UNIT 1

1.what is the meaning of business?

ans)Business means production and sales of goods or purchase and sale of goods for
profit.Wealth is created through buying and selling goods and through manufacturing
activity
2.what are the economic activities?
Ans)The activities which are undertaken for earning income are economic
activities.Production,exchange and distribution of products and rendering of services such as
transport ,banking ,insurance,supply of gas and electricity etc.
3.what are non economic activities?
Ans)Non economic activities are those activities which are performed with the aim of social
service. The activities which are performed by the members of the family for the sake of
family are non-economic activities.
4.what is the meaning of trade?How does it differ from commerce?
Ans)The purchase and sale of goods with a view to make profit is called trade.Commerce is
more wider term than trade.All the activities which are necessary to bring goods and
services from place of their origin to the place of their consumption are regarded as
commerce.
5.How do you classify trade?
Ans)On the basis of geographical factors the trade is classified as internal trade and external
trade.On the basis of quantity of goods dealt within the trade ,the trade is classified as
wholesale trade and retail trade.
6.Give 5 examples of aids to trade.
Ans)Trade means buying and selling of goods at a profit.The trade is facilitated by the
following services which are called aids to trade.They are
warehousing,transport,banking,insurance,distribution,advertising.
7.What an entrepreneur does?
Ans)He buys and sells goods and services or undertakes a manufacturing activity.He
assumes the risk in business.He makes decisions to obtain and use the unused natural
resources.
8.Write about the classification of industry?

9.A business unit requires funds for what purposes?

Ans)The business unit requires funds for two purposes.They are (a)fixed capital (b)working
capital
10.What constitutes fixed capital.Write the various assests covered in fixed capital?
Ans)The capital blocked by the company on permanent basis in the fixed assets is called
fixed capital.Such assets are land building ,plant and machinery, furniture ,patents,vehicles
etc.

11.What constitutes working capital.

Ans)Working capital is defines as current assets less currents liabilities.This is required to
carry out the day to day activities.
current Assets

current Liabilities

1.stock in trade
a.Raw material
b.work in progress
c.finished Goods
2.Debtors including b\r
3. cash and bank balances

1.trade creditors including b\p

2.bank overdraft
3.cash credit

12.write long term sources of finance.

Ans) a.Issue of shares
b.Issue of debentures
c.ploughing -back of profits
d.loans from specialised financial institutions
13.Preference share has what preference over equity shares.
Ans)The preference share has two preferences over equity shares.
(1)As to dividends during lifetime of the company.Unless the preferences dividends are
paid the company should not pay the equity dividends.
(2)As to repayment of capital:At the time of winding up of the company ,unless the full
payment is made to reference shareholders no payments should be made to the equity
shareholders towards repayment of capital.
14.What is a debenture?
Ans)Debenture is a bond issued by the company specifying that the amount stated in
debenture is due by the company to the holder of debenture.
15.What the debenture holder gets from the company?
Ans)the Debenture holder gets during the life time of debentures,the periodical interest at a
fixed rate.On maturity the debenture holder gets the principle amount either at premium ,or
at a discount or at par
16.What is the benefit to the company regarding debentures?
Ans)Interest on debentures is a tax deductable expenditure.The rate of interest on
debentures is lower than the rate of dividend on shares.
17.Depreciation is a source of funds-explain?
Ans)Depreciation which is debited to profit and less account is not an expenditure involving
outflow of cash. The depreciation amount gets accumulated and remains with the concern.It
can be used as working capital.
18.what are public deposits?
Ans)Companies accept deposits from public.The public deposits carry a fixed rate of interest
which is payable monthly or quarterly.The companies accepting deposits have to comply
with the companies(acceptance of deposits)rules 1975.The public deposits are unsecured
liabilities.
19.what are retained earnings?

Ans)If the profits made by the company are not distributed by way of dividends,such profits
will be accumulated in the business.They are called retained earnings.These may or may not
be transferred to general reserve a/c.These may be used for issues of bonus shares also.
20.what is commercial paper?
Ans)It is a bond issued by the borrower company to the lender.The company undertakes to
pay on the maturity date.The face value of the bond .These bonds are issued for 90
days,120 days,or 180 days.

1. Business organization.
A.A concern company or enterprise which buys & sells, is owned by one person under
a specific set of operating policies.
2. Main motive of business organization.
A. Profit.
3. Any two characteristics of business organization.
A .Exchange of goods and services, profit motive, Continuity of transactions, risk and
uncertainty etc.
4. What are the various forms of business organization?
A. (i) public undertakings (ii) private undertakings (iii) Joint sector undertakings
5. What do mean by public undertakings?
A. The undertakings owned or operated by public authorities are known as public
sector undertakings. In these undertakings either whole or most investment is done by
the Govt.
6. What are the different forms of organizations under the private sector?
A. (i) sole proprietorship (ii) partnership (iii) Joint Hindu Family (iv) Joint Stock
Companies (v) Cooperative societies
7. What are the different forms of organizations under the public sector?
A. (i) Departmental organizations (ii) Public corporations (iii) Government companies.
8. What is the main aim of public undertakings?
A. To provide goods & services to the public at a reasonable rate though profit earning
is not entirely excluded.
9. What do mean by public corporations?

A. Public corporations are those which are created by a special Statue of state or
central Govt.
10. Mention any two factors which influence the choice of a suitable form of
organization?
A. Capital requirement, liability, managerial needs continuity, Tax liability, flexibility etc.
11. Define Sole Trader/Sole Proprietorship?
A. A sole trader is a person who sets up the business with his own resourcrs, manages
the business himself by employing persons for his help and alone bears all the gains
and risks of the business.
12. Mention any two circumstances where sole trader is suitable?
A. (i) where markets are local (ii) where personal contacts with customers are required.
13. What are the two alternatives of expanding a sole trade business?
A. (i) Adding a partner (ii) Employing a servant.
14. Define partnership?
A. A partnership is an association of two or two or persons to carry on as co-owners, a
business and to share its profits and losses.
15. What do mean by Partner by Estoppel or Holding out?
A. When a person is not a partner but poses himself as a partner, either by words or in
writing or by his acts, he is called a partner by estoppel or holding out.
16. Define a sleeping or dormant partner?
A.A sleeping partner is one who contributes his capital, shares profits and contributes
to the bosses of the business but does not take part in the working of the concern.
17. Is a minor liable for the liabilities of the partnership firm?
A. The minor is not personally liable for liabilities of the firm, but his share in the
partnership property and profits of the firm will be liable for debts.
18. Is registration of partnership compulsory in India?
A. Registration is not compulsory however a registered firm enjoys certain extra
privileges.
19. What do you mean by partnership deed?

A. Partnership agreement or deed is a document containing all matters according to

which mutual rights, duties and liabilities
20. Is a written partnership deed compulsory?
A. Written deed is not compulsory. Deed may be written or oral or written, but a written
agreement is however is preferable because nobody can dispute the contracts.
21. What are the two kinds of partnership? Define them?
A. (i) General partnership Liability of members is unlimited.
(ii) Limited partnership Liability of some partners is limited while liability of some
partners is unlimited.
22. Differentiate between Dissolution of partnership and Dissolution of firm?
A. When partners agree to continue the firm under the same name, even after the
retirement or death of a partner, it amounts to dissolution of partnership. Dissolution of
firm means discontinuance of its activities. It includes dissolution of partnership too.
23. Under which act is the partnership concern registered?
A. Partnership Act of 1932.
24. How can a person acquire membership under Joint Hindu Family business?
A. (i) By birth or Adoption (ii) By marriage to a male person whom is already a member
of the family.
25. Who controls the affairs of a Joint Hindu Family?
A. Kartha- His liability is unlimited.

Unit-3
JOINT STOCK COMPANY
1) Define JOINTSTOCK COMPANY?
A company is an association of persons who contribute money in the shape of shares and the
company gets a legal entity and enjoys a permanent existence.
2) Define CHARTED COMPANIES?
Charted companies are also known as royal charter and royal charter defined the rights, duties,
liabilities and exclusive principles of such companies.
3) Define PROMOTER?

A promoter is a one who undertakes with reference to a given project and to set it going and who
takes the necessary steps to accomplish that purpose.
4) Name various stages of promoting a company?
Four stages are a) discovery of an idea b) detailed investigation c) assembling the requirement d)
financing proposition.
5) Define Memorandum of Association (MOA)?
MOA is a document, which contains the fundamental rules regarding the contribution and
activities of a company.
6) Name various clauses of MOA?
The clauses are:
1. The name clause
2. Registered office clause
3. Object clause
4. Liability clause
5. Capital clause
6. Association clause
7) Define Articles of Association (AOA)?
An article of association is an important document containing rules and regulations for internal
administration of a company's affair.
8) Define PROSPECTUS?
A prospects means any document described or issued as prospectus and includes any
notice,circular,advertisement or other documents inviting deposits for public or inviting offers
from the public for the subscription or purchase of any share in or debentures of a body
corporate.
9) Discuss the capital clause of a company?
The clause states the total capital of the proposed company. The division of capital into equity
share capital and preference share capital should also be mentioned.
10) Name any 3 advantages of Government Company's?
1. Flexibility in management
2. Helpful in developing neglected sectors
3. Provides healthy competition to the private sectors.

11) What is the statutory obligation of a joint stock company?

A company is required to maintain prescribed books and have a periodical audit. Some
information has to be supplied periodically to the register of a company.
12) What do you mean by holding companies?
If a company controls the policies of other companies through the ownership of its share and
through control over the composition of its board of directors, the company is called a holding
company.
13) Name different kinds of promoters?
1. Professional promoters

2. Occasional promoters
3. Financial promoters
4. Managing agents as promoters
14) What are the 2 aspects of financial planning?
1. Estimating financial needs
2. Finding out the sources
15) What are the 3 important documents issues by a company?
The 3 important documents are
1. Memorandum of association
2. Articles association
3. Prospects
16) What are the legal formalities before it can step up?
1. Registration or incorporation
2. Capital subscription
3. Commencement of business
17) Name any 2 characteristics of a promoter?
1. A promoter conceives an idea for the setting up a business
2. He prepares various documents and gets the company incorporated.
18) What is the scope of MOA?
The memorandum is a sort of constitution of the company. The company works in the farm work
given in the memorandum.
19) What are the minimum and maximum numbers of members required for the formation of Joint
Stock Company?
There must be at least two persons for starting a private company and maximum 50.Atleast 7
persons are required to start a public company and there is no maximum limit.
20) What are 2 promotional aspects?
1. Procedural decisions relating to planning and organizing a business
2. Legal aspect or legal formality involved in promotion.

UNIT 4
1.Organization need people but people also need organization.Comment.
Ans)Organization need people in order to get the things done to reach the corporate
goals.People also need organization because a group of persons can achieve a task which a
single person cannot achieve .Organization is a social innovation to overcome the limitations
of man.
2.What are the inter-related functions of management?
Ans)They range all the way from planning,organizing,staffing,directing,coordinating,reporting to budgeting .All those are closely inter-related.
3.Management is an influence process-Explain?

Ans)A manager influences Men,Money,Materials,Machines and methods.He uses authority to

influence them being himself influenced by the environmental conditions.Therefore this
influence is not unilateral but multilateral.
4.Management is concerned with ideas,things and people-comment.
Ans)Management starts with planning.The plans are ideas.Things are the resources such as
money,materials,machines etc.people represent the employees.people are directed to use
the things to convert the ideas into final results.This function is the management.
5.What is conceptual skill and what is technical skill?
Ans)The skills used by the management at higher level is conceptual skills,the skilled used
by the manager at supervisory level are technical skills.
6.Distinguish administration from management?
Ans)Deciding policies which is done at top level is called administration and the execution of
these policies which is done at lower level is called management.Newman,koonz and
o'donell are of the view that management and administration are one and the same.
7."Mangers are born and not made"Is the statement correct?
Ans)The statement is false.All managers need not be born.A person by studying the
management principles should understand about formal management successful
organization and observe how managers deal with different problems.Thus any person
having such interest could become a successful manager.
8.What is the difference between strategic planning and operational planning?
Ans)Strategic planning has a long time horizon,say,from 2 to 10 yrs.operational planning is
normally prepared for an year or less.
9.What is a strategic plan?
Ans)A particular plan which is made specifically to solve the given problematic situation is a
strategic plan.It is a single use plan .The production budget for say 100000units of
production is a strategic plan.
10.What is a programming decision?
Ans)The decision taken for a routine and recurring problem is called programmed
decision.These decisions are taken carefully and intelligently and given to lower level
executives so that they will implement such decisions without making any references to
higher managerial levels.
11.What is a non-programmed decision?
Ans)A decision taken for a unique problem which is of non-recurring nature is nonprogrammed decision.This type of decision is taken by the manager by using his
skills,judgement and creativity.For example a decision regarding adding a new product
,purchase of new machinery,opening a new branch,appointments of a new chief executive
are all non-programmed decisions.
12.What is rationality in decision making?
Ans)On implement of the decision if the objective is achieved the decision said to be rational
.The rationality is desirable for every decision.
13.Can you expect rationality in a non-programmed decision?
Ans)A non programmed decision is taken when the situation is ambiguous and non
precise.Such a decision is more creative than rational.

14.What the great man theory of leadership says?

Ans)according to great man theory of leadership leaders are born but not made.
15.Hoe leadership is different from management.
Ans)leadership is an elective position.Group members accept and elect a person as a leader
because of his charisma,knowledge and intelligence.Management is usually a positional
authority conferred on manager by superiors.The subordinates are bound to accept him to
be their manager.
16.Define planning?
Ans)planning is future oriented .It is nothing but a series of decisions which have to be
implemented at a certain point of time which have to take place in future for the
achievement of an organizational objective.
17.Define scientific management?
Ans)scientific management is the art of knowing exactly what you want your man to do and
then saving that they do it in the best and cheaper way.
18.Explain motion study ,time study and fatigue study
Ans)By motion study the unproductive movements of the worker are avoided as he is
performing the job.The necessary movements in job are arranged in sequence which is very
convenient for the performance of the job.By fatigue study the worker is allowed the
interval to relax in the course of his job.By time study the time required of the job is
fixed.These three studies are part of scientific management.
19.What are the objective of scientific management.
Ans)The objectives of scientific management are to increase the productivity and reduce the
cost of production and to maximize the prosperity of both employer and employees by
sharing the benefit of savings among them.
20.What is management by exception?
Ans)The founders of scientific management advocated that the manager need not always
observe the routine matters .It is sufficient is he observes without fail the critical matters.

ORGANIZATION
1. Define organization.
Ans: Organization is the process of identifying & grouping the work
to be performed, delegating responsibility to accomplish the
objectives.

2. What does Organization promote?

Ans: It promotes specialization & division of labour.
3. Define management by exception.
Ans: Management by exception is a philosophy which enables the
top management to concentrate on planning and policy formulation
and not bother on routine affairs of management.
4. Define span of control.
Ans: The number of subordinates to be supervised by the superior to
have effective control and supervision.
5. Define unity of Command.
Ans: one subordinate to be answerable to one superior only. So as to
avoid confusion & Conflicts
6. What are objectives of organization?
Ans: a) To help Management,
b) To increase Production,
c) Co-operation of Employees.
7. Types of organization charts.
Ans: a) Vertical b) Horizontal

c) Circular

8. What is an organization manual?

Ans: It provides & supplements additional details to the information

supplied by organization chart.
9. Define Scalar chain.
Ans: It is the line of authority in an enterprise running right from top
to bottom.
10. Formal Organization:Ans: It refers to the structure of well-defined jobs, each bearing a
definite measure of authority, responsibility & accountability.
11. Informal Organization:Ans: It refers to the relationships between people within the
organization based on personal attitudes, emotions, prejudices, likes
and dislikes. It is also called as Grapevine.
12. Give a few examples of formal organization structure.
Ans:

a) Hierarchical structure
b) Line-staff
c) Matrix structure
d) Functional

13. Define delegation of authority.

Ans: The process by which a manager divides the work among his
subordinates.

14. Explain Authority & Responsibility.

Ans: Authority & Responsibility go hand in hand. If subordinates

have been assigned duties it results in responsibility & accountability.
15. What are barriers to effective delegation?
Ans: Overconfidence of managers & undermining the effectives &
abilities of subordinate.
16. Why sub ordinate hesitate in accepting delegation.
Ans:

a) Fear of criticism.
b) Lack of self-confidence.
c) Inadequate incentive.

17. Define Decentralization.

Ans: It means dispersal of decision-making power to lower levels of
organization.
18. Difference between delegation & decentralization.
Ans: Delegation means delegating authority & responsibility from
one individual to another while decentralization is a broader concept,
which means scattering of authority throughout the organization.
19. Define Centralization.
Ans: It refers to the concentration of authority in the hands of the top
management.
20. Define the principles of unity of direction.
Ans: In order to accomplish the group activities in an organization
there should be one head & one plan & no deviations Permitted.

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