methods :

1. Actual inspection : By actual inspection we mean actual inspection of worker’s performance by taking rounds, visiting the departments.

2. Control through auditing : Internal or external auditing of certain accounts and books are necessary. By auditing we mean stock in going and incoming inventory, fixed assets books, cost accounting etc.

3. Control through motivation : This method is the best method of control. By motivating the labour, the sincere labour is encouraged to do more and more work.

4. By sending notices: Management can be controlled by sending notices, circulars, orders to subordinates for coordinating their work and establishing control thereby.

5. Return on investment (ROI): Return on investment is another wily used management control method of all. It is aimed of measuring profit as return on the capital employed for production. It uses a number of financial variables to arrive at the return on investment.

6. Control by policies : Policies are also one of the sources of control. Policies are
pre-determined for performance of activities. The employees work according to these policies. By these policies the employees get full opportunity to seek direction and they work within their own limits. Thus, control is observed by policies also.

7. Control by exception: Under this method, the controller or manager concentrates only on the exceptional circumstances and tries to remove them. Exceptions are activities which are not supposed to be done i.e., the activities should not be out of the area of activity of the employee. In management, control by exception has been imparted universal acceptance.

8. Control by example : This is specific example of control. The manager, in his leadership role, himself becomes a model example of the employees’ work and behaviour. The ideal behaviour of the manager becomes a ‘norm’ for the employees to follow, which in other words, means that the employees will behave in accordance with the example set by the manager. This method is called control by example.

9. Control by records and reports : The management scrutinizes the records and reports called from various branches from time to time. After scrutiny, the concerned branch or branches are issued necessary instructions or directions. Thus control is observed by scrutinizing the records and report of the concerned branches or offices.

10. Control by fixing of limitation: In an organization, area of activity or operation of an employee is fixed. It is necessary to obtain prior permission of the higher officials to work beyond the area of operation. This permission is granted in the interest of the organization only when it is found necessary. In this way, control is observed over the subordinates.

11. Control by disciplinary action : Disciplinary action along with criticism of an employee is a negative aspect of control. This has an adverse effect on the moral of the employee, reduces his efficiency and initiative. Even so. this method, at times, becomes necessary as a weapon of the last resort. This method is applied to those employees who do not improve in their efficiency in spite of use of all positive methods. This method should, however, be adopted only in instances of serious lapses or shortcomings.

12. Control by written order : Under this method the employees are served with written notice or memorandum. Sometimes, demi-official (D.O.) letters are also issued with instructions to bring improvement in their working using simple and clear language.

13. Control by other methods : In addition to above methods, control is adopted by additional budget, break-even analysis, ratio analysis, self-control, charts and tables, indices etc.

(B) Specific methods:

1. Budgetary control: It is a traditional form of control and it is a widely used device in management. Budgets are used to control the day today operations of an enterprise.

2. Cost control : By exercising cost control the per unit production cost can be ascertained and can find out the method of minimizing the cost in future.

3. Break even analysis: The relationship of sales and expenses is depicted by a break even point chart. This chart shows the volume at which revenues exactly covers expenses.

4. Quality control: The best quality product of same grade and size can be produced at a cheaper rate. Such attractive goods will capture the market.

5. Production control : Under production control, all the activities involved in production are controlled in such a manner that the work of production is accomplished within the fixed time. In production control, control measures like the quality of goods, quantity, cost etc. are also adopted. In production control, the following two factors are kept in mind :

(a) When, how much and by which methods goods are to be produced
(b) Whether production is being accomplished as per per-determined plans or not ?

6. Material control: In cost of production, materials form a major portion. Therefore, the availability of the best material and minimum cost is very essential. Less than required quantity or more than required quantity of material are both considered unsuitable. Whereas production will be affected in the absence of required quantity of material, in case of excess of material, a part of capital! will remain idle. “Therefore, observing required control over all activities of material management is material control.

Question 9.
What is controlling ? Explain its importance.
“Controlling is a continuous activity in an organization.”
Answer:
controlling is a continuous or never-ending process. According to Koontz and O’ Donnell, “Just as the navigator continually takes a planned action, so should the business manager continually take to reading to assure himself that his enterprise or department is on course. ” Controlling never stops. Planning and controlling are two interrelated functions are reinforce each other. Control follows a definite pattern and time-table, month after month and year after year on a continuous basis.
The following are the points due to which control has a great importance :

1. Increasing size of business: At present the size of business is increasing day by day, from sole trader to partnership, from partnership to company. One man cannot control such big organization. So it is necessary to take help from others, therefore, control is necessary to see that no type of irregularity creeps into the organization.

2. Motivation for efficient employee : Efficient employee always welcomes control system because he gets a good opportunity for good work and finds his way to progress. He may be appreciated by managers for good work and so an employee is motivated towards work.’ ‘

3. For complete discipline : Discipline is necessary for any enterprise. To maintain discipline, control is very necessary. So, it can be said where there is control, discipline will come automatically. In the absence of control, indiscipline arises and hence morale of good employees hampers.

4. Helpful in future planning : Through controlling process, managers get full knowledge about the limitations of their objects and their efficiency. On the basis of this knowledge, it becomes easier for managers to prepare future planning. Through the process of controlling, managers get very important information about targets which may be useful in preparing future planning. .

5. Aids efficiency : Basically, control is concerned with ensuring that all activities proceed as per plans. Hence, it brings about efficiency in the organization.

6. Decrease in risk : Generally business and risk cannot be segregated but limitation and obstacles of business can be fully controlled. If it is done, then risk of business may be minimized to a great extent.

7. Helpful in coordination : Coordination has an important place in management, where control is best, the discipline will be best and in the presence of discipline, coordination becomes easier.

8. Helpful in decentralization : Decentralization (Dispersion) of authority is essential in big enterprises. Management cannot delegate authority without ensuring controls management must retain control in its hands to make sure whether authority is being used properly.

9. Helps in further planning : Planning and control are closely related. While planning is forward-looking, control is backward looking. Good control enables to analyse causes for deviations, and if required alter the plans according to circumstances. Thus, control is essentially a review of work done, whereas planning drafts the course of future action. Thus, control helps in further planning.

10. Highlights deviations : Since control is basically a review of past actions, it highlights any deviation while implementing work. This is primarily done by comparing with the standards set. Constant review of actions definitely proves beneficial for the organization.

MP Board Class 12 Business Studies Important Questions

MP Board Class 12th Business Studies Important Questions Chapter 9 Financial Management

Financial Management Important Questions

Financial Management Objective Type Questions

Question 1.
Choose the correct answer :

Question 1.
The main function of Financial Management is :
(a)Financial planning
(b) To receive fund .
(c) Distribution of net profit
(d) All the above.
Answer:
(d) All the above.

Question 2.
The cheapest source of finance is :
(a) Debenture
(b) Equity share capital
(c) Preference share
(d) Retained earning.
Answer:
(d) Retained earning.

Question 3.
Fixed assets should be financed through :
(a) A long-term liability
(b) A short-term liability
(c) A mix of long and short-term liabilities
(d) All the above.
Answer:
(c) A mix of long and short-term liabilities

Question 4.
Current assets of a business firm should be financed through :
(a) Current liability only
(b) Long-term liability only
(c) Partly from both types i.e., long and short-term libilities
(d) All the above.
Answer:
(c) Partly from both types i.e., long and short-term libilities

Question 5.
Other things remaining the same, an increase in the tax rate on corporate profit will:
(a) Make debt relatively cheaper
(d) Make debt relatively less cheap home
(c) No impact on cost of debt
(d) We can’t say
Answer:
(a) Make debt relatively cheaper

Question 6.
On equity share the rate of dividend is …………..
(a) Not fixed
(b) Fixed
(c) Both (a) and
(b) (d) None of these.
Answer:
(a) Not fixed

Question 7.
Capital structure refers to the composition of …………..
(a) Long-term funds
(b) Short-term funds
(c) Both (a) and (b)
(d) None of these.
Answer:
(a) Long-term funds

Question 8.
It is a source of working capital …………..
(a) Preference shares
(b) Periodic loan
(c) Public deposit
(d) All the above.
Answer:
(d) All the above.

Question 9.
Determinants of working capital are…………..
(a) Size of organization
(b) Period of construction
(c) Availability of raw material
(d) All the above.
Answer:
(d) All the above.

Question 10.
For joint stock company to pay dividend is ………….
(a) Voluntary
(b) Compulsory
(c) Necessary
(d) None of these.
Answer:
(a) Voluntary

Question 11.
Bonus decision is the determinants of …………..
(a) Quantity of profit
(b) Liquidity of fund
(c) Age of the company
(d) All the above.
Answer:
(d) All the above.

Question 12.
Out of it which is the element of capital structure…………..
(a) Cash flow situation
(b) Interest ratio
(c) Age of the firm
(d) All the above.
Answer:
(d) All the above.

Question 13.
Current assets are those assets which are converted into cash…………..
(a) Within 6 months
(b) Within 1 year
(c) Within a month and 3 years
(d) Within 3 years to 5 years.
Answer:
(d) Within 3 years to 5 years.

Question 14.
Debenture holder of a company is called as …………..
(a) Debtor
(b) Creditor
(c) Owner
(d) Servant.
Answer:
(b) Creditor

Question 15.
Higher dividends per share is associated with :
(a) High earning, high cash flows, unusable earning and higher growth opportunities.
(b) Low earning, high cash flows, stable earning and lower growth opportunities
(c) High earning, high cash flows, stable earning and lower growth opportunities
(d) High earning, low cash flows, stable earning and lower growth opportunities.
Answer:
(c) High earning, high cash flows, stable earning and lower growth opportunities

Question 16.
A decision to acquire a new and modern plan to upgrade an old
(a) Financing decision
(b) Working capital decision
(c) Investment decision
(d) Dividend decision.
Answer:
(c) Investment decision

Question 17.
Companies with higher growth paternal are likely to :
(a) Pay lower dividends
(b) Pay higher dividends
(c) Dividends are not affected by growth consideration
(d) None of these.
Answer:
(a) Pay lower dividends

Question 18.
Which is not the cause of over capitalization :
(a) High promotion expenses
(b) Over capital issue
(c) Formation of company in inflation period
(d) Underestimate of earings.
Answer:
(d) Underestimate of earings.

Question 19.
Which is not the cause of under capitalization :
(a) Formation of business during deflation
(b) Under estimate of capital requirement
(c) Liberal dividend policy
(d) High standard of efficiency.
Answer:
(c) Liberal dividend policy

Question 20.
What is not included in fixed capital:
(a) Machines
(b) Building
(c) Furniture
(d) Stock.
Answer:
(d) Stock.

Question 2.
Fill in the blanks :

1. In business the form of mixture of capital is called
2. refers to the act of deciding in advance the quantum of fund requirements of a firm.
3. If the actual value of assets of a company is less than the book value, it is called
4. When rate of dividend of equity shares is distributed at a higher rate, such type of situations is called
5. capital is utilized to maintain day to day activities.

Answer:

1. Capital structure
2. Capitalization
3. Over capitalization
4. Under-capitalization,
5. Working capital,

Question 3.
Write the answer in one word/sentence :

1. Which ensures availability and profitable utilization of acquired funds in less cost ?
2. What is the result by promotion expenses ?
3. What is the situation faced by a company when capital is estimated less ?
4. In which situation more wages are demanded by workers ?
5. What is the mutual and proportional relation of various sources of long-term in an enterprise called ?
6. Which is the life blood of business ?
7. When is the issue of debentures profitable ?
8. Which is called the heart of financial planning ?
9. When is asset value more in an organization ?
10. Which is undesirabile or capitalization or under capitalization ?
11. What is the financial planning for five years or more than five years called ?
12. What is the tendency to get more profit on preferential share called ?
13. Who respresants the quantity of capital ?
14. Which capital is used to purchase raw material ?
15. What is the difference between the current asset and current liability known ?
16. Who makes investment decision ?
17. What is the period of long-term ferm finance ?
18. What is the main objective of financial management ?
19. How finance should be used in financial planning ?
20. By what control is done on financial work ?

Answer:

1. Financial management
2. Over capitalization
3. Under capitalization
4. Under capitalization
5. Capital structure
6. Finance
7. In depression
8. Financial accountancy
9. When market value of shares are more
10. Both
11. Long-term financial objectives
12. Preferential shares
13. Capitalization
14. Working capital
15. Working capital
16. Financial Manager
17. Not more than 12 Months
18. Profit maximization
19. Long-term finance
20. Financial Management.

Question 4.
Write true or false :

1. Nature of goods affect the requirement of fixed capital.
2. Financial planning is the main function of financial management.
3. Financial management is a part of business management.
4. Need of study of financial management is not for shareholders.
5. Term “capitalization” is used at all levels of capitalization.
6. Working capital is required for long-term period.
7. Fixed assets are arranged through long-term funds.
8. Equity shareholders enjoy voting rights.
9. In capital structure working capital is included.
10. By structure of capital we mean fixed capital.

Answer:

1. True
2. True
3. False
4. False
5. False
6. False
7. True
8. True
9. False
10. True.

Question 5.
Match the columns :

Answer:
1. (b)
2. (d)
3. (c)
4. (e)
5. (a)
6. (f)
7. (h)
8. (g)
9. (j)
10. (i)

Financial Management Very Short Answer Type Questions

Question 1.
What is the cheapest source of finance ?
Answer:
Loan.

Question 2.
What do you mean by business finance ?
Answer:
Financial management is the part of general management. It is concerned with the managing finance of the business for smooth functioning and successful accomplishment of the enterprise objectives.

Question 3.
Why is finance needed ?
Answer:
Finance is needed for establishing business to run it and for its modernization.

Question 4.
What do you mean by financial risk ?
Answer:
The risk of default of payment is called financial risk.

Question 5.
What do you mean by working capital ?
Answer:
Working capital is aggregate of current assets.

Question 6.
Which is the most expensive capital for a company ?
Answer:
For any company the most expensive capital is equity share capital whereas devident on it is not fixed.

Question 7.
What do you mean by over capitalization ?
Answer:
An enterprise is said to be over capitalized when its long-term funds are more than the amount of proper capitalization as justified by its requirements.

Question 8.
What do you mean by equity trade or trading on equity ?
Answer:
Trading on equity means borrowing funds at reasonable rate with the help of share capital. Trading on equity also affects the capital structure of an enterprise.

Question 9.
What do you mean by capitalization ?
Answer:
Capitalization is an important constituent of Financial plan. Capitalization refers to the act of deciding in advance the quantum of fund requiremets of a firm.

Question 10.
What do you mean by fixed capital ?
Answer:
Fixed capital refers to the amount invested to acquire fixed assets. Fixed capital provides the basic foundation on which the structure of business is laid.

Question 11.
What do you mean by watered capital ?
Answer:
When any assets is purchased more than its actual price then it is called watered capital.

Question 12.
What do you mean by financing decision ?
Answer:
Financing decision is about the quantum of finance to be raised from various long term sources.

Question 13.
Write the names of two factors which affect financial decision.
Answer:
1. Cost
2. Risk

Question 14.
Write the name of two factors which affect the investment decision.
Answer:
(a) Cash flows on project
(b) The rate of return.

Question 15.
What are public deposits ?
Answer:
Public deposit is an important source of business finance. As bank accepts the savings of public so also company does. The company receives funds in the form of public deposits to run their business.

Question 16.
What do you mean by gross working capital and net working capital ?
Answer:
Gross working capital deals with the problems of managing individual current assets in day today operations. The net working capital represents excess of current assets over current liabilites.

Question 17.
Write two needs of working capital.
Answer:
The need of working capital arises for :

1. For purchasing raw material
2. For payment of salaries and wages.

Question 18.
“Working capital affect both liquidity and profitability of business” how ?
Answer:
Working capital are more liquid but they contribute less in profitability. Thus with more working capital liquidity increases but profitability decreases.

Question 19.
What do you mean by financial planning ?
Answer:
Financial planing is the process of determine the objective policies, procedures, programmed and budgets to deal with financial activities of enterprise. It is an intellectual process which decides in advance the capital structure and capitalization of enterprise.

Question 20.
When do shareholders get profit ?
Answer:
Shareholders get profit when market value of their shares increases.

Question 21.
What do you means by cash flow ?
Answer:
Cash flows means series of cash receipts and payments over a specific period of time.

Question 22.
What is dividend ?
Answer:
Dividend is that portion of profit which is distributed to the shareholders.

Question 23.
What do you mean by production cycle ?
Answer:
Production cycle means the time gap between receiving the raw material and turning them into finished products.

Question 24.
What do you mean by equity shares ?
Answer:
Equity shares are regarded as comer store of the financial structure of a company without which a company can’t be founded. Management procures debt and preference shares capital against the strength of these shares. Equity shares represent the owner’s equity.

Question 25.
“The main aim of Financial Management is to minimise risk”. Explain.
Answer:
There is always a risk in carrying business activities. These risks may be due to various unforeseen natural economic and physical causes. Future is always uncertain, so element of risk will always remain there in business. Efforts are made so that these risk may be minimised.

Question 26.
What do you mean by capital budgeting ?
Answer:
Capital budgeting is long financial decision making of the firm. It requires decision regarding the purchase of new assets taking into consideration the utility of various other uses of assets.

Question 27.
What do you mean by trading on equity ?
Answer:
Trading on equity means borrowing funds at reasonable rates with the help of share capital. Trading on equity also affects the capital structure of an enterprise. It should be adopted by the enterprise which have regular income and have good will.

Question 28.
What do you mean by divident decision ?
Answer:
Dividend decision is to take decision by the manager how much profit earned by the company (after paying tax) is to be distributed to the share holders and how much of it should be retained in the business.

Question 29.
On what overall financial risk depends ?
Answer:
The overall financial risk depends upon the proportion of debt in the total capital.

Question 30.
What do you mean by floation cost ?
Answer:
The fund raising exercise also costs something which is called floation cost.

Question 31.
Write the meaning of Financial planning ?
Answer:
Financial planning is the process of determining the objectives, policies, procedures, programmes and budgets to deal with financial activities of enterprise.

Question 32.
What do you mean by cash budget ?
Answer:
By cash budget we mean expected incoming and outgoing of cash in a particular time.

Question 33.
Write the meaning of over capitalization.
Answer:
When the earnings of enterprise are not large enough to yield a fair return then it is said to be over capitalization.

Question 34.
What are the main source of funds for a shareholders ?
Answer:
The main sourcess of funds for a firm are shareholders fund and borrowed funds.

Question 35.
What do you mean by borrowed funds ?
Answer:
Borrowed funds refer to finance raised as debentures or other forms of debt. Interest on borrowed funds have to be repaid at a fixed time.

Financial Management Short Answer Type Questions

Question 1.
Define Capital structure.
Answer:
The term ‘Capital Structure’ refers to the composition or make-up of the amount of long-term financing. According to Gerstanberg, “Capital structure means the type of securities to be issued and the proportionate amounts that make up the capitalization.” It includes all long-term capital resources viz., loans, reserves, shares and bonds. Symbolically,Capital structure = Owner’s capital + Debt capital.Owner’s capital consists of long-term funds provided by the company’s owners. Debt capital includes any type of long-term funds obtained through borrowings. The ratio between owner’s capital (equity) and debt capital is decided under capital structure.

Question 2.
Discuss the two objectives of Financial Planning.
Answer:
Financial Planning strives to achieve the following two objectives :

1. To ensure ‘Availability of Funds’ whenever these are required: This includes a proper estimation of the funds required for different purposes such as for the purchase of long term assets or to meet day-to-day expenses of business etc.

2. To see that the Firm does not raise resources unnecessarily : Excess funding is almost as bad as Inadequate funding. Efficient financial planning ensures that funds are not raised unnecessarily in order to avoid unnecessary addition of cost.

Question 3.
What is ‘Financial risk’ ? Why does it arise ?
Answer:
It refers to the risk of company not being able to cover its fixed financial costs The higher level of risks are attached to higher degrees of financial leverage with the increase in fixed financial costs, the company its also required to raise its operating profit (EBIT) to meet financial charges. If the company cannot cover these financial charges, it can be forced into liquidation.

Question 4.
Define a ‘Current assets’ and give four examples.
Answer:
Current assets are those assets of the business which can be converted into cash within a period of one year. Cash in hand or at bank, bills receivable, debtors, finished goods inventory are some of the examples of current assets.

Question 5.
Financial management is based on three broad financial decisions. What are these ?
Answer:
Financial management is concerned with the solution of three major issues relating to the financial operations of a firm corresponding to the three questions of investment, financing and dividend decision. In a financial context, it means the selection of best financing alternative or best investment alternative. The finance function therefore, is concerned with three broad decision which are as follows :

1. Decision : The investment decision relates to how the firm’s funds are invested in different assets.

2. Financing Decision : This decision is about the quantum of finance to be raised from various long term sources and short term sources. It involves identification of various available sources of finance.

3. Dividend Decision : This decision relates to distribution of dividend. Dividend is that portion of profit which is distributed to shareholders, the decision involved here is how much of the profit earned by company is to be distributed to the shareholders and how much of it should be retained in the business for meeting investment requirements.

Question 6.
What is the main objective of financial management ? Explain briefly.
Answer:
Primary aim of financial management is to maximise shareholder’s wealth, which is referred to as the wealth maximisation concept. The wealth of owners is reflected in the market value of shares, wealth maximisation means the maximisation of market price of shares.

According to the wealth maximisation objective, financial management must select those decisions which result in value addition, that is to say the benefits from a decision exceed the cost involved. Such value addition increase the market value of the company’s share and hence result in maximisation of the shareholder’s wealth.

Question 7.
Discuss about working capital affecting both the liquidity as well as profitability of a business.
Answer:
The working capital should neither be more nor less than required. Both these situations are harmful. If the amount of working capital is more than required, it will no doubt increase liquidity but decrease profitability. For instance, if large amount of cash is kept as working capital, then this excessive cash will remain idle arid cause the profitability to fall.

On the contrary, if the amount of cash and other current assets are very little, then lot of difficulties will have to be faced in meeting daily expenses and making payment to the creditors. Thus, optimum amount of both current assets and current liabilities should be determined so that profitability of the business remains intact and there is no fall in liquidity.

Question 8.
What are the functions of Financial Management ?
Answer:
Functions of financial management:

1. Forecasting financial needs.
2. Capital budgeting.
3. Working capital management.
4. Making finance decision.
5. Making dividend policy decision.
6. Appraisal of finance performance.
7. Communication of finance performance. In addition to the above functions following advisory functions are performed :
   • Management of assets
   • Management of funds.

According to Ernest Dale, the financial management performs the following functions:

1. Safe custody of funds and investment
2. General accounting work
3. Maintenance of books of accounts
4. Preparation of financial statement and reports
5. Auditing of books of accounts
6. Cash management
7. Cash disbursement system
8. Calculation of accounting rations
9. Preparation of cash flow and funds flow statement
10. Cost accounting
11. Payroll accounting and disbursement.

Question 9.
Explain the importance of financial planning.
Answer:
The importance of financial planning are as follows :

1. Successful! promotion of business : Before starting any business, it is essential to make a perfect financial plan for achieving success. A financial plan should be made keeping in mind the size and expected expansions of business before the starting of business. Other plans remain incomplete without this plan.

2. Efficient management of business : For each and every activity of business finance is required, without sufficient finance any enterprise cannot be managed properly. Finance is required for establishment of business, purchase of asset raw materials, distribution of salary, etc.

3. Development and expansion of business: To earn more and more profit in business different types of policies related to development are made. To achieve this objective business is expanded. Proper financial plans are helpful in facing the financial problems.

4. Business liquidity : Due to successful financial plan sufficient amount of liquid fund can be kept in business. The important requirement of financial plan is easy liquidity of assets to meet the routine capital needs.

5. For future development of business : A good financial plan is essential for the smooth woking of an enterprise. To attract new industrial units perfect capital planning is compulsory.

6. Proper coordination among capital sources : Through efficient financial planning proper coordination among various sources of capital can be established. This reduces business risk and doesn’t affect goodwill in negative manner.

7. Safety of capital: Effective financial helps in providing safety to capital. It proves very helpful in facing the risks like incirease or decrease in demands, fashion, ups and downs of future, etc.

Question 10.
Discuss the aims/object:s of financial management.
Or
Discuss some functions of financial management.
Answer:

1. Increase in profit: A :firm should always increase its revenues in order to maximize its value. It is a normal practice for a firm to formulate and implement all possible plans of expansion and take every opportunity to maximize profit.

2. Reduction in cost: Capital and equity funds are factor inputs in production. A firm has to take every effort to reduce cos t of capital and to launch economy drive in all of its operations.

3. Risk minimization : There Ls always a risk in carrying business activities. Element of risk will always remain in the business. Efforts are made so that these risks may be minimized.

4. Effective utilization of fund s : In financial management efforts are made to utilize the funds properly and to control the misuse of wastage of funds.

Question 11.
Discuss the factors determine working capital requirements of a business enterprises
Answer:
The factors which govern the amounts of working capital in a business are :

1. Nature of Business: Public: utilities and service organizations require little working capital as sales are on cash basis,. There is little time gap between production and sales and these enterprises do not maintain large stock of goods. In trading and manufacturing concerns, on the other hand large amount of working capital is needed to maintain stocks.

2. Size of the Business : The volume of business has a direct influence on working capital requirements. Large firms require greater working capital for investment in current assets and to pay current liabilities.

3. Production Cycle: The length or duration or production process also affects working capital requirement. Where production takes longer time, More working capital is
required because more funds are needed for raw material, labour and other expenses. On the other hand, smaller production cycle need less working capital.

4. Turnover of Working Capital: Turnover implies the speed with which the working capital circulates in business. The rate of turnover of working capital is measured by the ratio of sales to current assets. More rapid is the flow of working capital, lesser is the need for working capital.

5. Terms of Trade : The terms of business also have lot of bearing on working capital requirement. If raw material can be had on credit and finished goods are sold for cash then less working capital is needed. On the other hand., if purchases have to be made cash and sales are on credit, then business will need more working capital. This happens in most of the wholesale trading business where margins are less and to take benefit of cash discount, wholesalers purchase for cash but have to sell on credit to have more sales.

6. Cyclical and Seasonal Fluctuations : Business firms which are subject to business cycles and seasonal demand may need greater working capital. During depression, investment in stock and debtors may be high while in a boom sales tend to be quick and stocks are smaller.

Question 12.
Write any four characteristics of an ideal financial plan.
Answer:
Following should be the characteristics of an ideal financial plan :

1. Simplicity : Financial plans should be made with the idea of simplicity. This simplicity must not effect working capacity.
2. Complete: The financial plans must possess quality of compactness and complete.
3. Cheaper : While making plans for acquiring capital it must be kept in mind that they should be cheap.
4. Flexibility : For the success of any organization it must be kept in mind that all the plans are flexible in nature.

Question 13.
Write any four executive functions of financial management.
Answer:
Executive Functions : The finance manager performs certain executive functions which are as under.

1. Arrange/Organize Finance : A finance manager has to find and arrange the various sources of finance required for the enterprise so that, on the basis of the finance available, the operations of the enterprise may be carried on.

2. Allotment of Available Funds : The funds. available with the finance manager are meant for requirements of the entire enterprise. Therefore, it is the responsibility of the finance manager to allot funds as and where needed l in the enterprise.

3. Management of Assets : Under these are covered activities like purchase of cur-rent and fixed assets arrangements for their safety’, maintenance etc. which are carried on under the instructions of the finance manager. The finance manager has also to consider, before allotting funds, the use and justification for the funds in different departments.

4. To Organize Expenditure : The finance manager should prepare budget estimates for expenditure required in the entire enterprise and invest the same in a planned manner. For this, the finance manager has to consider the expenditure on pay, interest, taxes, development activities etc.

Question 14.
Explain factors affecting the dividend decision.
Answer:
Dividend decision relates to distribution of profit to the shareholders and its retention in the business for meeting the future investment requirements.
How much of the profits earned by a company will be distributed as profit and how much will be retained in the business is affected by many factors. Some of the important factors are discussed as follows :

1. Earnings : Dividends are paid out of current and past year earnings. Therefore, earnings is a major determinant of the decision about dividend.

2. Stability: Of earnings other things remaining the same, a company having stable earning is in a position to declare higher dividends as against this, a company having unstable earnings is likely to pay. smaller dividend.

3. Growth Opportunities : Companies having good growth opportunities retain more money out of their earnings so as to finance the required investment. The dividend in growth companies is therefore, smaller than that in non-growth companies.

Question 15.
What qualities should be there in an ideal planning ?
Answer:
The success or failure of.any business enterprise depends upon effective financial planning. Following are the characteristics of best financial planning :

1. Simplicity : The financial plan should be such that it should be simple to manage the capital and easier to estimate the formation of capital. In future difficulties may arise in those financial plans where the formation of capital is a complex procedure. Thus financial plans should be understandable to all the persons concerned.

2. Flexibility : The financial plans of an enterprise should not be rigid. According to needs of enterprise and future uncertainties, financial plans should be such that necessary changes can be made.

3. Farsightedness : Financial plans should be made in such a manner that it should run for a long time. Capitalization should be such that fixed and current expenses of enterprise can be properly managed.

4. Liquidity : Financial planning should be such that it should maintain the balance between inflow and outflow of funds. It should make the liquid funds available throughout the year. Financial plan must ensure the maximum utilization of funds.

5. Utility : Whatever capital is invested in business must be properly utilized so that shareholders can receive proper dividend and investors will be attracted towards the enterprise. This will encourage them to invest more in the enterprise. All these provisions are made in the financial planning.

6. Wholeness : It is one of the important characteristic of financial planning that it should have the quality of wholeness. Wholeness means it should pay attention in every area of enterprise. If any area is left than it will cause loss in future.

Question 16.
What is Under Capitalisation ? Write its two causes.
Answer:
Under Capitalisation refers to the situation in which the company’s rate of profit is exceptionally have in relation to the return enjoyed by similar companies. The two causes are as :

1. The enterprises has made excess provision for depreciation on its assets thereby creating secret reserves.
2. It may have acquired assets at low prices due to depreciation. “

Question 17.
Capital structure decision is essentially optimization of risk-return relationship. Comment.
Answer:
Capital structure refers to the mix between owners and borrowed funds. It can be calculated as Debt/Equity.

Debt and equity differ significantly in their cost and riskiness for the firm. Cost of debt is lower than cost of equity for a firm because lender’s risk is lower than equity shareholder’s risk, since lenders earn on assured return and repayment of capital and therefore they should require a lower rate of return. Debt is cheaper but it is more risky for a business because payment of interest and the return of principal is obligatory for the business. Any default in meeting these commitments may force the business to go into liquidation. There is no such compulsion in case of equity, which is therefore, considered risk less for the business. Higher use of debt increases the fixed financial charges of a business, as a result increased. Use of debt increases the financial risk of a business.

Capital structure of a business thus, affects both the profitability and the financial risk. A capital structure will be said to be optimal when the proportion of debt and equity is such that it results in an increase in the value of the equity share.

Question 18.
A capital budgeting decision is capable of changing the financial fortune of a business. Do you agree ? Why or why not ?
Answer:
Investment decision can be long term or short term. A long term Investment decision is also called a capital budgeting decision. It involves committing the finance on a long term basis, e.g., making investment in a new machine to replace an existing one or acquiring a new fixed assets or opening a new branch etc. These decisions are very crucial for any business. They affect its earning capacity over the long-term, assets of a firm, profitability and competitiveness, are all affected by the capital budgeting decisions, Moreover, these decisions normally involve huge amounts of investment and are irreversible except at a huge cost.

Therefore, once made, it is almost impossible for a business to wriggle out of such decisions. Therefore, they need to be taken with utmost career decisions must be taken by those who understand them comprehensively. A bad capital budgeting decision normally has the capacity to severely damage the financial fortune of a business.

Question 19.
Discuss the merits of equity shares. Write its characteristics.
Answer:
1. Fixed capital : These shares constitute a good source of fixed capital for a company as the company is not bound to return it during its life.

2. Flexible dividend policy: The rate of dividend on equity shares is not always fixed and definite. The company may skip dividend. A flexible dividend policy can be adopted in the case of equity shares.

3. Safety of the company : Equity share capital is safety wall for the company on the basis of which it can face any financial crisis easily.

4. Arrange additional capital: The company can raise long term loan on the,security of these shares and thus it can arrange additional capital.
Characteristics :

1. On such shares rate of dividend is not fixed.
2. Equity shareholders enjoy voting rights over the others.
3. Equity shares are redeemed only at the time of liquidation.
4. At the event of liquidation the equity capital is refunded only after the preference shares are paid back.
5. Dividend of such shares are paid only after the preference dividend is paid.

Question 20.
What do you mean by capital budgeting ?
Answer:
Meaning : Capital budgeting is long financial decision making of the firm. It requires decision regarding the purchase of new assets taking into consideration the utility of various other uses of assets.
Characteristics :

1. Its nature is to have heavy investment
2. It increases long term profitability
3. In its decision the risk factor is more
4. It becomes difficult to change its decisions. ‘

Question 21.
Distinguish between Fixed capital and Working capital
Answer:
Differences between Fixed capital and Working capital:

Fixed capital

1. Fixed capital is that capital which more or less remains permanently invested in business.
2. It is known as long term capital. For example : Land, machine etc.
3. There is very less liquidity in this capital because these are not easily meant for resale.
4. Requirement of fixed capital depend on size of the enterprise.

Working capital

1. This is the capital required to meet day to day expenses of the business.
2. It is also known as short term capital.Like purchase of raw material, payment of salaries or wages.
3. It is a liquid capital because flow of this capital does not slop suddenly.
4. It is invested in production of goods.

Question 22.
What are the factors affecting fixed capital ?
Answer:
The various factors affecting fixed capital are :

1. Nature of industry : Fixed capital requirement largely depends on the nature of industry. When there is a need of land, building, machinery etc. in industry, the need of capital increases.
2. Nature of production : The requirement of fixed capital also depends on the nature of production, whether it is capital based or labour based.
3. Scope of business : If business is only a buyer or only a seller the capital requirement is less and if it is both the capital needed is comparatively more.
4. Expansion of business : If business is to be expanded in future then fixed capital is required in great sum. Due to modem machines and management the expenses increases. So capital requirement increases.
5. Preliminary expenses: The need of fixed capital will increase if the promoters at the time of establishment of company speed more on salary of promoters, establishment expenses, purchase of patent etc.
6. Attitude of management: If the manager wants to enter in the market as a major producer from. The very beginning than more fixed capital will be needed.

Financial Management Long Answer Type Questions

Question 1.
Distinguish between Over capitalization and Under capitalization.
Answer:
Differences between Over capitalization and Under capitalization :

Question 2.
What are the sources of long term working capital ?
Answer:
Sources of Long-Term Working Capital (These are also the Sources of Fixed Capital).
Some part of working capital is permanently required in the organisation and its sources have also to be such which can provide capital for a long time. Following are the sources of long-term or permanent working capital:

1. Issue of shares : For procurement of permanent working capital both equity and preference shares can be issued but equity shares prove better because, unlike on preference shares, no dividend at fixed rate has to be paid.

2. Issue of debentures : Issue of debentures is also a preferred source of long-term working capital. Debentures are issued when it is felt that after sometime there will be lesser need of working capital. Money can be refunded by redeeming redeemable debentures. Equity share capital cannot be returned back during the life time of the company (except by buy back of shares). It proves better to raise permanent working capital partly by issue of equity shares and partly through issue of debentures so that money raised from issue of debentures can be returned back when not required.

3. Publishing back of profits : Reinvestment of profit, called ploughing back of profits, is an important source of raising permanent working capital. It is a free of charge method which does not create a burden on future profits of the business. As the company expands, the need for permanent working capital also increases. This need can be met by reinvesting profits in business; but to do so the management has to adopt a tight or conservative dividend policy and the shareholders have to make a sacrifice. This method can be adopted by profit making companies only.

4. Public deposits : Under this method companies accept deposits from public for medium period at attractive rates of interest. The defect of this method is that public will place deposits only in financially sound companies and there will be rush for withdrawals in cash of financial difficulties.

5. Loans from financial institutions : Various state governments and the central government have set-up specialised financial institutions which provide medium and long term loans to industries. These institutions have become major sources of finance of medium and large scale industries. Industrial Finance Corporation of India (IFCI), State Financial Corporations (SFCs), Industrial Development Bank of India (IDBI), Industrial Credit and Investment Corporation of India (ICICI), Life Insurance Corporation of India (LIC) and Unit Trust of India (UTI) are examples of such financial institutions.

Question 3.
What are the causes of over capitalization ?
Answer:
Following are the causes of over capitalization :

1. More promotion expenditure : When in a company formation, over time is taken and over expences is done on un appropriate promotion then it gives rise to over capitalization promotion expenditure should be in accordance with the trading of company. When amount of capital is fixed more than acquired capital then over capitalization takes place.

2. Issue of over capital: When in a company more than required capital is issued then in a company more than requirement. When it is not used properly the problem of over capitalization.

3. Formation of company during inflation : When any company is formed during the period of inflation. During inflation it is expensive to purchase assets and they are not profitable to purchase in future. Whenever period of inflation is over the problem of over capitalization starts.

4. More income than expected at the time of promotion : When more income is expected at the time of promotion then over capitalization takes place.

Question 4.
Explain the types of working capital.
Answer:
There are two types of working capital:

1. Fixed or regular working capital: Some type of working capital is that which is required for the whole year. Arrangement of such type of capital is done permanantly through long term capital. Regular or working capital is required to maintain minimum stock, to keep minimum amount of cash in banks, wear and tear of business electricity, wages, salary etc. For general working of the business it is essential. By this capital business can make progress.

2. Seasonal or Variable working’capital: It is such type of capital which is used in a specific season in a year. This expenditure is goes on changing. Due to this reason, it is called seasonal or variable working capital.

For example, capital required to purchase woollen clothes in winter season, rainy materials before rainy season. The year in which more rainfall is there or more cold is there such products are sold on large scale. Thus proportion of capital increases.

Question 5.
What is the importance of working capital ?
Answer:

1. Prompt payment to suppliers and others : A business enterprise with sufficient working capital can make prompt payments to its suppliers and meet other liabilities promptly. It increases credit standing or reputation of the enterprise.

2. Can avail benefits of cash discounts : A business with sufficient working capital can avail cash discounts by making prompt payments to its creditors.

3. Garbing business opportunities : Adequate working capital enables Finns to take advantage of any favourable business opportunity like purchasing and storing raw material at low prices or executing special orders.

4. Increase in credit worthiness and goodwill : Availability of sufficient working capital is considered as sign of good financial position by creditors and banks and there is no difficulty in borrowing funds in case of need.

5. Distribution of dividend : If there are sufficient liquid assets with an organisation, it can afford to declare and distribute good dividends. A firm starved of working capital can not do so, it has to plough back its profits in business.

6. Facing emergencies : A company having sufficient working capital can overcome short-term financial difficulties and meet other emergencies.

Question 6.
What are the disadvantages of equity shares ?
Answer:
Disadvantages of Equity Shares are :

1. Disruption in working : By exercising their rights in company meetings equity shareholders may cause disruption in smooth working of the company for their own gains.

2. Loosing benefit of trading on equity : By raising whole the capital through equity shares the company cannot take benefit of trading on equity. .

3. Danger of over capitalization : Excessive issue of equity shares may lead to over capitalization which is harmful for the company.

4. Loss of control on management: With the sale of equity shares, there is transfer of voting right also. If any group is able to acquire a large number of shares in the company, it may gain control over its affairs and the present management may be ousted.

5. Payment of high dividends : To attract investors in equity shares the management has to maintain high rate of divident. Dividend paid is not deductible as a business expense. All this makes equity shares method of raising finance a costly affair.

6. Difficulty in increasing share capital: If the authorised capital of the company has to be increased or some shares with special rights have to be issued, the consent of existing equity shareholders has to be obtained which is not an easy task always.

7. Uncertainty of income : From the viewpoint of investors, equity shares do not guarantee a regular income, the rate of dividend may vary each year and there may be non in some years.

8. Fall in value of shares : Due to speculation and other economic and political factors there may be fall in the value of equity shares which may cause financial loss to investors.

Question 7.
Write the advantages of preferential shares ?
Advantages of Preference Shares :

1. Trading on equity is possible : As preference shareholders get dividend at fixed rate, trading on equity are available to equity shareholders.
2. No burden on company : Though rate of dividend is fixed on preference shares but if profits in any year are insufficient, their payment can be postponed.
3. Retaining control on management: As preference shareholders have limited voting rights, the management can get capital without granting any voting rights and, thus retain control over the company.
4. No charge over assets of the company : Issue of preference shares creates no charge over assets of the company (as is the case when secured debentures are issued). The company can, therefore, utilize its assets for borrowing later.
5. Flexibility : To get funds for medium term the company can issue redeemable preference shares adding flexibility to its capital structure.
6. Cautious investors are attracted : By issuing preference shares, which offer special security, the company can raise capital from cautious investors, not willing to undertake risks.

Question 8.
What is the bad effects of over capitalization on company ?
Answer:
Effects or demerits of over capitalization : The effects or demerits of over capitalization are as follows :

1. Loss of goodwill
2. Difficulty in obtaining capital
3. Difficulty in obtaining loans
4. It creates artificial high dividend rate
5. Demand for winding up can be raised
6. It is difficult to face competition
7. Shareholders receive dividend at low rate
8. The face value of shares reduces due to over capitalization
9. Welfare facilities of employees is reduced
10. It also affects the society as the prices of products increases
11. Low quality of goods are provided to consumers
12. It creates unemployment
13. Frustration in economic system develops due to over capitalization.

Question 9.
What are the internal factors affecting the capital structure ?
Answer:
Internal Factors : The following internal factors affect capital structure :

1. Nature of business : The nature of business of an enterprise effects the business
most. Enterprises indulged in the process of manufacturing requires more fixed capital compared to working capital. While other business enterprises require more working capital than fixed capital. The enterprises which require more capital can form it through long term loans or shares while working capital can be formed through other sources.

2. Regularity and certainty of income : The regularity and certainty of income also affects the capital structure. Thus, according to estimated incomes capital structure should be formed. If enterprise has certainty of income then capital should be formed by issuing debentures, bonds and preference shares but when there is uncertain income, capital should be formed by issue of equity shares.

3. Future plans : In the capital structure of an enterprise the current needs as well as the future development plans should be also kept in mind, so that in future the required capital can be formed. First of all equity shares are issued and later on according to needs preference shares and debentures are issued. Thus, future plans affects capital structure.

4. Trading on equity : Trading on equity means borrowing funds at reasonable rates with the help of share capital. Trading on equity also affects the capital structure of an enterprise. It should be adopted by the enterprise which have regular income and have goodwill.

5. Structure of commercial assets : The enterprises in which the structure of commercial assets include more fixed capital, in its capital structure consists more share of long term loans and debentures while less share of share capital. But the structure of commercial which includes more current assets, in its capital structure consists of less long term loans.

6. Desire to control the business : Desire to control business also affects the capital structure. If funds are raised by issuing equity shares then the number of owners controlling the company increases. It will not be acceptable to existing shareholders. But when funds are raised through debt capital there is no effect on the control of company because debenture holders have no control over the affairs of enterprise.

7. Age of firm: The goodwill of a new enterprise is very less in the market and extent of risk is more. Thus, it is difficult for these type of firms to raise the capital. So these firms try to raise capital at their own risk. Later on when these enterprise increases the goodwill then it becomes easier to raise the funds.

Question 10.
What are the external factors of affecting capital structure ?
Answer:
External factors: The following external factors also affect the capital structure:

1. Conditions of capital market: The conditions of capital market also affects capital structure up to a certain extent. At the time of depression when rate of interest is low and chances of profit is uncertain then in place of shares, debentures are more popular.

2. Psychological condition of investors : The capital structure of an enterprise is affected by the nature and types of investors. The psychological conditions and risk facing ability of investors affects the capital structure. According to these conditions the various types of securities are issued.

3. Legal Provision : Capital structure is also influenced by the legal provisions or government regulations. The public issue of shares and debentures have to be made under SEBI guidelines.

4. Tax provisions : The tax rules and regulations of any country affects the capital structure.

Question 11.
Write the types of Financial planning.
Answer:
Following are the types of financial planning :

(1) Short term financial planning: Generally in a business planning is made for one year is called short term financial planning. In short term financial planning mainly working capital is used. Short term planning is the part of long term and mid term planning.

(2) Mid term financial planning: Mid term planning is that planning which is made for more than one year and less than five years. This type of planning is made for maintenance of business and for developmental work.

(3) Long term financial planning : Planning which is made for five years or more than five years is called Long-term financial planning. This type of planning is based on broad type of outlook. This type of planning is done for long term problems.

Question 12.
What do you mean by investment decisions ? Write the factors affecting investment decisions.
Answer:
It means the selection of best financing alternative or best investment alternative. Financial decision-making is concerned with three broad decisions. A firm’s resources are
scarce in comparison to the uses to which they can be put. A firm, therefore, has to choose where to invest these resources, so that they are able to earn the highest possible return for their investors.

The investment decision, therefore, relates to how the firm’s funds are invested in different assets. Factors which affect capital budgeting decisions :

(a) Cash flows of the project : When a company takes an investment decision involving huge amount it expects to generate some cash flows over a period. These cash flows are in the form of a series of cash receipts and payments over the life of an investment. The amount of these cash flows should be carefully analysed before considering a capital budgeting decision.

(b) The rate of return : The most important criterion is the rate of return of the project. These calculations are based on the expected returns from each proposal and the assessment of risk involved. Suppose, there are two projects A and B (with the same risk involved) with a rate of return of 10 percent and 12 percent, respectively, then under normal circumstance, project B will be selected.

(c) The investment criteria involved : The decision to invest in a particular project involves a number of calculations regarding the amount of investment, interest rate, cash flows and rate of return. There are different techniques to evaluate investment proposals which are known as capital budgeting techniques.These techniques are applied to each proposal before selecting a particular project.

Question 13.
What is meant by working capital ? How is it calculated ? Discuss five important determinants of working capital requirements.
Answer:
Working capital is that part of total capital which is required to meet day-to-day expenses. To buy raw materials, to pay wages and other expensess of routine nature in the production process or we can say it refers to excess of current assets over current liabilities.
Working Capital = Current Assets-Current Liabilities
Factors affecting working capital requirement are :

(i) Nature of Business : The basic nature of a business influences the amount of working capital required. A trading organisation usually needs a lower amount of working capital compared to a manufacturing organisation. This is because in trading. There is no processing required. In a manufacturing business, however raw materials need to be converted into finished goods. Which increases the expenditure on raw material, labour and other expenses.

(ii) Scale of Operation : The firms which are operating on a higher scale of operations, the quantum of inventory, debtors required is generally high. Such organisations there fore, require large amount of working capital as compared to the organisations which operate on a lower scale.

(iii) Production Cycle : Production cycle is the time span between the receipts of raw materials and their conversion into finished goods. Some businesses have a longer production cycle while some have a shorter one. Working capital requirement is higher in terms with longer processing cycle and lower in firms with shorter processing cycle.

(iv) Credit Allowed : Different firms allow different credit terms to their customers. A liberal credit policy results in higher amount of debtors, increasing the requirements of working capital.

(v) Credit Availed : Just as a firm allows credit to its customers, it also may get credit from its suppliers. The more credit, a firm avails company may be profitable but short on cash. Availability of enough cash in the company is necessary for declaration of dividend by it.

MP Board Class 12 Business Studies Important Questions

MP Board Class 12th Economics Important Questions Unit 5 माँग तथा पूर्ति वक्रों के सरल अनुप्रयोग

माँग तथा पूर्ति वक्रों के सरल अनुप्रयोग Important Questions

माँग तथा पूर्ति वक्रों के सरल अनुप्रयोग वस्तुनिष्ठ प्रश्न

प्रश्न 1.
सही विकल्प चुनकर लिखिए –

प्रश्न (a)
प्रशासकीय कीमत है –
(a) कीमत सीमा
(b) कीमत तल
(c) और (b) दोनों
(d) इनमें से कोई नहीं।
उत्तर:
(c) और (b) दोनों

प्रश्न (b)
गेहूँ का न्यूनतम समर्थन मूल्य कहलाता है –
(a) कीमत सीमा
(b) कीमत तल
(c) बाजार कीमत
(d) साम्य कीमत।
उत्तर:
(b) कीमत तल

प्रश्न (c)
साधन, कीमत निर्धारण के निम्न में से कौन – से घटक हैं –
(a) लगान
(b) मजदूरी
(c) ब्याज
(d) उपर्युक्त सभी।
उत्तर:
(d) उपर्युक्त सभी।

प्रश्न (d)
साम्य कीमत का निर्धारण निम्न में से किसके द्वारा स्थापित होता है –
(a) माँग
(b) पूर्ति
(c) (a)और (b) दोनों
(d) इनमें से कोई नहीं।
उत्तर:
(c) (a)और (b) दोनों

प्रश्न (e)
निम्न में से कौन – सा कथन सही है –
(a) श्रम की माँग उत्पादक द्वारा की जाती है
(b) श्रम की माँग उसकी उत्पादकता पर निर्भर करती है
(c) श्रम की सीमान्त उत्पादकता उसकी अधिकतम मजदूरी होती है।
(d) उपर्युक्त सभी।
उत्तर:
(d) उपर्युक्त सभी।

प्रश्न (f)
अधिमाँग देखने को मिलता है –
(a) बाजार निर्धारित कीमत में
(b) निम्नतम निर्धारित कीमत में
(c) उच्चतम निर्धारित कीमत में
(d) इनमें से कोई नहीं।
उत्तर:
(c) उच्चतम निर्धारित कीमत में

प्रश्न 2.
रिक्त स्थानों की पूर्ति कीजिए –

1. कीमत सीमा तथा कीमत तल को …………………………………. कीमतें भी कहते हैं।
2. निम्नतम निर्धारित कीमत का दूसरा नाम कीमत ………………………………… है।
3. आधुनिक विचारधारा के अनुसार, लगान साधन की ………………………………… के कारण उत्पन्न होती है।
4. FAD सिद्धांत ……………………………. द्वारा प्रस्तुत किया गया।
5. साधन माँग …………………………… माँग होती है।

उत्तर:

1. प्रशासकीय
2. तल
3. विशिष्टता
4. प्रो. अमर्त्य सेन
5. व्युत्पन्न।

प्रश्न 3.
सत्य /असत्य बताइये –

1. कीमत सीमा निर्धारण का उद्देश्य लाभ प्राप्त करना है।
2. कीमत तल को निम्नतम निर्धारित कीमत भी कहते हैं।
3. स्वतंत्र बाजार व्यवस्था में वस्तुओं व सेवाओं की कीमतों का निर्धारण, माँग और पूर्ति शक्तियों के द्वारा होता है।
4. कीमत सीमा व कीमत तल बाजार उन्मुख कीमतों से भिन्न होती है।

उत्तर:

1. असत्य
2. सत्य
3. सत्य
4. सत्य।

प्रश्न 4.
सही जोड़ियाँ बनाइये –

उत्तर:

1. (b)
2. (c)
3. (a)

प्रश्न 5.
एक शब्द/वाक्य में उत्तर दीजिये –

1. साम्य कीमत से अधिक, कीमत निर्धारण क्या कहलाता है?
2. कीमत सीमा के परिणामस्वरूप कौन-सी समस्या उत्पन्न होती है? कोई एक बताइए।
3. उत्पादकों के हितों की रक्षा किस कीमत से होती है?
4. वस्तु की कीमत का निर्धारण किसके द्वारा होता है?

उत्तर:

1. कीमत तल
2. कालाबाजारी
3. कीमत तल
4. माँग व पूर्ति, द्वारा।

माँग तथा पूर्ति वक्रों के सरल अनुप्रयोग अति लघु उत्तरीय प्रश्न
प्रश्न 1.
प्रशासकीय कीमत किसे कहते हैं?
उत्तर:
किसी वस्तु या सेवा की सरकार द्वारा निर्धारित ऊपरी सीमा या न्यूनतम सीमा पर कीमत निर्धारित की जाती है तो उसे प्रशासकीय कीमत कहते हैं।

प्रश्न 2.
कीमत तल किसे कहते है?
उत्तर:
किसी वस्तु या सेवा की सरकार द्वारा निर्धारित न्यूनतम सीमा को कीमत तल या निम्नतम निर्धारित कीमत कहते हैं।

प्रश्न 3.
सरकार द्वारा उच्चतम निर्धारित कीमतों के दो परिणाम लिखिए?
उत्तर:

1. लम्बा इन्तजार
2. बजट या भार।

प्रश्न 4.
कीमत तल के उदाहरण लिखिए?
उत्तर:
कीमत तल का उदाहरण न्यूनतम मजदूरो विधान के अंतर्गत सरकार श्रमिकों को दी जाने वाली मजदूरी की न्यूनतम सीमा को निर्धारित कर देती है।

प्रश्न 5.
एक निश्चित मजदूरी स्तर के बाद श्रम का पूर्ति वक्र बायीं ओर क्यों मुड़ जाता है?
उत्तर:
एक सीमा के पश्चात् मजदूरी दर के बढ़ने पर श्रम की पूर्ति कम होने लगती है क्योंकि एक सीमा से अधिक मजदूरी मिल जाने पर श्रमिक काम की तुलना में आराम अधिक पसन्द करने लगते हैं। ऐसी स्थिति में श्रम का पूर्ति वक्र पीछे की ओर मुड़ता हुआ वक्र बन जाता है।

प्रश्न 6.
प्राकृतिक विपदाएँ भुखमरी कैसे लाती हैं?
उत्तर:
प्राकृतिक विपदाएँ जैसे – बाढ़, सूखा इत्यादि आवश्यक खाद्यान्न उत्पादन में कमी लाती हैं जिसके कारण खाद्यान्न की पूर्ति; माँग की तुलना में गिरती है। पूर्ति के सापेक्ष खाद्यान्न की अतिरिक्त माँग खाद्यान्न की कीमतों में वृद्धि करती है जिसके परिणामस्वरूप गरीब व्यक्ति खाद्यान्न उपलब्धता से वंचित हो जाते हैं और क्षेत्र में भुखमरी की समस्या उत्पन्न हो जाती है।

MP Board Class 12th Economics Important Questions

MP Board Class 12th Accountancy Important Questions Chapter 5 Dissolution of a Partnership Firm

Dissolution of a Partnership Firm Important Questions

Dissolution of a Partnership Firm Objective Type Questions

Question 1.
Choose the correct answer:

Question 1.
Profit on Realization is credited to Partner’s:
(a) Bank AJc
(b) Capital A/c
(c) Revaluation A/c
(d) Realization A/c.
Answer:
(b) Capital A/c

Question 2.
Assets and liabilities accounts are closed by transferring them into:
(a) Revaluation A/c
(b) Realization A/c
(c) Cash A/c
(d) Capital A/c.
Answer:

Question 3.
Compulsory dissolution of a firm:
(a) On the death of a partner
(b) On insolvency of a partner.
(c) On becoming insane of a partner
(d) When the business of the firm become illegal.
Answer:
(b) On insolvency of a partner.

Question 4.
Assets are transferred to Realization account on their :
(a) Book value
(b) Cost price
(c) Market price
(d) Establishment cost.
Answer:
(d) Establishment cost.

Question 5.
On payment of Liabilities, amount written :
(a) Book value
(b) Originally paid amount
(c) After deducting discount
(d) Any other price.
Answer:
(a) Book value

Question 6.
After transferring creditors and Bills payable to Realization account, if nothing is mentioned about its payment then these liabilities are:
(a) Not paid
(b) Fully paid
(c) Partially paid
(d) None of these.
Answer:
(b) Fully paid

Question 7.
When a partner pay the dissolution expenses on behalf of the firm, then these expenses will be debited in :
(a) Realization A/c
(b) Partner’s Capital A/c
(c) Partner’s loan A/c
(d) None of these.
Answer:
(a) Realization A/c

Question 8.
When unrecorded assets is taken over by a partner, it is shown in :
(a) Debit side of Realization A/c
(b) Debit side of Bank A/c
(c) Credit side of Realization A/c
(d) Credit side of Bank A/c.
Answer:
(c) Credit side of Realization A/c

Question 9.
When unrecorded liabilities are paid, it is shown in :
(a) Debit side of Realization A/c
(b) Debit side of Bank A/c
(c) Credit side of Realization A/c
(d) Credit side of Bank A/c.
Answer:
(a) Debit side of Realization A/c

Question 10.
Which of the following is an internal liability .
(a) Bank loan
(b) Bank overdraft
(c) General Reserve
(d) None of these.
Answer:
(c) General Reserve

Question 11.
On dissolution of firm all assets and liabilities are transferred to :
(a) Capital A/c
(b) Revaluation A/c
(c) Realization A/c
(d) None of these.
Answer:
(c) Realization A/c

Question 12.
The asset which is not transferred in realization A/c but it is sold :
(a) Stock
(b) Goodwill
(c) Investment
(d) None of these.
Answer:
(d) None of these.

Question 13.
Realization A/c is prepared :
(a) On admission of new partner
(b) On retirement of partner
(c) On dissolution of firm
(d) None of these.
Answer:
(c) On dissolution of firm

Question 14.
Dissolution of a firm, partner’s loan account is transferred to: (MP 2009 Set A)
(a) Realization account
(b) Partner’s capital account
(c) Partner’s current account
(d) None of these.
Answer:
(d) None of these.

Question 15.
Insolvency of a partner leads to which type of dissolution :
(a) Dissolution of agreement
(b) Compulsory dissolution
(c) Dissolution by incidence
(d) Dissolution by court.
Answer:
(b) Compulsory dissolution

Question 16.
Realization A/c is: (MP 2015,16)
(a) Real A/c
(b) Personal A/c
(c) Nominal A/c
(d) None of these.
Answer:
(c) Nominal A/c

Question 17.
At the time of dissolution of a firm Bank Overdraft is transferred to: (MP 2014)
(a) Cash A/c
(b) Realization A/c
(c) Capital A/c
(d) Revaluation A/c.
Answer:
(b) Realization A/c

Question 18.
Undistributed losses and reserves are transferred to: (MP 2017)
(a) Cash account
(b) Bank account
(c) Capital account of partners
(d) Profit & loss A/c.
Answer:
(c) Capital account of partners

Question 2.
Fill in the blanks:

1. On the dissolution of firm the court appoint an ………………
2. All the assets except ……………. are transferred to debit side of Realization account.
3. Payment of liabilities is entered in …………….. side of cash account.
4. The realized amount of assets is entered in ………….. account.
5. All the Assets (except cash in hand and Bank) are transferred to ………….. side of …………. Account.
6. All ……………… (External / Internal) liabilities are transferred to …………… side of …………… Account.
7. Reserve loss / Undistributed losses are transferred to ……………… in their …………… ratio.
8. When a partner took over any liability of the firm, his capital account is ………………
9. Partner’s loan account is …………… in Realization Account.
10. When a partner took over any assets of the firm, his capital account will be …………..
11. Balance of Partner’s current account is transferred to partner’s …………… account.
12. When all the partners of firm become insolvent except one then there is …………… dissolution of firm.
13. Amount due to deceased partner is transferred to …………… account.
14. By dissolution of partnership there is not compulsory dissolution of ……………..
15. On dissolution of firm first of all ……………. liabilities are paid. (MP 2010)
16. On dissolution of firm cash in hand is transferred to ………….. account.
17. Realization account is a kind of …………….. account. (MP 2011)
18. After dissolution of the firm, partner can transact their own ……………. (MP 2017)

Answer:

1. Solicitor
2. Cash & Bank balance
3. Credit
4. Realization
5. Credit, Realization
6. External, Debit, Realization
7. Capital A/c, Profit Sharing ratio
8. Debited
9. Credited
10. Not recorded
11. Capital
12. Compulsory
13. legal executors
14. firm
15. outsiders
16. cash
17. real
18. business.

Match the columns:

Answer:

1. (d) Goodwill
2. (c) Loan from partner (MP 2010,17)
3. (b) Bank loan
4. (a) Unrecorded asset
5. (e) Preferred (MP 2010)
6. (f) Dissolution
7. (h) At the time of dissolution. (MP 20I5)
8. (g) Realization A/c Dr. (MP 2016)

Question 4.
Write true or false:

1. Unrecorded assets are transferred to realization A/c.
2. In a firm the dissolution of partnership among all partners is called dissolution of firm.
3. Provision for bad debts is not transferred to realization A/c.
4. Profit and loss of Realization A/c is divided among partners in profit and loss sharing ratio.
5. Revaluation account is opened for closing the books of a firm under dissolution. (MP 2009 Set A)
6. Balance sheet is prepared at the time of firm’s dissolution. (MP 2010,15)
7. Partners loan is an internal liability. (MP 2010)
8. The balance of realization account is transferred among partners in capital ratio.
9. There are five methods of dissolution of firm. (MP 2011)
10. The business is closed in case of dissolution of a firm. (MP 2012)
11. Realization account is made many times in the life of a firm. (MP 2012)
12. There is no difference between the dissolution of firm and dissolution of partner-ship. (MP 2016)
13. On dissolution, payment made to creditors is debited to realization account. (MP 2017)

Answer:

1. False
2. False
3. False
4. True
5. False
6. False
7. True
8. False
9. True
10. True
11. False
12. False
13. True.

Question 5.
Write the answer in one word / sentence:

1. Realization account is prepared. (MP 2008,17)
2. Assets and liabilities are transferred at book value. (MP 2012)
3. The balance of current account is transferred.
4. When liabilities of the partner are more than his assets, then he is called as ?
5. The act which is applicable on dissolution of a firm.
6. When all the partners or all the partners except one is declared insolvent then which type of dissolution it is ?
7. At which value the assets of a dissolved firm are transferred to realization A/c.
8. On the expiry of time the dissolution of partnership is called ? (MP 2016)
9. On dissolution of firm, assets bought by partners is entered in Capital A/c in which side ?
10. Profit or loss on Realization is divided among partners in which ratio ?
11. Which assets are not transferred to Realization account ?
12. Assets are transferred to Realization account in which value ?
13. After the expiry of term, partnership that comes to an end is known ?

Answer:

1. On dissolution of firm
2. In realization account
3. In capital account
4. Insolvent
5. Indian partnership act 1932
6. Compulsory dissolution
7. Book value
8. Dissolution by co-incidence
9. Debit side
10. Profit sharing
11. Cash & Bank balance
12. Book value
13. Partnership at will.

Dissolution of a Partnership Firm Very Short Answer Type Questions

Question 1.
What do you mean by dissolution of a partnership ?
Answer:
Dissolution of partnership firm means closing down the business of the firm. There is distinction between dissolution of partnership and dissolution of firm. Dissolution of partnership involves a change in the relation of partners, but the business is carried on. Section 39 of Indian Partnership Act, 1932 provides that, “The dissolution of partnership among all the partners of a firm is called the dissolution of the firm.”

Question 2.
What do you mean by realization account ?
Answer:
When the firm is dissolved, it is essential to close the accounts of various assets and liabilities. In this circumstance the assets are sold off and cash is realized. This cash is used for paying the liabilities. This process is entered in a separate account, which is known as realization account. It is a temporary account.

Question 3.
Write the names of those accounts entered in assets side of balance sheet which are not transferred to realization account.
Answer:
The following accounts are not transferred to realization account:

• Cash Account
• Bank Account
• Prepaid Expenses Account
• Accrued Income A/c
• Debit Balance of Profit and Loss Account.

Question 4.
Write the names of those accounts entered in the liability side of balance sheet which are not transferred to realization account.
Answer:
The following accounts are not transferred to realization account:

• Undivided Profit
• General Reserve
• Capital Account
• Partners Loan Account.

Question 5.
What journal entries are passed on sale of unrecorded Asset ?
Answer:
Cash A/c                – Dr.
To Realization A/c

Question 6.
Which accounts are opened when a firm is dissolved ?
Answer:
The following accounts are opened when a firm is dissolved:

• Realization Account
• Partner’s Loan Account
• Partner’s Capital Account
• Cash Account or Bank Account.

Question 7.
In which condition partnership act will be dissolved ?
Answer:
According to Indian partnership Act section 43. When partnership act will be there then the firm can be dissolve by giving information to all the partners.

Question 8.
What do you mean by Compulsory dissolution of a firm ? Explain.
Answer:
Compulsory Dissolution: As per Indian partnership Act the compulsory dissolution of a firm takes place under the following conditions:

• When all the partners or all the partners except one partners are declared insolvent.
• When the business of the firm is declared illegal due to happening of any specific event.
• When the maximum number of members exceeds the stipulated Limit.
• When the citizen of an enemy nation is the partner of the firm.

Question 9.
Under what circumstances a court may order for the dissolution of a firm ? Explain.
Answer:
Court may order the dissolution of a firm if a partner files a suit for the purpose. The grounds on which such dissolution may be ordered are as under :

• When a partner became insane.
• When any of the firm’s partner becomes handicapped or permanently disabled.
• When any of the firm’s partner willfully breaches the agreement.
• When there is possibility of losses regularly in the firm’s business.
• On any other reason for which the court is satisfied that it is necessary to dissolve the firm.

Question 10.
Write the internal Liabilities which are not paid in cash by the firm during dissolution.
Answer:
Following are the internal Liabilities of any firm which are not paid in cash during firm’s dissolution.
Partner’s Capital A/c
Partner’s Loan A/c
Loan A/c of partner’s wife.

Question 11.
Which assets are not transferred in the debit side of Realization account but the amount received on their sale are entered in it ?
Answer:
Unrecorded assets are not transferred in the debit side of the Realization ac-count but the amount received on their sale are entered in it.

Question 12.
How do the left over or unrecorded assets and liabilities were recorded in realization A/c ? Explain .
Answer:
Unrecorded Assets and Liabilities are not transferred to realization account. But the amount received from the sale of unrecorded assets is entered in the credit side and payment made for unrecorded liabilities are entered in the debit side of realization account.

Question 13.
Which assets shown in the assets side of the balance sheet were not transferred to the realization account ?
Answer:
Cash in hand
Bank A/c
Dr. Balance of P/L A/c.

Question 14.
Which Liabilities shown in the liabilities side of the balance sheet were not transferred to the realization A/c ?
Answer:
Following liabilities were not transferred to the realization A/c :

• Undistributed profits
• General Reserve
• Partner’s Capital A/c
• Partner’s Loan A/c.

Question 15.
What is Memorandum balance Sheet ?
Answer:
Sometimes the partner’s capital accounts and all other liabilities were given in the question but the amount of total assets is not given. Under such condition, the amount of total assets is ascertained. Total of all the Liabilities is done on the basis of old balance sheet and from it, the amount of total sundry assets is calculated. Such a balance sheet is known as Memorandum Balance sheet.

Dissolution of a Partnership Firm Short Answer Type Questions

Question 1.
Write three differences between the dissolution of a firm and dissolution of part-pep?
Answer:
Differences between dissolution of a firm and dissolution of partners:

Question 2.
State the rules given under Section 48 of Partnership Act of 1932 to close the accounts when a firm is dissolved.
Or
How are accounts settled on dissolution of a firm ?
Answer:
The following rules are given under Section 48 of the Partnership Act of 1932 to close the accounts when a firm is dissolved:
(1) All the loss including the capital deficiency of the partners is adjusted at first from the profit, then from their capital balance and if need arise they have to bring in sufficient amount in their profit or loss sharing ratio.

(2) The realized amount from the sale of assets (including the amount brought by the partner) is used in the following order:

• The outside liabilities of the firm
• Proportionate payment of partner’s loan
• Payment of capital balance
• If any amount is left, it is shared by the partners in their profit or loss-sharing ratio.

Dissolution of a Partnership Firm Long Answer Type Questions

Question 1.
What accounts are opened on the dissolution of a firm ? Explain the realization account.
Answer:
When a partnership is dissolved, the following accounts are opened:

• Realization Account
• Partner’s Capital Account
• Bank/Cash Account
• Loan Account.

Realization account:
When a partnership is dissolved for closing all the assets and liabilities account and for entering the amount realized from the sale of assets and payments of all the liabilities, an account is opened, which is known as realization account. Preparation of realization account:

In the debit side of realization account, all the assets excluding cash and bank balance are entered. In the credit side of this account all the liabilities excluding the partners capital balance, partners loan towards the firm and the reserves are entered.

After that the amount received from the sale of assets credited and the payment of liabilities is debited in this account. After the dissolution, the balance of this account is transferred to all the partners capital account in their profit or loss sharing ratio.

Question 2.
Differentiate between revaluation account and realization account.
Answer:
Differences between revaluation account and realization account:

Question 3.
which circumstances a partnership firm may be dissolved ?
Or
Explain the methods of dissolution of a firm.
Answer:
Section 40 to 44 of the Indian Partnership Act of 1932 tells that, on the following circumstances a partnership firm may be dissolved:

1. Dissolution by agreement:
A firm may be dissolved with the consent of all the partners or according to the terms of the agreement among the partners.

2. Compulsory dissolution:
Under section 41 of the Indian partnership act 1932, by the adjudication of all the partners but one as insolvent, or by the business of the firm becomes unlawful or illegal due to the happening of any such incident or event, the firm may be compulsory dissolved.

3. Dissolution by court: If any of the circumstances lays down, the court may under to dissolve the firm:

• When a partner becomes unsound mind
• When a partner suffers from permanent incapacity and incapable for performing his duties as a partner
• When a partner is found guilty out of misconduct affecting the firm
• On the will full and persistent breach of partnership agreement by a partner
• On the transfer of the whole or the interest by a partner in favor of a third party or when his share is attached
• under a decrease or sold under process of law.
• When the business of the firm can’t be carried on.
• On any other just and equitable ground.

4. Dissolution on the happening of contingencies: A firm may be dissolved in any of the following ways unless there is a contract between the partners to the contrary:

• By expiry of the term fixed
• By the completion of the adventure that which the firm is constituted
• By the death of a partner
• By the adjudication of a partner as insolvent.

MP Board Class 12 Accountancy Important Questions