MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Financial Management Class 12 MCQ Questions With Answers

Financial Management MCQ Class 12 Chapter 9 Question 1.

Which of the following statements is false regarding financial management?

(A) Aims at ensuring availability of enough funds whenever required.
(B) Aims at reducing the cost of funds procured.
(C) Is concerned with optimal procurement as well as usage of finance.
(D) Facilitates price discovery for securities of ompany.
Answer:
(D) Facilitates price discovery for securities of ompany.

Explanation:
The main objective of financial management is to maximize the wealth of shareholders. This include 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.

Financial Management Class 12 MCQ Chapter 9 Question 2.

The foremost objective of financial management is:

(A) Maximisation of market share
(B) Maximisation of shareholders’ wealth
(C) Maintenance of liquidity
(D) Profit maximisation
Answer:
(B) Maximisation of shareholders’ wealth

Explanation:
The primary aim of financial management is to maximise shareholders’ wealth, which is referred to as the wealth maximisation concept.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 3.

For optimal procurement of manager identifies different and compares those items in terms of cost and associated risks. Identify concept highlighted in the above lines.

(A) Financial management
(B) Financial decisions
(C) Working capital
(D) None of the above
Answer:
(A) Financial management

Question 4.

Which of the financial decisions is about the quantum of finance to be raised from various long-term sources?

(A) Investment
(B) Dividend
(C) Financing
(D) None of these
Answer:
(C) Financing

Explanation:
Financing decision relates to the proportion in which funds are raised from various sources. Factors like cost of fund, risk involved, control, cash flow, etc. are considered before taking financial decision. In financing decision the firm has to decide the ratio of owned funds and borrowed funds.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 5.

A decision to acquire a new and modern plant to upgrade an old one is known as ………….. decision.

(A) Financing
(B) Working capital
(C) Investment
(D) Dividend
Answer:
(C) Investment

Explanation:
The investment decision relates to how the firm’s funds are invested in different g assets. These decisions are very crucial for any business since they affect its earning capacity in the long run.

Question 6.

Which of the following statements is false regarding financial management ?

(A) Money required for carrying out business activities is called business finance.
(B) For optimal procurement, different available sources of finance are identified and compared in terms of their costs and associated risks.
(C) The objective of financial management is to minimise the current price of equity shares.
(D) All of the above
Answer:
(C) The objective of financial management is to minimise the current price of equity shares.

Explanation:
The objectives of financial management is to maximize the wealth of shareholders, to provide maximum returns to the owners on their investment. To ensure continuous availability of sufficient funds at reasonable cost, etc.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 7.

Dilip is the finance manager of Venus Ltd. He is facing difficulty in deciding the amount of profit earned by the company that should be distributed as dividend to the shareholders. In the current year, the company earned high profit. However, Dilip thinks that it is better to declare higher dividend as he is sure about the earning potential of the company in the coming years. Which of the following factors affected Dilip’s choice regarding dividend decision.

(A) Taxation Policy
(B) Cash Flow Position
(C) Stability of Dividends
(D) Shareholders’ Preference
Answer:
(C) Stability of Dividends

Explanation:
Companies generally follow a policy of stabilising dividend per share. The increase in dividends is generally made when there is confidence that their earning potential has gone up and not just the earnings of the current year.

Question 8.

Tractors Pvt. Ltd. producing 2,00,000 trucks and generating revenue of ₹ 2,000 crores annually, has recently acquired the world’s second largest truck manufacturing company. After this acquisition, Tractors Pvt. Ltd. will become the world’s largest truck manufacturer. For financing the acquisition, the company had to arrange about ₹ 1,00,000 crores through debt and equity function is being performed by the company for arranging the funds through debt and equity.

(A) Investment
(B) Financing
(C) Dividend
(D) All of these
Answer:
(B) Financing

Explanation:
Issue of more equity may lead to dilution of management’s control over the business. Debt financing has no such implication. Companies afraid of a takeover bid would prefer debt to equity.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 9.

Match the FINANCIAL DECISIONS in Column I with their correct EXAMPLES in Column II.

Column I Column II
(a) Investment Decision (i) Profit  earned by company (after paying tax) is to be distributed to the shareholders.
(b) Financing Decision (ii) Decisions about the levels of cash, inventory and receivables.
(c) Dividend Decision (iii) The proportion of debt, equity, preference share capital.

(A) (ii), (iii), (i)
(B) (iii), (ii), (i)
(C) (ii), (i), (iii)
(D) (iii), (i), (ii)
Answer:
(A) (ii), (iii), (i)

Question 10.

Financial planning usually begins with the preparation of a………………

(A) Sales forecast
(B) Profit forecast
(C) Business cycle
(D) None of theses
Answer:
(A) Sales forecast

Explanation:
The financial planningbegins with determination of total capital requirement. For this the finance managers do the sales forecast and if the future prospects appear to be bright and expect increase in sale, then firm needs to increase its production capacity which means more requirement of long term funds.

Question 11.

takes into consideration the growth, performance, investments and requirement of funds for a given period.

(A) Business cycle
(B) Financial planning
(C) Organising
(D) Working capital
Answer:
(B) Financial planning

Explanation:
Financial planning is essentially the preparation of a financial blueprint of an organisation’s future operations. The objective of financial planning is to ensure that enough funds are available at right time.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 12.

Vikrant joins his father’s business of Organic masalas, near Kotgarh in Himachal after completing his MBA. In order to capture a major share of the market, he decided to sell the product in small attractive packages by using the latest packaging technology. His father suggested that they hire financial consultants to estimate the amount of funds that would be required for the purpose and timings when it would be required. The concept being discussed by Vikrant’s father, links which financial decision with the investment decision?

(A) Dividend decision
(B) Financial planning
(C) Capital structure decision
(D) Financing decision
Answer:
(B) Financial planning

Explanation:
The financial statements are prepared keeping in mind the requirement of funds for investment in the fixed capital and working capital. Then the expected profits during the period are estimated so that an idea can be made of how much of the fund requirements can be met internally.

Question 13.

Mr. Raghav, Finance manager of Manav InfraTech Pvt. Ltd., prepared a detailed plan of financial needs of the firm in coming six months and the sources from where funds will be acquired to meet out these needs as company is planning to open a new branch in other states of India. Identify the financial concept discussed here:

(A) Business cycle
(B) Financial planning
(C) Capital structure
(D) Working capital
Answer:
(B) Financial planning

Explanation:
Financial planning is broader in scope as it does not end by raising estimated finance. It includes long term investment decision- In financial planning finance manager analyses various investments plans and selects the most appropriate.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 14.

Which of the following statements is incorrect?

(A) Financial planning is the process of estimating the fund requirement of a business and specifying the sources of funds.
(B) The objective of financial planning is to ensure that enough funds are available at right time.
(C) Financial planning is a substitute of Financial Management.
(D) None of the above
Answer:
(C) Financial planning is a substitute of Financial Management.

Explanation:
Financial planning is not equivalent to, or a substitute for, financial management. Financial management aims at choosing the best investment and financing alternatives by focusing on their costs and benefits. Its objective is to increase the shareholders’ wealth. Financial planning on g the other hand aims at smooth operations by focusing on fund requirements and their availability in the light of financial decisions.

Question 15.

Which of the following is not an objective of financial planning?

(A) To ensure availability of funds whenever required.
(B) To choose the best investment and financing alternatives by focusing on their costs and benefits.
(C) To see that the firm does not raise resources unnecessarily.
(D) All are the objectives of financial planning.
Answer:
(B) To choose the best investment and financing alternatives by focusing on their costs and benefits.

Explanation:
The main objectives of financial planning is to ascertain the amount of fixed capital as well as the working capital required in a given period, to determine the amount to be raised through various sources using a judicious debt-equity mix and to ensure that the required amount is raised on time at the lowest possible cost.

Question 16.

Detailed plans of action are prepared under financial planning. What benefits does this result in?

(A) Reducing waste
(B) Reducing duplication of efforts
(C) Reducing gaps in planning
(D) All of the above
Answer:
(D) All of the above

Explanation:
Financial planning helps in coordinating various business functions, e.g., sales and production functions, by providing clear policies and procedures and making detailed plans of action which reduces waste, duplication of efforts, and gaps in planning.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 17.

Financial planning takes into consideration which of the following:

(A) Growth
(B) Performance
(C) Investments
(D) All of these
Answer:
(D) All of these

Explanation:
Financial planning takes into consideration the growth, performance, investments and requirement of funds for a given period. Financial planning includes both short-term as well as long-term planning. Long term planning relates to long term growth and investment. It focuses on capital expenditure programmes. Short term planning covers short term financial plan called budget

Question 18.

ICR =…………….

(A) EBIT/Interest
(B) EBIT x Interest
(C) EBIT – Interest
(D) Interest/EBIT
Answer:
(A) EBIT/Interest

Explanation:
The interest coverage ratio refers to the number of times earnings before interest and taxes of a company covers the interest obligation.

Question 19.

Which component of capital structure determines the overall financial risk ?

(A) Debt
(B) Equity
(C) Both (A) and
(B) (D) None of these
Answer:
(A) Debt

Explanation:
Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

Question 20.

Samara Ltd. has Debt Equity ratio of 3:1 whereas Gehlot Ltd. has Debt Equity ratio of 1:1. Name the advantage Samara Ltd. will have over Gehlot Ltd., when the rate of interest is lower than the rate of return on investment of the company.

(A) Trading on equity
(B) Low risk
(C) Low cost of equity
(D) Greater flexibility
Answer:
(A) Trading on equity

Explanation:
If the ROI of the company is higher, it can choose to use trading on equity to increase its EPS, i.e., its ability to use debt is greater.

Question 21.

Which of the following statements is incorrect?

(A) A low Debt Service Coverage Ratio indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.
(B) Use of higher debt increases the cost of equity.
(C) Low interest rates increase a firm’s capacity to employ higher debt.
(D) None of the above
Answer:
(A) A low Debt Service Coverage Ratio indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.

Explanation:
A higher DSCR indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 22.

When the stock market is bearish, a company must go for which of the following?

(A) More debt
(B) Less debt
(C) More equity
(D) Equal mix of debt and equity
Answer:
(A) More debt

Explanation:
During a bearish phase, a company may find raising of equity capital more difficult and it may opt for debt.

Question 23.

When the stock market is bullish, a company must go for which of the following?

(A) More debt
(B) More equity
(C) Less equity
(D) Equal mix of debt and equity
Answer:
(B) More equity

Explanation:
If the stock markets are bullish, equity shares are more easily sold even at a higher price. Use of equity is often preferred by companies in such a situation.

Question 24.

Of the following sources of funds, are Owner’s Funds.

(A) Equity share capital
(B) Preference share capital
(C) Reserves and surpluses
(D) All of the above
Answer:
(D) All of the above

Explanation:
Owners’ funds consist of equity share capital, preference share capital and reserves and surpluses or retained earnings.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 25.

Of the following sources of funds, are not Borrowed Funds.

(A) Loans
(B) Retained earnings
(C) Public deposits
(D) Debentures
Answer:
(B) Retained earnings

Explanation:
Borrowed funds can be in the form of loans, debentures, public deposits, etc. These may be borrowed from banks, other financial institutions, debenture holders and public.

Question 26.

Match the TERMS in Column I with their correct MEANING in Column II.

Column I Column II
(a) Floatation Costs (i) Comparing cash profits with the total cash required for the service of the debt and the preference share capital.
(b) ICR (Interest Coverage  Ratio) (ii) Extent to which earnings before interest and taxes of a company covers the interest obligation.
(c) DSCR (Debt Service Coverage Ratio) (iii) Cost involved in the process of raising resources

(A) (ii), (i), (iii)
(B) (iii), (ii), (i)
(C) (i), (iii), (ii)
(D) (iii), (i), (ii)
Answer:
(B) (iii), (ii), (i)

Question 27.

Fixed capital is financed through:

(A) Equity shares
(B) Preference shares
(C) Debentures
(D) All of these
Answer:
(D) All of these

Explanation:
Fixed capital be financed through long-term sources of capital such as equity or preference shares, debentures, long-term loans and retained earnings of the business. Fixed Assets should never be financed through short-term sources.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 28.

Net working capital may be defined as the:

(A) Excess of current assets over current liabilities
(B) Excess of current liabilities over current assets
(C) Both (A) and (B)
(D) one of the above
Answer:
(A) Excess of current assets over current liabilities

Explanation:
Some part of current assets is usually financed through short-term sources, i.e., current liabilities. The rest is financed through long-term sources and is called net working capital. Thus, NWC = CA – CL (i.e. 1 Current Assets – Current Liabilities.)

Question 29.

………………. is the time span between the receipt of raw material and their conversion into finished goods.

(A) Production cycle
(B) Business cycle
(C) Both (A) and (B)
(D) None of these
Answer:
(A) Production cycle

Explanation:
Production cycle is the time span between the receipt of raw material and their conversion into finished goods. Some businesses have a longer production cycle while some have a shorter one. Duration and the length of production cycle, affects the amount of funds required for raw materials and expenses.

Question 30.

Which of the following statements is true?

(A) Higher competition requires larger stocks to meet urgent orders from customers which results into requirement of more working capital.
(B) The companies having growth prospects require lesser amount of working capital.
(C) If the rate of inflation is high, an organisation is required to invest less in working capital. .
(D) All of the above
Answer:
(A) Higher competition requires larger stocks to meet urgent orders from customers which results into requirement of more working capital.

Explanation:
Higher level of competitiveness may necessitate larger stocks of finished goods to meet urgent orders from customers. This increases the working capital requirement. Competition may also force the firm to extend liberal credit terms.

Question 31.

There is a boom in the demand for i-pods. How does it affect the requirement of working capital for companies manufacturing i-pods?

(A) More working capital will be needed.
(B) Less working capital will be needed.
(C) No change in working capital needed.
(D) None of the above
Answer:
(A) More working capital will be needed.

Explanation:
The basic nature of a business influences the amount of working capital required. A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation. This is because there is usually no processing.

Question 32.

Cars Udyog Ltd. plans to manufacture solar cars in its new plant. It has an offer from Toyota for collaboration. What impact will the collaboration have on the requirement of fixed capital for Cars Udyog Ltd.?

(A) Increase the requirement for fixed capital
(B) Decrease the requirement for fixed capital
(C) No change in fixed capital needed
(D) None of these
Answer:
(B) Decrease the requirement for fixed capital

Explanation:
At times, certain business organisations share each other’s facilities. Such collaboration reduces the level of investment in fixed assets for each one of the participating organisations.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 33.

Bright Bulbs Pvt. Ltd., is manufacturing good quality LED bulbs and catering to the local market. The current production of the company is 1,000 bulbs a day. Anita, the marketing manager of the company, surveyed the market and decided to supply the bulbs to five-star-hotels also. She anticipated the higher demand in future and decided to buy a sophisticated machine to further improve the quality and quantity of the bulbs produced. Which factor affected the fixed capital requirements of the company?

(A) Scale of Operations
(B) Growth Prospects
(C) Diversification
(D) Choice of Techniques
Answer:
(B) Growth Prospects

Explanation:
Companies which are expanding and have higher growth plan require more fixed capital as to expand they need to expand their production capacity and to expand production capacity companies need more plant and machinery so more fixed capital.

Question 34.

Tapan, after leaving his job, wanted to start a Private Limited Company with his son. His son was keen that the company may start manufacturing of Mobile-phones with some unique features. However, Tapan felt that the mobile phones are prone to quick obsolescence and a heavy fixed capital investment would be required regularly in this business. Therefore, he convinced his son to start a furniture business factor affecting fixed capital requirements is making Tapan choose furniture business over mobile phone.

(A) Scale of operations
(B) Choice of techniques
(C) Financing alternatives
(D) Technology upgradation
Answer:
(D) Technology upgradation

Explanation:
Industries in which technology up-gradation is fast need more amount of fixed capital as when new technology is invented old machines become obsolete and they need to buy new plants and machinery whereas companies where technological up-gradation is slow they require less fixed capital as they can manage with old machines.

Question 35.

Match the TERMS in Column I with their corresponding MEANING or EXPLANATION in Column II

Column I  Column II
(a) Fixed capital (i) Investment in current assets
(b) Working capital (ii) Assets which get converted into cash or cash equivalents within one year
(c) Fixed assets (iii) Assets which remains in the business for more than one year
(d) Current assets (iv) Investment in long-term assets

(A) (ii), (i), (iii), (iv)
(B) (iii), (iv), (ii), (i)
(C) (iv), (i), (iii), (ii)
(D) (iii), (i), (ii), (iv)
Answer:
(C) (iv), (i), (iii), (ii)

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question 1.

Assertion (A): Higher the flotation cost, less attractive the source.
Reason (R): The choice between the payment of dividend and retaining the earnings is, to some extent, affected by the difference in the tax treatment of dividends and capital gains.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
If the floatation cost is high, it will be more expensive for the company to raise funds, because the company ends up spending much higher money than it would if floatation cost less.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 2.

Assertion (A): Financial planning tries to link the present with the future.
Reason (R): Financial planning is essentially the preparation of a financial blueprint of an organisation’s future operations.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Financial planning means deciding in advance how much to spend and on what to spend according to the funds at your disposal. It enables the management to foresee the funds requirements both the quantum as well as the timing.

Question 3.

Assertion (A): Financial planning ensures that the firm does not raise resources unnecessarily.
Reason (R): Excess funding is almost as bad as inadequate funding.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Excess funding is almost as bad if as inadequate funding. Even if there is some surplus money, good financial planning would
put it to the best possible use so that the financial resources are not left idle and don’t unnecessarily add to the cost.

Question 4.

Assertion (A): Financial planning includes both short-term as well as long-term planning.
Reason (R): Short-term planning focuses on capital expenditure programmes.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Long-term planning relates to long term growth and investment. It focuses on capital expenditure programmes. Short term planning covers short term financial plan called budget.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 5.

Assertion (A): Financial planning includes determining the objectives, policies, procedures and programmes to deal with financial activities.
Reason (R): Financial planning facilitates in developing a sound capital structure which gives maximum returns to shareholders.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Financial planning involves estimating the amount of capital to be raised determining the pattern of financing i.e., deciding on the form and proportion of capital to be raised and formulating the financial policies and procedures for procurement, 1 allocation and effective utilisation of funds.

Question 6.

Assertion (A): Debt and equity differ significantly in their cost and riskiness for the firm.
Reason (R): Debt is cheaper but is more risky for a business because the payment of interest and the return of principal is obligatory for the business.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The cost of debt is lower than the cost of equity for a firm because the lender’s risk is lower than the equity shareholder’s
risk, since the lender earns an assured return and repayment of capital and, therefore, they should require a lower rate of return. There is no such compulsion in case of equity, which is therefore, considered risk less for the business.

Question 7.

Assertion (A): Capital structure of a company affects only the profitability.
Reason (R): 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.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Capital structure of a company affects both the profitability and the financial risk as capital structure is the mix between owner’s funds and borrowed funds.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 8.

Assertion (A): A higher DSCR indicates better ability to meet cash commitments.
Reason (R): If a firm uses its debt potential to the full, it loses flexibility to issue further debt.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
A higher DSCR indicates better ability to meet cash commitments and consequently, the company’s potential to increase debt component in its capital structure. If a firm uses its debt potential to the full, it loses flexibility to issue further debt, To maintain flexibility, it must maintain some borrowing power to take care of unforeseen circumstances.

Question 9.

Assertion (A): The higher the ICR, lower shall be the risk of company failing to meet its interest payment obligations.
Reason (R): If the ROI of the company is higher, it can choose to use trading on equity to increase its EPS, i.e., its ability to use debt is greater.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
A higher ICR ratio indicates a better financial health. It means company is more capable to meet its interest obligations from operating earnings.

Question 10.

Assertion (A): A trading organisation usually needs a smaller amount of working capital compared to a manufacturing organisation.
Reason (R): The basic nature of a business influences the amount of working capital required. S3

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The working capital requirement of the manufacturing companies is usually high as they require huge stock-in-trade (inventories) and the amount of their debtors is also expected to be large because of the credit sales involved.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 11.

Assertion (A): A labour-intensive organisation requires higher investment in plant and machinery.
Reason (R): Those manufacturing enterprises which make use of modern and automatic machines need large amount of fixed capital.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Companies using capital intensive techniques require more fixed capital whereas companies using labour-intensive techniques require less capital because capital intensive techniques make use of plant and machinery and company needs more fixed capital to buy plants and machinery.

Question 12.

Assertion (A): In peak season, because of higher level of activity, larger amount of working capital is required.
Reason (R): Most business have some seasonality in their operations.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The seasonal enterprises, i.e., the enterprise whose operations pick up seasonally may require more working capital to meet their increased operations during the particular season.

Question 13.

Assertion (A): With rising prices, larger amounts are required even to maintain a constant volume of production and sales.
Reason (R): The working capital requirement of a business become higher with higher rate of inflation.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Inflation leads to increase in prices of raw materials, thus more working capital is required. Changes in the price level also affect the working capital requirements. Generally, the rising prices will require the firm to maintain larger amount of working capital as more funds will be required to maintain the same current assets.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Case-Based MCQs

I. Read the following text and answer the following questions on the basis of the same:

Mr. A. Bose is running a successful business. Mr. Bose is the owner of R. K. Cement Ltd. Mr. Bose decided to expand his business by acquiring a Steel Factory. This required an investment of ? 60 crores. To seek advice in this matter, he called his financial advisor Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%). Employ more of cheaper debt may enhance the EPS. Mr. Ghosh also suggested him to take loan from a financial institution as the cost of raising funds from financial institutions is low. Though this will increase the financial risk but will also raise the return to equity shareholders. He also apprised him that issue of debt will not dilute the control of equity shareholders. At the same time, the interest on loan is a tax-deductible expense for computation of tax liability. After due deliberations with Mr. Ghosh, Mr. Bose decided to raise funds from a financial institution.

Question 1.

Identify the concept of Financial Management as advised by Mr. Ghosh in the above situation.

(A) Capital Budgeting
(B) Capital Structure
(C) Dividend Decision
(D) Working Capital Decision
Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Capital structure refers to the mix between owners and borrowed funds. Capital structure of a company affects both the profitability and the financial risk. A capital structure will be said to be optimal when the proportion df debt and equity is such that it results in an increase in the value of the equity share.

Question 2.

In the above case Mr. Ghosh suggested to raised more funds from debt. Higher debt-equity ratio results in:

(A) Lower financial risk
(B) Higher degree of operating risk
(C) Higher degree of financial risk
(D) Higher earning of profit
Answer:
(C) Higher degree of financial risk

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 3.

“Mr. T. Ghosh who advised him about the judicious mix of equity (40%) and Debt (60%).” The proportion
of debt in the overall capital is called ………….

(A)Working Capital
(B) Financial Leverage
(C) Total Assets
(D) None of these
Answer:
(B) Financial Leverage

Explanation:
as the financial leverage increases, the cost of funds declines because of increased use of cheaper debt but the financial risk increases. The impact of financial leverage on the profitability of a business can be seen I through EBIT-EPS (Earning before Interest and Taxes-Earning per Share) analysi

Question 4.

Employ more of cheaper debt may enhance the EPS. Such practice is called:

(A) Equity Trading
(B) Financial Leverage
(C) Investment Decision
(D) Trading on Equity
Answer:
(D) Trading on Equity

Explanation:
Trading on Equity refers to the increase in profit earned by the equity shareholders due to the presence of fixed financial charges like interest.

II. Read the following text and answer the following questions on the basis of the same:

Sunrises Ltd. dealing in readymade garments, is planning to expand its business operations in order to cater to international market. For this purpose, the company needs additional ₹ 80,00,000 for replacing machines with modern machinery of higher production capacity. It involves committing the finance on a long-term basis. These decisions are very crucial for any business since they affect its earning capacity in the long run. The company wishes to raise the required funds by issuing debentures. The debt can be issued at an estimated cost of 10%. The EBIT for the previous year of the company was ₹ 8,00,000 and total capital investment was ₹ 1,00,00,000. Instead of issuing 10% debenture the company can issue equity shares for raising the funds. The financial manager of the company would normally opt for a source which is the cheapest.

Question 1.

What is the other name of long-term decision ?

(A) Capital budgeting
(B) Gross working capital
(C) Financial management
(D) Working capital
Answer:
(A) Capital budgeting

Explanation:
Capital budgeting decision. involves committing the finance on a long term basis. For example, making investment in a new machine to replace an existing one or acquiring a new fixed asset or opening a new branch, etc. These decisions are very crucial for any business since they affect its earning capacity in the long run.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 2.

A decision for replacing machines with modern machinery of higher production capacity is a:

(A) Financing decision
(B) Working capital decision
(C) Investment decision
(D) None of the above
Answer:
(C) Investment decision

Question 3.

A decision for raising fund of ₹ 80,00,000 either from 10% debenture or equity shares is a:

(A) Financing decision
(B) Dividend decision
(C) Investment decision
(D) None of these
Answer:
(A) Financing decision

Explanation:
Financing decision is about the quantum of finance to be raised from various long-term sources.

Question 4.

The financing decisions are affected by various factors. Which one of the following factor is discussed in the above case?

(A) Cash flow position of the company
(B) Cost
(C) Amount of earnings
(D) Taxation policy
Answer:
(B) Cost

Explanation:
The cost of raising funds through different sources are different. A prudent financial manager would normally opt for a source which is the cheapest.

III. Read the following text and answer the questions given below:

Charu and Arpita, who are young fashion designers, left their job with a famous fashion designer chain to set-up a company ‘Trends Pvt. Ltd’. They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening. For the coaching centre, they took on lease the first floor of a nearby building. Their major expense was money spent on photocopying of notes for their students. They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier.

In the basement of the building of Trends Pvt. Ltd.’, Ramesh and Suresh were carrying on a printing and stationery business in the name of ‘Fine Prints Pvt. Ltd.’ Charu approached Ramesh with the proposal to buy a photocopier jointly which could be used by both of them without making separate investment. Ramesh agreed to this.

Question 1.

‘They decided to run a boutique during the day and coaching classes for entrance examination of National Institute of Fashion Designing in the evening.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.?

(A) Scale of operations
(B) Choice of technique
(C) Growth prospects
(D) Diversification
Answer:
(D) Diversification

Explanation:
A firm may choose to diversify its operations for various reasons. With diversification, fixed capital requirements increase e.g., a textile company is diversifying and starting a cement manufacturing plant.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 2.

‘For the coaching centre, they took on lease the first floor of a nearby building.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.?

(A) Nature of business
(B) Financing alternatives
(C) Growth prospects
(D) Scale of operations
Answer:
(B) Financing alternatives

Question 3.

‘They thought of buying a photocopier knowing fully that their scale of operations was not sufficient to make full use of the photocopier.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.?

(A) Scale of operations
(B) Level of collaboration
(C) Growth prospects
(D) Choice of technique
Answer:
(A) Scale of operations

Explanation:
A larger organisation operating at a higher scale needs bigger plant, more space etc. and therefore, requires higher investment in fixed assets when compared with the small organisation.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 4.

‘Charu approached Ramesh with the proposal to buy a photocopier jointly which could be used by both of them without making separate investment.’ This statement represents which factor affecting the fixed capital requirements of Trends Pvt. Ltd.

(A) Technology upgradation
(B) Diversification
(C) Level of collaboration
(D) Financing alternatives
Answer:
(C) Level of collaboration

Explanation:
If companies are preferring collaborations, then companies will need less fixed capital as they can share plant and machinery with their collaborators but if company prefers to operate as independent unit then there is more requirement of fixed f capital.

IV. Read the following text and answer the questions given below:

‘Spun Ltd.’ is a company manufacturing cotton Yarn for the past 15 years. It has been consistently earning good profits for many years and is a market leader. This year too, it has been able to generate enough profits. There is availability of enough cash in the company and good prospects for growth in future as the demand for its products has been consistently increasing. It is a well-managed organisation and believes in quality, equal employment opportunities and good remuneration practices and has been able to maintain the same for the past several years.

It has many shareholders who prefer to receive a regular income from their investments. It has taken a loan of ₹ 40 lakhs from ICICI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement.
The above discussion about the company leads to various factors which decide how much of the profits should be retained and how much has to be distributed by the company.

Question 1.

‘It has been consistently earning good profits for many years’. This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Cash flow position
(B) Stability of earnings
(C) Amount of earnings
(D) Stability of dividends
Answer:
(B) Stability of earnings

Explanation:
A company having stable earning is in a better position to declare higher dividends. As against this, a company having unstable earnings is likely to pay smaller dividend.

Question 2.

‘There is availability of enough cash in the company.’ This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Cash flow position
(B) Stability of earnings
(C) Amount of earnings
(D) Access to capital market
Answer:
(A) Cash flow position

Explanation:
The payment of dividend involves an outflow of cash. A company may be earning profit but may be short on cash. Availability of enough cash in the company is necessary for declaration of dividend.

MCQ Questions for Class 12 Business Studies Chapter 9 Financial Management

Question 3.

‘It has many shareholders who prefer to receive regular income from their investments.’ This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Shareholders’ preference
(B) Legal constraints
(C) Cash flow position
(D) Access to capital market
Answer:
(A) Shareholders’ preference

Question 4.

‘It has taken a loan of ₹40 Lakhs from ICICI and is bound by certain restrictions on the payment of dividend according to the terms of loan agreement.’ This statement represents which factor affecting the dividend decision of Spun Ltd.?

(A) Shareholders’ preference
(B) Taxation policy
(C) Contractual constraints
(D) Legal constraints
Answer:
(C) Contractual constraints

Explanation:
While granting loans to a company, sometimes the lender may impose certain restrictions on the payment of dividends in future. The companies are required to ensure that the dividend does not violate the terms of the loan agreement in this regard.

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Controlling Class 12 MCQ Questions With Answers

Controlling MCQ Chapter 8 Class 12 Question 1.

Name the function of management which helps in the formulation of future plans, in the light of the problems that were identified and thus, helps in better planning in the future period.

(A) Planning
(B) Organising
(C) Directing
(D) Controlling
Answer:
(D) Controlling

Explanation:
Controlling means ensuring that activities in an organisation are performed as per the plAnswer: Controlling also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of predetermined goals.

Question 2.

Identify an important principle of management control in which only significant deviations which go beyond the permissible limit should be brought to the notice of management.

(A) Management by control
(B) Control by exception
(C) Critical point control
(D) Both (A) and (B)
Answer:
(B) Control by exception

Explanation:
Management by exception, which is often referred to as control by exception, is ‘ an important principle of management control based on the belief that an attempt to control everything results in controlling nothing.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 3.

Which of the following steps in the Controlling process state that comparison becomes easier when standards are set in quantitative terms ?

(A) Analysing deviations
(B) Measurement of actual performance
(C) Comparing actual performance with standards
(D) Setting performance standards
Answer:
(C) Comparing actual performance with standards

Explanation:
This step involves comparison of actual performance with the standard. Such comparison will reveal the deviation between actual and desired results. Comparison becomes easier when standards are set in quantitative terms.

Question 4.

An important project at AMB Consultants is running behind schedule by a month. This has upset their clients and might affect the reputation of the company in the long run. No managerial action like assigning more workers, equipment or giving overtime has been able to solve the problem. What managerial action may now be taken by the company to avoid such a situation from arising in future?

(A) Revise the schedule
(B) Assigning additional workers and equipment to the project
(C) Get permission for further overtime work
(D) Both (B) and (C)
Answer:
(A) Revise the schedule

Question 5.

Controlling means ensuring that activities in an organisation are performed as per the …………. .

(A) Plans
(B) Goals
(C) Resources
(D) None of these
Answer:
(A) Plans

Explanation:
Once a plan becomes operational, controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events conform to plAnswer: Thus, controlling ensures that the activities in an organisation are performed as per the plAnswer:

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 6.

What should be the ‘focus point’ for a manager while controlling, as controlling at each and every step is not possible?

(A) Special area
(B) Key result area
(C) Normal area
(D) None of these
Answer:
(B) Key result area

Explanation:
Control should focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as the critical points.

Question 7.

An effort to control everything may end up in controlling nothing is related to:

(A) Critical Point Control ”
(B) Management by Exception
(C) Management by Information
(D) Key Result Areas
Answer:
(B) Management by Exception

Explanation:
Management by exception, which is often referred to as control by exception, is an important principle of management control based on the belief that an attempt to control everything results in controlling nothing.

Question 8.

What should be the ‘focus point’ for a manager while controlling, as controlling at each and every step is not possible?

(A) Analysing deviations
(B) Measurement of actual performance
(C) Comparing actual performance with standards
(D) Setting performance standards
Answer:
(A) Analysing deviations

Explanation:
Some degree of deviation in performance can be expected in all activities. Thus, it is essential to determine the permissible range these deviations.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 9.

“Employee know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised, which inturn help them to give better performance.”
Which importance of controlling is highlighted above?

(A) Facilitating coordination in action
(B) Making efficient use of resources
(C) Accomplishing organisational goals
(D) Improves employee motivation
Answer:
(D) Improves employee motivation

Explanation:
Controlling sets up some standard of employees and employees knows the standards against which their performance will be measured. It thus, increases employee otivation.

Question 10.

Match the FUNCTIONAL AREA in Column I with their respective STANDARDS set to gauge performance in Column II, as a part of the controlling function.

Column I Column II
(a) Marketing (i) Quality
(b) Production (ii) Liquidity
(c) Human Resource Management (iii) Advertising expenditures
(d) Finance and Accounting (iv) Labour absenteeism

(A)(i), (iii), (iv), (ii)
(B) (iii), (i), (iv), (ii)
(C) (iv), (ii), (i), (iii)
(D) (iii), (i), (ii), (iv)
Answer:
(B) (iii), (i), (iv), (ii)

Assertion and Reason based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 1.

Assertion (A): Controlling ensures that resources are used in the most effective and efficient manner.
Reason (R): In controlling, each activity is performed in accordance with predetermined standards and norms.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
A good control system enables management to verify whether the standards set are accurate and objective. By exercising control, a manager seeks to reduce wastage and spoilage of resources.

Question 2.

Assertion (A): A small enterprise cannot afford to install an expensive control system.
Reason (R): Control system loses some of its effectiveness when standards cannot be defined in quantitative terms.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Control is a costly affair as it involves a lot of expenditure, time and effort.A small enterprise cannot afford to install an expensive control system. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.

Question 3.

Assertion (A): The controlling function measures progress towards the organisational goals.
Reason (R): Controlling guides the organisation and keeps it on the right track so that organisational goals might be achieved.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Controlling as a function of management refers to the evaluation of actual performance of work against planned or standard performance and taking the corrective action, if necessary.

Question 4.

Assertion (A): Controlling creates an atmosphere of order and discipline in the organisation.
Reason (R): Controlling helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Through controlling, company can track dishonest employees by using tools such as computer monitoring as a part of their control system.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Case-Based MCQs

I. Read the following text and answer the questions given below:

Vinay was the Chief Operating Officer of ‘Easy Solutions Ltd.’, a company providing advanced software solutions to Indian Defence Services. They had been carrying on business successfully for the last twelve years and earning enough profits. But from the last one year, they realised that though the business is getting big orders which are being fulfilled on time, even then the revenues kept on decreasing. Vinay was not able to find out where the problem was. He started keeping a close check on the progress of activities as he could sense that something was wrong.

He wanted to take some action before any major damage could be done to the business. Vinay appointed a cyber security expert who monitored the company’s processes and found out that the computer operator was deleting the entries from the computers and pocketing the revenues. He was caught and handed over to the police. This created an atmosphere of order and discipline in the organisation and helped in minimizing dishonest behaviour on the part of the employees.

Question 1.

Which management function proved helpful in creating an atmosphere of order and discipline in the organisation and helped in minimizing dishonest behaviour on the part of the employees?

(A) Planning
(B) Organizing
(C) Directing
(D) Controlling
Answer:
(D) Controlling

Explanation:
Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.

Question 2.

What did the measurement of performance reveal?

(A) The company was earning enough profits.
(B) Declining revenues despite getting big orders which were being fulfilled on time.
(C) The company was running successfully.
(D) All of the above.
Answer:
(B) Declining revenues despite getting big orders which were being fulfilled on time.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 3.

What did the analysis by Vinay reveal ?

(A) Nothing was wrong.
(B) The computer operator was deleting the entries from the computers and pocketing the revenues.
(C) Vinay was not able to find out where the problem was.
(D) None of the above.
Answer:
(B) The computer operator was deleting the entries from the computers and pocketing the revenues.

Question 4.

What corrective action did Vinay take?

(A) He did not take any action as no major damage was done.
(B) Computer operator was caught and handed over to the police.
(C) Computer operator was warned with dire consequences.
(D) None of the above.
Answer:
(B) Computer operator was caught and handed over to the police.

II. Read the following text and answer the questions given below:

Sameer Sweets, a renowned name for quality sweets since 1950 had maintained its standards ever since then. It is an ancestral sweet shop and Sana, the present owner of Sameer Sweets, is the third generation entrepreneur who has taken the charge of the sweet shop from her father. Sana has been handling her responsibilities exceptionally well except that she was worried as the sales had declined during the last three months despite her best efforts and involvement in business.

When she enquired from the Sales Manager, Ajay, he reported that there were some complaints about the quality of sweets from many customers recently. Therefore, Sana ordered for sample checking of sweets by her quality control team. The team investigated and reported to Sana. She realized that during peak demand, quality was being compromised by her team to satisfy the customers. She decided to invest more capital in order to increase production to be able to meet the increasing demand especially during peak seasons like festivals and marriage catering.

Question 1.

‘…a renowned name for quality sweets since 1950 had maintained its standards ever since then.’ Which step does this represent in the controlling process?

(A) Setting performance standards
(B) Measurement of actual performance
(C) Comparison of actual performance with standards.
(D) Analysis of deviations
Answer:
(A) Setting performance standards

Explanation:
Standards are the criteria against which actual performance would be measured.Thus, standards serve as benchmarks towards which an organisation strives to work, Standards can be set in both quantitative as well as qualitative terms.

Question 2.

‘.. .sales had declined during the last three months.’ Which step does this represent in the controlling process?

(A) Measurement of actual performance
(B) Comparison of actual performance with standards
(C) Analysis of deviations
(D) Taking corrective action
Answer:
(A) Measurement of actual performance

Explanation:
Performance should be measured ’ in an objective and reliable manner. There are several techniques for measurement of performance.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 3.

‘…Sana ordered for sample checking of sweets by her quality control team.’ Which step does this represent in the controlling process?

(A) Measurement of actual performance
(B) Comparison of actual performance with standards
(C) Analysis of deviations
(D) Taking corrective action
Answer:
(C) Analysis of deviations

Explanation:
Some deviation in performance can be expected in all activities. It is therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. Critical point control and management by exception should be used by a manager in this regard.

Question 4.

‘She decided to invest more money in order to increase production to be able to meet the increasing demand….’ Which step does this represent in the controlling process?

(A) Measurement of actual performance
(B) Comparison of actual performance with standards
(C) Analysis of deviations
(D) Taking corrective action
Answer:
(D) Taking corrective action

Explanation:
No corrective action is required when the deviations are within acceptable limits. However, when the deviations go beyond the acceptable range, especially in the important areas, it demands immediate managerial attention so that deviations do not occur again and standards are accomplished,

III. Read the following text and answer the questions given below:

A critical point control (CPC) approach is followed by McDonald in the cooking and handling process so that any food safety threat can be prevented, eliminated, or reduced to an acceptable level. Hence, continuous monitoring of activities are undertaken to ensure that the process is right at each critical point control. The main principle followed for cooking at McDonald is “less amount many time” which can ensure the high quality and high fresh level of the food.

For instance, if four hamburgers have to be made, a worker cannot cook all the four hamburgers at one time. The time figured out for making one hamburger is one hundred and forty-five seconds. Moreover, nearly all foods in the McDonald have the specific holding time, the holding time for hamburgers is ten minutes and for french fries is seven minutes. If it is not sold within that time it is thrown away. Also, the temperature of the milk sent by the supplier must be under 4° C, otherwise, it will be returned.

Question 1.

Which of the following steps involved in the controlling process is discussed in the above lines?

(A) Analysing deviation
(B) Taking corrective action
(C) Both (A) and (B)
(D) Setting Performance Standards
Answer:
(C) Both (A) and (B)

Question 2.

Which of the following statements is true with respect to critical point control?

(A) Control focus on key result areas
(B) CCPs may be located at any point in the food production plant where hazards need to be prevented, eliminated, or reduced to acceptable levels.
(C) It helps in saving time, and thus manager can focus on other relevant issues.
(D) All of the above.
Answer:
(D) All of the above.

Explanation:
Critical point control means keeping focus on some key areas and if there is any deviation in these key areas, and then it must be attended urgently. Key areas are those which have impact on whole organisation.

MCQ Questions for Class 12 Business Studies Chapter 8 Controlling

Question 3.

Identify the point which highlights the importance of the controlling function in the above text.

(A) Accomplishing organisational goals
(B) Making efficient use of resources
(C) Judging accuracy of standards
(D) All of the above
Answer:
(D) All of the above

Question 4.

Which feature of controlling is highlighted in the above text?

(A) Control is a continuous process.
(B) Control is all pervasive.
(C) Action is the essence of control.
(D) Control is forward looking.
Answer:
(A) Control is a continuous process.

Explanation:
Controlling is an ongoing and dynamic function of management. It involves a continuous review of performance and is not a one-time exercise. The period of control normally depends upon the nature of work, the amount of work and the policies of management.

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Directing Class 12 MCQ Questions With Answers

Directing MCQ Chapter 7 Class 12 Question 1.

Under which of the following function of management, employees are guided and inspired:

(A) Directing
(B) Planning
(C) Controlling
(D) Organizing
Answer:
(A) Directing

Explanation:
Directing guides employees to fully realise their potential and capabilities by motivating and providing effective leadership. A good leader can always identify the potential of his employees and motivate them to extract work upto their full potential.

Directing Class 12 MCQ Chapter 7 Question 2.

Directing is initiated at…………….. level of management.

(A) Lower
(B) Middle
(C) Top
(D) All of these
Answer:
(C) Top

Explanation:
Directing is first initiated at f top level and flows to the bottom through organisational hierarchy. It means that every manager can direct his immediate subordinate and take instructions from his immediate boss.

Question 3.

Which of the following is not the element of Directing?

(A) Delegation
(B) Leadership
(C) Motivation
(D) Communication
Answer:
(A) Delegation

Explanation:
The elements of directing are Supervision, Motivation, Leadership and Communication.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 4.

A company wants to replace manual production technique with mechanised techniques. Labour unions are resisting this change. Which function of management will help in the introduction of this change?

(A) Planning
(B) Organising
(C) Controlling
(D) Directing
Answer:
(D) Directing

Explanation:
Directing facilitates introduction of needed changes in the organisation. Generally, people have a tendency to resist changes in the organisation. Effective directing through motivation, communication and leadership helps to reduce such resistance and develop required cooperation in introducing changes in the organisation.

Question 5.

Which of the following statements is true about directing?

(A) Directing is necessary at planning stage.
(B) Directing is needed at every level of management in each department.
(C) Directing is initiated at lower level of management.
(D) Directing is the least important function of management.
Answer:
(B) Directing is needed at every level of management in each department.

Explanation:
Motivation is an internal feeling. The urge, drives, desires, aspirations, striving or needs of human being, which are internal, influence human behaviour.

Explanation:
Directing takes place at every level of management: Every manager, from top executive to supervisor performs the function of directing.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 6.

Directing takes place between who among the following:

(A) Superior-Superior
(B) Superior-Subordinate
(C) Subordinate-Subordinate
(D) All of the above
Answer:
(B) Superior-Subordinate

Explanation:
Every manager, from top executive to supervisor performs the function of directing. Directing takes place wherever a superior subordinate relations exist.

Question 7.

Match the ELEMENTS of Directing in Column I with their correct EXPLANATION in Column II

Column I Column II
(a) Supervision (i) Friendship
(b) Motivation (ii) Recognition
(c) Leadership (iii) Achievement of goals
(d) Communication (iv) Stability of income

(A) (i), (iii), (iv), (ii)
(B) (ii), (iii), (i), (iv)
(C) (iv), (ii), (i), (iii)
(D) (ii), (i), (iii), (iv)
Answer:
(C) (iv), (ii), (i), (iii)

Question 8

…………………… is an inner state that energises, activates or moves and directs behaviour towards goals.

(A) Motivation
(B) Motive
(C) Motivators
(D) All of the above
Answer:
(B) Motive

Explanation:
A motive is an inner state that energises, activates or moves and directs behaviour towards goals. Motives arise out of the needs of individuals. Realisation of a it motive causes restlessness in the individual which prompts some action to reduce such restlessness.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 9.

Which of the following Maslow’s needs refer to affection, sense of belongingness, acceptance and friendship?

(A) Esteem Needs
(B) Self-Actualisation Needs
(C) Affiliation/Belonging Needs
(D) Safety/Security Needs
Answer:
(C) Affiliation/Belonging Needs

Explanation:
Man is a social animal. He wanted to live in the society honourably. Therefore, he wants friends and relatives with whom he can share his joys and sorrows. Social needs include need for love, affection, friendship, etc.

Question 10.

Which of the following Maslow’s needs include factors such as self-respect, autonomy status, recognition and attention?

(A) Esteem Needs
(B) Self-Actualisation Needs
(C) Affiliation/Belonging Needs
(D) Safety/Security Needs
Answer:
(A) Esteem Needs

Explanation:
Esteem needs are of two types: internal esteem needs (self-respect, confidence, competence, achievement and freedom) and external esteem needs (recognition, power, status, attention and admiration).

Question 11.

Which of the following is a financial incentive?

(A) Productivity linked wage incentive
(B) Organisational climate
(C) Status
(D) Job enrichment
Answer:
(A) Productivity linked wage incentive

Explanation:
Several wage incentive plans aims at linking payment of wages to increase in productivity at individual or group level.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 12.

CPA Services CEO, Abhishek Nigam’s compensation includes salary, commission and other allowances. The company also pays for his insurance and vacations. Identify one indirect payment being made by the company to the CEO.

(A) Employer paid insurance
(B) Salary
(C) Commission
(D) All of the above
Answer:
(A) Employer paid insurance

Question 13.

Which of the following statements is incorrect regarding Motivation?

(A) It is the process of stimulating subordinates to act in a desired manner to achieve certain organisational goals.
(B) It produces goal-directed behaviour.
(C) It is an external feeling of an individual
(D) It is mainly based on needs of individuals.
Answer:
(C) It is an external feeling of an individual

Question 14.

What is the effect of motivation on all the employees of an organisation?

(A) Invariable
(B) Same
(C) Variable
(D) Uniform
Answer:
(C) Variable

Question 15.

Match the NEEDS as per Maslow’s Need Hierarchy Theory of Motivation in Column I with their correct Examples in Column II

Column I Column II
(a) Security Needs (i) Friendship
(b) Self Actualisation Needs (ii) Recognition
(c) Esteem Needs (iii) Achievement of goals
(d) Belonging Needs (iv) Stability of income

(A) (i), (iii), (iv), (ii)
(B) (iv), (iii), (ii), (i)
(C) (iv), (ii), (i), (iii)
(D) (ii), (i), (iii), (iv)
Answer:
(B) (iv), (iii), (ii), (i)

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 16.

Which of the following qualities of a leader states that he should have the capacity to clearly explain his ideas and make the people understand his ideas?

(A) Knowledge
(B) Motivation skills
(C) Initiative
(D) Communication skills
Answer:
(D) Communication skills

Explanation:
A leader should be a good communicator He should have the capacity to clearly explain his ideas and make the people to understand his ideas. He should not only be a good speaker but a good listener, teacher, counsellor and persuader.

Question 17.

Which of the following statements is false with respect to a leader?

(A) Leader provides training to his subordinates.
(B) A leader maintains personal relations and helps followers in fulfilling their needs.
(C) Leader plays a key role in introducing required changes in the organisation.
(D) None of the above
Answer:
(D) None of the above

Explanation:
A leader maintains personal relations and helps followers in fulfilling their needs. He provides needed confidence, support and encouragement and thereby creates congenial work environment. Leader plays a key role in introducing required. changes in the organisation. He persuades, clarifies and inspires people to accept changes whole-heartedly.

Question 18.

Mr. Prateek Goyal, the Ex-chairman of India Original Ltd., built up his successor before retiring. Following the norms set up by himself, he handed over the reins of the company to the co-founder Mr. Arvind Mishra, who had the potential to bring about change in the behaviour of others. Name the concept of management which was the reason, why Mr. Prateek Goyal choose Mr. Arvind Mishra to be his successor.

(A) Motivation
(B) Leadership
(C) Communication
(D) Staffing
Answer:
(B) Leadership

Explanation:
Leadership influences the behaviour of people and makes them to positively contribute their energies for the benefit of the organisation. Good leaders always produce goods results through their followers.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 19.

Which of the following statements is not true regarding Democratic Style of Leadership?

(A) The leader exercises more control by using forces within the group.
(B) The leader encourages subordinates to participate in decision making.
(C) The leader gives orders and insists that they are obeyed.
(D) The leader supports and respects the ubordinates’ opinion.
Answer:
(C) The leader gives orders and insists that they are obeyed.

Explanation:
An autocratic leader gives orders and expects his subordinates to obey those orders. If a manager is following this style, then communication is only one-way with the subordinate only acting according to the command given by the manager.

Question 20.

Which of the following statements is true regarding Laissez Faire Style of Leadership?

(A) The leader gives complete freedom to the subordinates.
(B) The leader gives orders and insists that they are obeyed.
(C) The leader does not change or wish to be contradicted.
(D) All are true.
Answer:
(A) The leader gives complete freedom to the subordinates.

Explanation:
It refers to a style where the leader gives his subordinates complete freedom to take the decisions. Such a leader does not believe in the use of power unless it is absolutely essential. The followers are given a high degree of independence to formulate their own objectives and ways to achieve them.

Question 21.

Mr. Saxam, production manager of Creative Concepts, discusses with his staff about the new export order. All the staff members unanimously agree that they all will work together to do overtime to complete the order and meet the deadline.
Mr. Saxam is following ……………… Leadership Style.

(A) Democratic
(B) Autocratic
(C) Authoritative
(D) LaissezFaire
Answer:
(A) Democratic

Explanation:
A democratic leader will develop action plans and makes decisions in consultation with his subordinates. He will encourage them to participate in decision-making.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 22.

When a leader is a role model to others regarding ethics and values, he is said to possess the quality of………………

(A) Initiative
(B) Integrity
(C) Self-confidence
(D) Decisiveness
Answer:
(B) Integrity

Question 23.

Match the QUALITIES of a good leader in Column I with their correct EXPLANATIONS in Column II

Column I Column II
(a) Initiative (i) Being firm and not changing opinions frequently.
(b) Social skills (ii) Not waiting for opportunities to come but rather grabbing the opportunity and using it to the advantage of the organisation.
(c) Decisiveness (iii) Capacity to clearly explain the ideas and make the people understand them.
(d) Communication skills (iv) Being friendly with his colleagues and followers.

(A) (i), (iii), (iv), (ii)
(B) (iv), (hi), (ii), (i)
(C) (iv), (ii), (i), (iii)
(D) (ii), (iv), (i), (iii)
Answer:
(D) (ii), (iv), (i), (iii)

Question 24.

…………………… is the process of converting encoded symbols of the sender.

(A) Encoding
(B) Decoding
(C) Media
(D) All of these
Answer:
(B) Decoding

Explanation:
It is the process of converting the f symbols encoded by the sender. After decoding the message is received by the receiver.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 25.

……………… communication takes place between one division and another.

(A) Horizontal
(B) Vertical
(C) Informal
(D) None of these
Answer:
(A) Horizontal

Explanation:

Horizontal or lateral communication takes place between one division and another. For example, a production manager may contact marketing manager to discuss about schedule of product delivery, product design, quality, etc.

Question 26.

Which of the following statements is true regarding ‘Communication?

(A) Communication acts as a basis for coordination.
(B) Communication is basis to an organisation’s existence, right from its birth through its continuing life.
(C) It is a process by which people create and share information with one another in order to reach at a common understanding.
(D) All of the above
Answer:
(D) All of the above

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question 1.

Assertion (A): Directing is a key managerial function.
Reason (R): Directing is a continuous activity.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Directing is a key managerial function. A manager has to perform this function along with planning, organising, staffing and controlling while discharging his duties in the organisation. While other functions prepare a setting for action, directing initiates actions in the organisation. Directing is a continuous! activity. It takes place throughout the life of the organisation irrespective of people occupying managerial positions.

Question 2.

Assertion (A): Supervisor acts as a link between workers and management.
Reason (R): Supervisor plays a key role in maintaining group unity among workers placed under his control.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Supervisor acts as a link between workers and management. He conveys management ideas to the workers on one hand land workers problems to the management on the other. This role played by supervisor helps to avoid misunderstandings and conflicts between management and workers/employees.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 3.

Assertion (A): Motivation is the technique used to motivate people in an organisation.
Reason (R): Negative motivation provides positive rewards like increase in pay, promotion, recognition, etc.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Motivator is the technique used to motivate people in an organisation. Managers use diverse motivators like pay, bonus, promotion, recognition, praise, responsibility, etc., in the organisation to influence people to contribute their best. Positive motivation provides positive rewards like increase in pay, promotion, recognition, etc.

Question 4.

Assertion (A): Motivation helps to change negative or indifferent attitudes of employee to positive attitudes so as to achieve organisational goals.
Reason (R): Motivation helps to improve performance levels of employees as well as the organisation.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Good and positive motivation in the organisation helps to achieve higher levels of performance as motivated employees contribute their maximum efforts for organisational goals.

Question 5.

Assertion (A): Maslow’s Theory focuses on the needs as the basis for motivation.
Reason (R): Motivation theory helps managers to realise that need level of employee should be identified to provide motivation to them.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Maslow’s hierarchy of needs is a theory by Abraham Maslow, which puts forward that people are motivated by five basic categories of needs: physiological, safety, love, esteem, and self-actualization.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 6.

Assertion (A): A leader maintains personal relations and helps followers in fulfilling their needs.
Reason (R): A leader handles conflicts effectively and does not allow adverse effects resulting from the conflicts.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:

A good leader always allows his followers to ventilate their feelings and disagreement but persuades them by giving suitable clarifications.

Question 7.

Assertion (A): Communication provides needed information for decision making.
Reason (R): Communication acts as basis of planning.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Communication acts as basis off coordination. It provides coordination among departments, activities and persons in the organisation. Such coordination is provided by explaining about organisational goals, the mode I of their achievement and inter relationships between different individuals, etc.

 

Case-Bassd MCQs

I. Read the following text and answer the following questions on the basis of the same:

Mr. Sunil Diali is a safety officer in a reputed PSU sector ECL. He supervises the workers towards the predetermined goals of the organisation and directs how to eradicate unsafe practices of inundation, fire breakouts, existence of inflammable gases, etc. On one such instances there was huge fire breakout in the underground mines and the workers morale was down and demotivated because of several risk hazards.

Mr. Diali observed the whole situation and consulted with all his workers and constantly monitored, guided and inspired them to integrate their efforts and accept the situation as a challenge and take adequate safety measures for fire extinguish and subsidizing its effects. Thereby, production turnover was outstanding and outperformed other subsidiaries. Mr. Diali was recognized with Bravery Award from CIL.

Question 1.

Mr. Diali worked towards predetermined goals of the organization. Which important function of directing is addressed here?

(A) Means of motivation
(B) Initiates action
(C) Facilitate change
(D) Brings stability
Answer:`
(C) Facilitate change

Explanation:
Directing is the starting point of action. It initiates action based on planning,organising and staffing. Action is initiated when the managers provide direction to their subordinates for carrying out the task. Therefore, the directing function provides a set of guidelines to the employees on how to start working towards achieving the goals of the organisation.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 2.

Mr. Diali consulted with all his workers, he listened to their opinions. Which form of leadership is identified here?

(A) Laissez-faire
(B) Autocratic
(C) Democratic
(D) Free-rein
Answer:
(C) (A) is true, but (R) is false.

Explanation:
It refers to a style where the leader consults its subordinates before taking the final decision.

Question 3.

Bravery award is………………………………….. form of non-financial incentive.

(A) Status
(B) Job security
(C) Career advancement
(D) Employee recognition
Answer:
(C) (A) is true, but (R) is false.

Explanation:
Recognition means acknowledge-ment with a show of appreciation. When such appreciation is given to the work performed by employees, they feel motivated to perform at higher level.

Question 4.

Under Maslow’s hierarchy need theory which need of Mr. Diali has been met through respect and recognition among other employees?

(A) Self-Actualization need
(B) Safety and security needs
(C) Esteem needs
(D) Physiological needs
Answer:
(C) (A) is true, but (R) is false.

Explanation:
At the fourth level in Maslow’s hierarchy is the need for appreciation and respect. When the needs at the bottom three levels have been satisfied, the esteem needs begin to play a more prominent role in motivating behaviour.

II. Read the following text and answer the questions given below:

Hema is a permanent employee of a very large company called Global Pvt. Ltd. She has been working with the company for the last 5 years and is now eligible for retirement benefits as well. She likes her work and performs her responsibilities with due diligence. She has always displayed utmost dedication while being at work. As per the job agreement, she had to work for 40 hours per week and was free to work overtime. Hema worked overtime during the weekdays and on some occasions, she also used to work on weekends for 8 to 10 hours. On account of which she fell sick and had to take leave from her work as she got hospitalized for a fairly long period of time.

The company did not show any concern and neither did it enquire about her health. She realised that on one hand, she was able to fulfill only some of her needs as she only had the stability of income and pension plans since she had completed 5 years already with the organization. On the other hand some other needs still remained unfulfilled which she realized on account of the indifferent attitude of the company during her sickness. Thus, Hema felt that though her most basic needs are being met as per Maslow’s need hierarchy theory, she has a long way to go before her highest level needs are met.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 1.

Which of the following need of Hema is being fulfilled?

(A) Security needs
(B) Belongingness needs
(C) Esteem needs
(D) All of the above
Answer:
(A) Security needs

Explanation:
Once an individual’s physiological needs are satisfied, the needs for security and safety become salient. People want to experience order, predictability and control in their lives. These needs can be fulfilled by the family and society (e.g. police, schools, business and medical care).

Question 2.

Which need of Hema is not being fulfilled ?

(A) Belongingness Needs
(B) Esteem Needs
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

Question 3.

In the light of the above case, what are the most basic needs of Hema known as?

(A) Safety needs
(B) Affiliation needs
(C) Physiological needs
(D) Self-actualization Needs
Answer:
(C) Physiological needs

Explanation:
These refer to basic physical needs like drinking when thirsty or eating when hungry.

Question 4.

In the light of the above case, which is the highest level of needs of Hema which she believes will take a fairly long time to fulfill?

(A) Security needs
(B) Belongingness needs
(C) Esteem needs
(D) Self-actualization needs
Answer:
(D) Self-actualization needs

Explanation:
Self actualisation needs are concerned with becoming what a person is capable of becoming. These needs include need for growth, self fulfillment, etc.

III. Read the following text and answer the questions given below:

Zeba Ltd., an e-commerce company operating for the past 10 years, is a company which strongly believes in motivating its employees by offering them various incentives. It is so because they are very focused on their goals and objectives and want their people to improve their performance because there is a lot of competition in the market and Zeba Ltd. has the vision to become the market leader in the next 5 years. Aman, who is an alumnus of IIM Ahmedabad and has done his specialization in Marketing, is a marketing employee employed with the company for the last 3 years has often been rewarded with a pay hike for his growing performance.

Samay, who is a Chartered Accountant and has been working in the company for the last 7 years, is from the finance department and has been allotted some shares by the management in lieu of various incentives payable in cash for his continuous efforts towards ensuring timely availability of funds and their effective utilization at all times. Aadvika, who recently graduated from FMS Delhi, is working in the Human Resources department of the company and joined as a contractual employee but is now on the payrolls of the company.The company also organizes annual functions to provide public appreciation to its high performers as it strongly believes in uplifting their spirits towards working for the company as well as preventing them from joining their competitors.

Question 1.

What type of incentive has been provided to Aman?

(A) Profit sharing
(B) Bonus
(C) Pay and allowances
(D) Stock option
Answer:
(C) Pay and allowances

Explanation:
For every employee, salary is the basic monetary incentive. It includes basic pay, dearness allowance and other allowances. Salary system consists of regular increments in the pay every year and enhancement of allowances from time-to-time.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 2.

What type of incentive has been provided to Samay?

(A) Retirement benefits
(B) Perquisites
(C) Pay and allowances
(D) Co-partnership
Answer:
(D) Co-partnership

Explanation:
Under these incentive schemes, employees are offered company shares at a set price which is lower than market price. Sometimes, management may allot shares in line of various incentives payable in cash.

Question 3.

What type of incentive has been provided to Aadvika?

(A) Job enrichment
(B) Job security
(C) Employee participation
(D) Employee empowerment
Answer:
(B) Job security

Explanation:
Employees want their job to be secure. They want certain stability about future income and work so that they do not feel worried on these aspects and work with greater zeal.

Question 4.

What type of incentive does the company provide by organizing annual functions to provide public appreciation to its high performers?

(A) Employee recognition programmes
(B) Job security
(C) Career advancement opportunity
(D) Employee empowerment .
Answer:
(A) Employee recognition programmes

Explanation:
Every employee wants to be considered as an important part of the organisation. Work of an organisation should be distributed in such a way that every employee feels that his work is yield and he is capable to do that work. This motivates the worker and he works hard and in a responsible manner.

IV. Read the following text and answer the questions given below:

ABC Ltd. is a company which is successfully running in the insurance sector for the past 15 years. It is one of the leading companies and Mr. Ghosh, the Zonal Sales Head has been working in the company for the past 8 years spearheading its sales continuously. He has a wide and rich experience in the insurance sector and has worked with two other major insurance companies previously. In the company, the employees always feel that they are under enormous unnecessary stress, as their manager Mr. Ghosh does not provide any information about future plans but simply instructs them what to do. He also does not listen to any of the suggestions given by the subordinates.

Mr. Ghosh does not provide any flexibility to his subordinates; he is extremely rigid while taking decisions and does not like to be interrupted. Thus, he is extremely unpopular as a manager due to his leadership style. But Mr. Ghosh strongly believes in his style of leadership and has seen effective results on account of this. He has been able to increase the sales number of insurance policies in the last quarter of the financial year for the past three years in a row and thus has been able to meet the annual sales targets successfully. On account of this, he has been awarded the ‘Best Employee’ Trophy for two years by the management.

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 1.

What is the leadership style of the manager, Mr. Ghosh?

(A) Autocratic
(B) Democratic
(C) Laissezfaire
(D) Participative
Answer:
(A) Autocratic

Explanation:
An autocratic leader gives orders and expects his subordinates to obey those orders. If a manager is following this style, then communication is only one-way with the subordinate only acting according to the command given by the manager.

Question 2.

Citing from the above paragraph, which of the following features does Mr. Ghosh depict in his leadership style identified in Question l. above ?

(A) Such a leader does not change or wish to be contradicted.
(B) Such a leader respects the other’s opinion and supports his subordinates.
(C) Such a leader gives a high degree of independence to his followers.
(D) All of the above
Answer:
(A) Such a leader does not change or wish to be contradicted.

Question 3.

Quoting lines from the paragraph, in which circumstances has Mr. Ghosh’s leadership style proved effective?

(A) In meeting the annual sales target.
(B) In increasing his team’s productivity in the last quarter.
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(C) Both (A) and (B)

MCQ Questions for Class 12 Business Studies Chapter 7 Directing

Question 4.

What is the nature of communication in the leadership style of Mr. Ghosh identified in Q 1. above?

(A) Informal and Two-way
(B) Informal and One-way
(C) Formal and Two-way
(D) Formal and One-way
Answer:
(D) Formal and One-way

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Staffing Class 12 MCQ Questions With Answers

Staffing MCQ Class 12 Chapter 6 Question 1.

staffing is a process which involves a series of steps. arrange the following steps in correct order:

(i) Placement and Orientation
(ii) Recruitment
(iii) Selection
(iv) Estimating manpower requirement

(A) (iv), (ii), (iii), (i)
(B) (iv), (iii), (ii), (i)
(C) (i), (ii), (iii), (iv)
(D) (ii), (iv), (iii), (i)
Answer:
(A) (iv), (ii), (iii), (i)

Explanation:
The staffing process is a systematic attempt to implement the human resource plan by recruiting, evaluating and selecting qualified candidates for the job-positions in the organization.

Question 2.

Which of the following steps in the process of staffing involves the process of searching for prospective employees and stimulating them to apply for respective jobs in the organization?

(A) Recruitment
(B) Selection
(C) Training and Development
(D) Placement and Orientation
Answer:
(A) Recruitment

Explanation:
Recruitment refers to searching for suitable candidates for the various job positions to be filled up from time to time in the organisation. It is the process of finding and attracting suitable applicants for I employment.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 3.

Which aspect of staffing is concerned with upgradation of the knowledge and skills of the employees?

(A) Placement and Orientation
(B) Training and Development
(C) Selection
(D) Estimating manpower requirement
Answer:
(B) Training and Development

Explanation:
Training helps employees to improve their knowledge and skill and make them perform their tasks more efficiently. It also helps them in promotion and improves their attitudes and confidence levels.

Question 4.

What does workforce analysis reveal?

(A) Number of human resources available.
(B) Type of human resources available.
(C) Both number and type of human resources available.
(D) None of the above.
Answer:
(C) Both number and type of human resources available.

Question 5.

‘Workload Analysis’ includes which of the following.

(A) The number and type of human resources already available.
(B) The number and type of human resources necessary in future.
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(B) The number and type of human resources necessary in future.

Explanation:
Workload analysis would enable an assessment of the number and types of human resources necessary for the performance of various jobs and accomplishment of organisational objectives. Workforce analysis would reveal the number and type available.
Answer:
(D) Neither (A) nor (B)

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 6.

For an enterprise, staffing is the ……………………function in the series of management functions?

(A) First
(B) Second
(C) Third
(D) Fourth
Answer:
(C) Third

Explanation:
After planning and organising of the organisation structure, the next step in the management process is to fill the various posts provided in the organisation. This is termed as the management of staffing function. Thus, it is the third function in the series of management functions.

Question 7.

Staffing is considered as a ………………… process.

(A) Continuous
(B) One-time
(C) Random
(D) None of these
Answer:
(A) Continuous

Question 8.

Match the STEPS in the staffing process in Column with their correct EXPLANATION in Column II:

Column I Column II
(a) Placement and Orientation (i) Opportunity for higher position with more pay, responsibility, etc.
(b) Performanc Appraisal (ii) Employee occupies the post and gets familiar with the organisation.
(c) Promotion and Career Planning (iii) Search prospective employees and stimulate them to apply for the job.
(d)  Recruitment (iv) Employee’s performance is evaluated for salary hike, promotion, etc.

(A) (i), (iii), (ii), (iv)
(B) (ii), (iv), (i), (iii)
(C) (iii), (i), (iv), (ii)
(D) (ii), (i), (iii), (iv)
Answer:
(B) (ii), (iv), (i), (iii)

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 9.

Which of the following internal sources of recruitment involves shifting of an employee from one job to another, one department to another?

(A) Transfer
(B) Promotion
(C) Both (A) and (B)
(D) None of the above
Answer:
(A) Transfer

Explanation:
Transfer involves shifting of an employee from one job to another, one department to another or from one shift to another, without a substantive change in the responsibilities and status of the employee.

Question 10.

Which of the following statements is true with respect to internal source of recruitment?

(A) Simplifies the process of selection and placement.
(B) Employees are motivated to improve their performance.
(C) This is a more reliable way of recruitment.
(D) All of the above
Answer:
(D) All of the above

Question 11.

In which of the following external source of recruitment, applicants are introduced by the present employees:

(A) Labour Contractors
(B) Recommendations of Employees
(C) Campus Recruitment
(D) lacement Agencies and Management Consultants
Answer:
(B) Recommendations of Employees

Explanation:
Applicants introduced by present employees, or their friends and relatives may prove to be a good source of recruitment. Such applicants are likely to be good employees because their background is sufficiently known.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 12.

Real Tech Builders has to deliver the flats to its buyers for possession on time. Due to this, there is a sudden increase in workload. Therefore, the company needs to arrange workers to work at the sites at a short notice. The source of recruitment which may be used by the company to tap the casual vacancy is:

(A) Direct recruitment
(B) Advertisement
(C) Recommendation of employees
(D) Employment exchange
Answer:
(A) Direct recruitment

Explanation:
Under the direct recruitment, a notice is placed on the notice-board of the enterprise specifying the details of the jobs available. It is suitable for filling casual vacancies when there is a rush of work or when some permanent workers are absent.

Question 13.

Which of the following is true regarding Transfers?

(A) Involves shifting of an employee from one job to another.
(B) Involves shifting of an employee from one department to another or from one shift to another.
(C) There is no substantive change in the responsibilities and status of the employee.
(D) All of the above
Answer:
(D) All of the above

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 14.

Which of the following is true regarding Promotion?

(A) Involves more pay
(B) Involves higher responsibility
(C) Gives job satisfaction
(D) All of the above
Answer:
(D) All of the above

Question 15.

Which of the following statements is incorrect?

(A) Through internal sources of recruitment employees may become lethargic if they are sure of time-bound promotions.
(B) A new enterprise cannot use internal sources of recruitment.
(C) Frequent transfers of employees improves the productivity of the organization.
(D) None of the above.
Answer:
(C) Frequent transfers of employees improves the productivity of the organization.

Explanation:
Transfer is a tool of training the employees to prepare them for higher jobs.Frequent transfers of employees may often reduce the productivity of the organisation.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 16.

…………………. source of recruitment brings in new blood in the organisation ?

(A) Transfers
(B) Promotions
(C) Campus recruitment
(D) All of these
Answer:
(C) Campus recruitment

Explanation:
Campus recruitment is a external source of recruitment.

Question 17.

Match the EXTERNAL SOURCE of recruitment in Column I with its correct EXPLANATION in Column II:

Column I Column II
(a) Direct Recruitment (i) List of job-seekers is prepared from a database of unsolicited applicants and is screened to fill the vacancies.
(b) Casual Callers (ii) Help to match personnel demand and supply by serving as link between job-seekers and employers.
(c) Advertisement (iii) Job-seekers assemble outside the premises of the organisation on the specified date and selection is done on the spot.
(d) Employment Exchange (iv) Vacancies are published in newspapers or trade and professional journals.

(A) (i),(iii),(ii),(iv)
(B) (ii),(iv),(i),(iii)
(C) (iii), (i), (iv), (ii)
(D) (ii), (i), (iii), (iv)
Answer:
(C) (iii), (i), (iv), (ii)

Question 18.

Which of the following type of selection test provides clues to a person’s emotions, reactions, maturity and value system, etc.?

(A) Aptitude Tests
(B) Personality Tests
(C) Intelligence Tests
(D) Interest Tests
Answer:
(B) Personality Tests

Explanation:
These tests judge the psychological make up of any person. These tests check a person’s motivational level, emotions, integrity, sympathy, sensitivity, etc. These traits in an individual provide the manager with an overall picture of his personality.

Question 19.

Which of the following steps in the process of selection, helps the manager to eliminate unqualified or unfit job-seekers based on the information supplied in the application form?

(A) Preliminary Screening
(B) Employment Interview
(C) Reference and Background Checks
(D) Selection Decision
Answer:
(A) Preliminary Screening

Explanation:
Preliminary screening help reject misfits for reasons, which did not appear in the application forms.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 20.

Selection is a process which involves a series of steps. Arrange the following steps in correct order.

(i) Interview
(ii) References check
(iii) Preliminary screening
(iv) Selection test

(A) (iii), (iv), (i), (ii)
(B) (iv), (iii), (ii), (i)
(C) (i), (ii), (iii), (iv)
(D) (ii), (iv), (iii), (i)
Answer:
(A) (iii), (iv), (i), (ii)

Question 21.

Rajan Ltd. decided to change their organization structure and shift to functional structure. So, it decided to hire four different Heads for Sales, Accounts, Purchase and Production from outside the company to bring fresh talent. It publishes advertisement and shortlists 20 candidates for each position after conducting various selection tests. Out of the following, identify the next step to be followed by Rajan Ltd.

(A) Employment interview
(B)Preliminary screening
(C) Reference and background check
(D) Selection decision
Answer:
(A) Employment interview

Explanation:
Interview is a formal, in-depth conversation conducted to evaluate the applicant’s suitability for the job. The role of the interviewer is to seek information and that 1 B of the interviewee is to provide the same.

Question 22.

Security Agents Ltd. provides security services. They gave an advertisement in newspaper for hiring males for the post of Security Guard who are reliable and keep client information confidential. 75 candidates approached them and Security Agents Ltd. finalized 10 candidates to be selected after conducting required test and interview. Out of the following, identify the next step to be followed by Security Agents Ltd.

(A) Medical examination
(B) Job offer
(C) Reference and background check
(D) Selection decision
Answer:
(C) Reference and background check

Explanation:
After interview, reference and background of the employee is checked. Many employers request names, addresses, and telephone numbers of references for the purpose of verifying information and, gaining additional information on an applicant. Previous employers, known persons, teachers and university professors can act as references.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 23.

Which of the following is correct about Aptitude Tests?

(A) Measures individual’s potential for learning new skills
(B) Measures person’s capacity to develop
(C) Good index of a person’s future success score
(D) All of the above
Answer:
(D) All of the above

Question 24.

The last step in the selection process is ………………… .

(A) Selection decision
(B) Medical examination
(C) Job offer
(D) Contract of employment
Answer:
(D) Contract of employment

Explanation:
After the job offer has been made and candidate accepts the offer, certain documents need to be executed by the employer and the candidate. There is also a need for preparing a contract of employment. Basic information that should be included in a written contract of employment will vary according to the level of the job.

Question 25.

Interest Tests measures ……………………… .

(A) Actual skills possessed
(B) Potential skills to be acquired
(C) Involvement of inclination of a person
(D) None of the above
Answer:
(C) Involvement of inclination of a person

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 26.

Match the SELECTION TEST in Column I with its correct EXPLANATION in Column II:

Column I Column II
(a) Intelligence Tests (i) Measure of individual’s potential for learning new skills.
(b) Aptitude Test (ii) Provide clues to a person’s emotions, his reactions, maturity and value system.
(c) Personality Tests (iii) Measure the level of knowledge and proficiency in the area of professions or technical training.
(d) Trade Test (iv) Indicator of a person’s learning ability or the ability to make decisions and judgements.

(A) (i), (iii), (ii), (iv)
(B) (ii), (iv), (i), (iii)
(C) (iii), (i), (iv), (ii)
(D) (ii), (i), (iii), (iv)
Answer:
(B) (ii), (iv), (i), (iii)

Question 27.

Which of the following statements is false with respect to training ?

(A) Enhances employee productivity
(B) Equips the future manager
(C) Increases employee morale
(D) None of the above
Answer:
(D) None of the above

Question 28.

Which of the following on-the-job training method puts the trainee under the guidance of a master worker ?

(A) Apprenticeship Programmes
(B) Coaching
(C) Internship Training
(D) Job Rotation
Answer:
(A) Apprenticeship Programmes

Explanation:
Apprenticeship programmes put the trainee under the guidance of a master worker. These are designed to acquire a higher level of skill.

Question 29.

Which of the following statements is incorrect ?

(A) When jobs are simple, easy to learn and influenced to only a small degree by technological changes, there is little need for employees to upgrade or alter their skills.
(B) Training and development help only the organisation and not the individual.
(C) Training attempts to improve their performance on the current job or prepare them for any intended job.
(D) Development is any process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased.
Answer:
(B) Training and development help only the organisation and not the individual.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 30.

Which of the following is true about development ?

(A) It increases executive’s professional talent.
(B) It helps in tackling the complex management working problems.
(C) It is wider than training.
(D) All of the above
Answer:
(D) All of the above

Question 31.

The quality of production is not as per standards. On investigation, it was observed that most of the workers were not fully aware of the proper operation of the machinery. What could be the way to improve the accuracy ?

(A) Training
(B) Development
(C) Both training and development
(D) Neither training nor development
Answer:
(A) Training

Explanation:
Training is any process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased. It is a f process of learning new skills and application of knowledge. It attempts to improve their performance on the current job or prepare them for any intended job.

Question 32

……………………. method of training is suitable when employees are required to handle sophisticated machinery.

(A) Apprenticeship Programmes
(B) Internship Training
(C) Vestibule Training
(D) Induction Training
Answer:
(C) Vestibule Training

Explanation:
Employees learn their jobs on the equipment they will be using, but the training is conducted away from the actual work floor. Actual work environments are created in a class rooom and employees use the same materials, files and equipment. This is usually done when employees are required to handle sophisticated machinery and equipment.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 33.

Match the TERMS in Column I with their correct EXPLANATION in Column II:

Column I Column II
(a) Education (i) Process by which the aptitudes, skills and abilities of employees to perform specific jobs are increased.
(b) Training (ii) Process of increasing the knowledge and understanding of employees.
(c) Development (iii) Learning opportunities designed to help employees grow towards maturity and actualisation of their potential.

(A) (i), (ii), (ii)
(B) (i), (ii), (iii)
(C) (iii), (i), (ii)
(D) (ii), (i), (ii)
Answer:
(D) (ii), (i), (ii)

Question 34.

Soler Horse Ltd. decided to import new hi-tech machines from Korea to decrease the cost of production and increase quality of work. It decided to give one month training to 5 supervisors and 10 workers to provide technical knowledge and skills to operate those machines. For this, dummy models of machinery were provided to them to practice on it. Identify the type of training provided by Soler Horse Ltd.

(A) Internship Training
(B) Apprenticeship Training
(C) Induction Training
(D) Vestibule Training
Answer:
(D) Vestibule Training

Explanation
In vestibule training, the workers are trained in a prototype environment on specific jobs in a special part of the plant. An attempt is made to create working condition similar to the actual workshop conditions.

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question 1.

Assertion (A): Staffing is the most fundamental and critical drive of organisational performance.
Reason (R): No organisation can be successful unless it can fill and keep filled the various positions
provided for in the structure with the right kind of people.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Staffing is ‘putting people to jobs’. Human resources are the foundation of any business. The right people can help you take your business to the top; the wrong people can break your business. Hence, staffing is the most fundamental and critical drive of organisational performance.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 2.

Assertion (A): Internal recruitment simplifies the process of selection and placement.
Reason (R): Filling vacancies in higher jobs from within the organisation motivates the employees to improve their performance through learning and practice.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Internal recruitment also simplifies the process of selection and placement. The candidates that are already working in the enterprise can be evaluated more accurately and economically. This is a more reliable way of recruitment since the candidates are already known to the organisation.

Question 3.

Assertion (A): Direct method of recruitment is very inexpensive as it does not involve any cost of advertising for the vacancies.
Reason (R): Under direct recruitment, a notice is placed on the notice-board of the enterprise specifying the details of the jobs available.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Job seekers assemble outside the premises of the organisation on the specified date and selection is done on the spot. Certain workers present themselves at the factory gate every day for employment. Thus, it does not involve any cost of advertising for the vacancies.

Question 4.

Assertion (A): Advertisement is an internal source of recruitment.
Reason (R): Advertisement gives the management a wider range of candidates from which to choose.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Advertising is an external source of recruitment. Advertisement in newspapers or trade and professional journals is generally used when a wider choice is required.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 5.

Assertion (A): Trade tests are used to know the pattern of interests or involvement of a person.
Reason (R): Selection test is a mechanism that attempts to measure certain characteristics of individuals.

Answer:
(D) (A) is false, but (R) is true.

Explanation:
Every individual has fascination for some job than the other. Interest tests are used to know the pattern of interests or involvement of a person.

Question 6.

Assertion (A): Training helps the employees in promotion.
Reason (R): Training makes employees perform their tasks more efficiently.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Training helps employees to improve their knowledge and skill and make them perform their tasks more efficiently It also helps them in promotion and improves their attitude and confidence levels.

Question 7.

Assertion (A): On-the-job methods refer to the methods that are applied to the workplace, while the employee is actually working.
Reason (R): On-the-job methods means learning before doing.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
In these methods, the employees learn about their jobs while doing the work duly assisted by their supervisors or seniors. These methods encourage self-learning through practice. On-the-job methods means learning while doing.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 8.

Assertion (A): Staffing ensures the continuous survival and growth of the enterprise through the succession planning for managers.
Reason (R): The function of staffing enables the manager to find out as to how many workers are required and with what qualifications and experience.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Staffing helps in getting right people for the right job at the right time. Staffing contributes to improved organisational productivity. Through proper selection the organisation gets quality workers, and through proper training the performances level of the workers can be improved.

Case-Based MCQs

I. Read the following text and answer the following questions on the basis of the same:

Mr. Vikas Goel is an H.R. Manager of “Sanduja Furniture Private Limited.” At the beginning of the new year he anticipated that the company will need 30 new additional persons to fill up different vacancies. He gave an advertisement in the newspaper inviting applications for filling up different vacant posts. As many as 120 applications were received. The same were scrutinized. Out of these, conditions of 15 applicants were not acceptable to the company. Letters of regret, giving reasons, were sent to them. Remaining candidates were called for preliminary interview.

The candidates called for were asked to fill up blank application forms. Thereafter, they were given four tests. The objective of the first test was to find out how much interest the applicant takes in his work. The objective of the second test was to find out ‘specialization’ of the applicant in any particular areaThird test aimed at making sure whether the applicant was capable of learning through training or not. The purpose of the fourth test was to find out how much capability a person has to mix-up with other persons, and whether he can influence other persons and get influenced by them.

Question 1.

“The purpose of the fourth test was too find out how much capability a person has to mix-up with other persons, and whether he can influence other persons and get influenced by them.” Which tests is indicated in this situation?

(A) Personality Test
(B) Intelligent Test
(C) Aptitude Test
(D) Trade Test
Answer:
(A) Personality Test

Explanation:
Personality tests provide clues to a person’s emotions, his reactions, maturity and value system, etc. These tests probe the overall personality.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 2.

“At the beginning of the new year he anticipated that the company will need 30 new additional persons to fill up different vacancies.” Identify the first step of staffing.

(A) Placement and Orientation
(B) Training and Development
(C) Recruitment
(D) Estimating Manpower Requirement
Answer:
(D) Estimating Manpower Requirement

Explanation:
Manpower planning refers to the process of estimating the manpower requirement of an organisation. While estimating the manpower requirement, the management generally keeps in mind the available infrastructure including the technology, production schedule, market fluctuation, demand forecasts, government’s policies and so on.

Question 3.

From the given lines, ‘Out of these, conditions of 15 applicants were not acceptable to the company. Letters of regret, giving reasons, were sent to them’. Which aspect of staffing is highlighted in the statement?

(A) Recruitment
(B) Selection
(C) Training
(D) Education
Answer:
(B) Selection

Explanation:
Selection is the process of identi fying and choosing the best person out of a number of prospective candidates for a job.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 4.

The applicants were given four tests like intelligent test to interest test after filling up blank application form. Identify which step of selection process was followed by the management.

(A) Selection decision
(B) Selection test
(C) Job offer
(D) Medical examination
Answer:
(B) Selection test

II. Read the following text and answer the questions given below:

Motorcycles Rides Pvt. Ltd. decided to modernize the plant as they are going to manufacture on large scale and cater to the export market as weE as the domestic market. So, it has become necessary to provide knowledge and skills to the existing workers to cope with new technology. The company believes that training wEl help its workers to improve their functioning and performance in many areas. Thus, the company has decided to train its workers so as to equip them with the latest production technology. But the company is in a dilemma with respect to the training method to be adopted. The HR department wants to adopt a training method which is more suitable for a manufacturing concern than a trading concern as the workers will be involved in operating many sophisticated machines, majority of which the company is planning to import from Japan.

Thus, they have decided to create actual work environments in a class room and employees to use the same materials, files and equipment in order to equip themselves with the imported new technology. Some of the employees are kept under guidance of a master worker for a prescribed period of time. This will enable firm to reduce accidents as employees will be more efficient to handle machines. They also plan to recruit more people especially freshers to meet the rise in demand and train them accordingly. For this purpose they have decided to select candidates who are studying but will also work in their factory or office to acquire practical knowledge and skills.

Question 1.

Identify the benefit of training stated in the above paragraph.

(A) Makes employees more efficient to handle machines.
(B) Prepare them for any intended job.
(C) Equips the future manager who can take over in case of emergency.
(D) All of the above
Answer:
(A) Makes employees more efficient to handle machines.

Question 2.

Which training method has been choosen by Motorcycles Rides Pvt. Ltd. to train its existing workers?

(A) Apprenticeship Training
(B) Internship Training
(C) Vestibule Training
(D) None of the above
Answer:
(C) Vestibule Training

Explanation:
In vestibule training, the workers are trained in a prototype environment on specific jobs in a special part of the plant. An attempt is made to create working condition similar to the actual workshop conditions. After training workers in such condition, the trained workers may be put on similar jobs in the actual workshop.

Question 3.

Which training method has been chosen by Motorcycles Rides Pvt. Ltd to train its new workers?

(A) Lectures
(B) Internship Training
(C) Vestibule Training
(D) Apprenticeship Training
Answer:
(B) Internship Training

Explanation:
It is a joint programme of training in which educational institutions and business firms cooperate. Selected candidates carry on regular studies for the prescribed period. They also work in some factory or office to acquire practical knowledge and skills.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 4.

“Some of the employees are kept under guidance of a master worker for a prescribed period of time.”Which method is the company following?

(A) Internship Training
(B) Vestibule Training
(C) Apprenticeship Training
(D) None of the above
Answer:
(B) Vestibule Training

Explanation:
This kind of training involves shifting the trainee from one department to another or from one job to another.
This enables the trainee to gain a broader understanding of all parts of the business and how the organisation as a whole functions. The trainee gets fully involved in the departments operations and also gets a chance to test her own aptitude and ability.

III. Read the following text and answer the questions given below:

Mrs. Ambika Lamba founded ‘Professional University’ for undergraduate and postgraduate courses in diverse disciplines. The University is among the top universities of India and has a tie-up with many other organizations which visit the campus annually in order to hire its future employees during its placement season and offer handsome salary packages. On the basis of the reputation and performance of its students performance in the practical world, the Information Technology department of the Lalit Power Ltd., had few vacancies related to Cyber Security. The Human Resource Department of the company decided to recruit fresh engineering graduates from ‘Professional University’ for the same after they received certain recommendations from other industry players about the institution.

For this purpose, they conducted ’employment interviews’ of many engineering graduates who applied and were keen to join their company. There were five vacant positions which were duly filled after the company undertook approximately 60 employment interviews. Thus, they gave a ‘job offer’ to the final five students who cleared all the steps they undertook in order to till the vacancies. They also decided to hire a Chartered Accountant for their Finance and Accounts department. For this the company plans to undertake a series of steps in order to ensure that a person with sound knowledge and experience is selected. They finally hired Satnam who worked only for four months and left the company citing his inability to continue further on account of not having adequate experience to handle huge projects. This proved costly for the Finance and Accounts department of Lalit Power Ltd. and they realized that they went wrong in the initial step to select the candidate. Thus, they had to conduct the whole process again in order to select a new Chartered Accountant.

Question 1.

What is the source of recruitment chosen by Lalit Power Ltd. for hiring engineering graduates?

(A) Direct Recruitment
(B) Campus Recruitment
(C) Placement Agencies and Management Consultants
(D) Employment Exchange
Answer:
(B) Campus Recruitment

Explanation:
Colleges and institutes of management and technology have become a popular source of recruitment for technical, professional and managerial jobs. Many big organisations maintain a close liaison with the universities, vocational schools and management institutes to recruit qualified personnel for various jobs.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 2.

What was the company’s first or initial step towards hiring a Chartered Accountant where they went wrong?

(A) Selection Tests
(B) Interview
(C) Preliminary Screening
(D) Selection Decision
Answer:
(C) Preliminary Screening

Explanation:
Preliminary screening helps the manager eliminate unqualified or unfit job seekers based on the information supplied in the application forms. Preliminary interviews help reject misfits for reasons, which did not appear in the application forms.

MCQ Questions for Class 12 Business Studies Chapter 6 Staffing

Question 3.

Why did Lalit Power Ltd. conduct ’employment interviews’ in the process of selection of the cyber security professionals?

(A) To evaluate the applicant’s suitability for the job.
(B) To ask for names, addresses, and telephone numbers of references for the purpose of verifying information.
(C) To check if the candidate is medically fit.
(D) To give the candidate the letter of appointment.
Answer:
(A) To evaluate the applicant’s suitability for the job.

Question 4.

Which of the following is true about the job offer which Lalit Power Ltd. provided to its five prospective employees hired for the IT department?

(A) Only those applicants were given the job offer who passed all the previous hurdles.
(B) Job offer was made through a letter of appointment.
(C) It contains a date by which the appointee must report on duty.
(D) All of the above.
Answer:
(D) All of the above.

MCQ Questions for Class 12 Business Studies with Answers

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Organising Class 12 MCQ Questions With Answers

Organising Class 12 MCQ Chapter 5 Question 1.

……………….. is the process of dividing work into manageable activities and then grouping the activities which are similar in nature.

(A) Coordination
(B) Departmentalisation
(C) Organisation structure
(D) Delegation of authority
Answer:
(B) Departmentalisation

Explanation:
Once work has been divided into small and manageable activities, then those activities which are similar in nature, are grouped together. This process is called departmentalization. Departments can be created on the basis of products, functions and territory. This brings specialization in operation.

Question 2.

Which of the following importance of organising stimulates creativity amongst the managers?

(A) Development of personnel
(B) Optimum utilization of resources
(C) Expansion and growth
(D) None of the above
Answer:
(A) Development of personnel

Explanation:
Organising stimulates creativity amongst the managers. Effective delegation allows the managers to reduce their workload by assigning routine jobs to their subordinates.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 3.

Which of the following is not a benefit of organising?

(A) Clarity in working relationship
(B) Adaptation to change
(C) Expansion and growth
(D) Identification and obtaining competitive personnel O
Answer:
(D) Identification and obtaining competitive personnel O

Explanation:
The significance of the organising function mainly arises from the fact that it helps in the survival and growth of an enterprise and equips it to meet various challenges.

Question 4.

Which of the following importance of organising reduces the workload as well as enhances productivity?

(A) Clarity in working relationships
(B) Benefits of specialisation
(C) Adaptation to change
(D) Effective administration
Answer:
(B) Benefits of specialisation

Explanation:
Organising leads to a systematic allocation of jobs amongst the work force. This reduces the workload as well as enhances productivity because of the specific workers performing a specific job on a regular basis.

Question 5.

Which of the following statements is true about the organizing function of management?

(A) Departmentalisation is the first step in the process of organising.
(B) Organising discourages creativity amongst the managers.
(C) Organising allows a business enterprise to accommodate changes in the business environment.
(D) All of the above
Answer:
(C) Organising allows a business enterprise to accommodate changes in the business environment.

Explanation:
The process of organising allows a business enterprise to accommodate changes in the business environment. It allows the organisation structure to be suitably modified and the revision of inter-relationships amongst managerial levels to pave the way for a smooth transition.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 6.

Which of the following is not related to ‘Organising as a Process’?

(A) Initiates implementation of plAnswer
(B) Provides framework for performing managerial and operating tasks.
(C) Clarifies jobs and working relationship.
(D) Effectively deploys resources.
Answer:
(B) Provides framework for performing managerial and operating tasks.

Explanation:
Organising is a process that initiates implementation of plans by clarifying jobs and working relationships and effectively deploying resources for attainment of identified and desired results.

Question 7.

In order to make the ‘Annual Day’ of the school a successful event, the Headmistress of the school segregated all the activities into task groups each one dealing with a specific area. For instance, decorations, refreshments, backstage support, etc. Each group was put under the charge of one teacher. Identify the function of management performed by the Headmistress by dividing the activities and assigning the duties?

(A) Planning
(B) Organising
(C) Staffing
(D) Directing
Answer:
(B) Organising

Explanation:
Organising essentially implies a process which coordinates human efforts, assembles resources and integrates both into a unified whole to be utilised for achieving specified objectives.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 8.

An IT company currently employing 5,000 people, plans to expand its business through diversification. It aims to become a global leader. To achieve this goal, it has started shifting to a decentralised management system from a centralized one.
Thus, function of management is being performed by the company to become a decentralised company.

(A) Directing
(B) Staffing
(C) Organising
(D) Planning 0
Answer:
(C) Organising

Explanation:
Organising facilitates growth and diversification of activities through clear division of work. It helps in developing a proper organisation structure and the extent and nature of decentralisation can be determined.

Question 9.

Match the STEPS in the process of organising in Column I with the appropriate EXPLANATION in Column II.

Column I Column I
(a) Identification and division of work (i) Dividing work into manageable activities
(b) Departmentalisation (ii) Establishing a hierarchical structure
(c) Assignment of duties (iii) Grouping similar activities together
(d) Establishing authority and reporting relationships (iv) Allocating jobs to the members of each department

(A) (ii),(iii),(iv),(i)
(B) (iii), (iv),(ii), (i)
(C) (i), (iii), (iv), (ii)
(D) (iv), (iii), (i), (ii)
Answer:
(C) (i), (iii), (iv), (ii)

Question 10.

……………… ensures that the heads of separate business units in the organisation are responsible for profit or loss of their unit and have authority over it.

(A) Span of management
(B) Divisional structure
(C) Functional structure
(D) Hierarchy of authority
Answer:
(B) Divisional structure

Explanation:
In a divisional structure, the organisation structure comprises of separate business units or divisions. Each unit has a divisional manager responsible for performance and who has authority over the unit.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 11.

Which type of organisational structures is the most suitable when the size of the organisation is large and is producing one line of product?

(A) Functional
(B) Divisional
(C) Both (A) and (B)
(D) None of these
Answer:
(A) Functional

Explanation:
A functional structure is most suitable when the size of the organisation is large, has a diversified activities and operations require a high degree of specialisation.

Question 12.

Which of the following is a disadvantage of divisional structure?

(A) Conflict may arise among different divisions with reference to allocation of funds.
(B) More emphasis on departmental objectives.
(C) Leads to inter-departmental conflict.
(D) Leads to inflexibility.
Answer:
(A) Conflict may arise among different divisions with reference to allocation of funds.

Explanation:
Conflict may arise among different divisions with reference to allocation of funds and further a particular division may seek to maximise its profits at the cost of other divisions.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 13.

Which type of organisational structures is the most suitable for those business enterprises where a large variety of products are manufactured?

(A) Functional
(B) Divisional
(C) Both (A) and (B)
(D) None of the above
Answer:
(B) Divisional
Question 14.

Which of the following is an advantage of functional structure?

(A) Leads to occupational specialisation.
(B) Promotes control and coordination within a department.
(C) Helps in increasing managerial and operational efficiency.
(D) All of the above.
Answer
(D) All of the above.

Explanation:
A functional structure leads to occupational specialisation since emphasis is placed on specific functions. It promotes control and coordination within a department because of similarity in the tasks being performed. It helps in increasing managerial and operational efficiency and this results in increased profit.

Question 15.

Which of the following gives shape to the organisation structure?

(A)Extent of delegation
(B) Employee strength
(C) Span of management
(D) None of the above
Answer:
(C) Span of management
Explanation:
The span of management, to a large extent, gives shape to the organisational structure. Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the level of management in the structure.

Question 16.

Which of the following is true regarding Organisational Structure?

(A) Grouping of jobs of similar nature under functional structure and organising these major functions as separate departments creates a divisional structure.
(B) Span of Management determines the levels of management in the organisation structure.
(C) Divisional structure makes training of employees easier as the focus is only on a limited range of skills.
(D) All of the above
Answer:
(B) Span of Management determines the levels of management in the organisation structure.

Explanation:
Span of management refers to the number of subordinates that can be effectively managed by a superior. This determines the levels of management in the structure.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 17.

Yummy Foods Ltd. has its registered office in Lucknow, manufacturing unit in Kanpur and marketing department in Chandigarh type of organisational structure should be adopted by the company to achieve its objectives.

(A) Functional
(B) Divisional
(C) Both (A) and (B)
(D) Neither (A) nor (B)
Answer:
(A) Functional

Explanation:
An organisation structure formed by grouping together all activities into functional departments and putting each department under one coordinating head is called functional structure.

Question 18.

Match the STRUCTURE in an organisation in Column I with the appropriate EXPLANATION in Column II.

Column I Column II
(a) Organisation Structure (i) Grouping activities on the basis of products.
(b) Functional Structure (ii) Framework within which managerial and operating tasks are performed.
(c) Divisional Structure (iii) Grouping of simitar jobs and organizing them as separate departments.

(A) (ii), (iii), (i)
(B) (iii), (ii), (i)
(C) (ii), (i), (m)
(D) (iii), (i), (ii)
Answer:
(A) (ii), (iii), (i)

Question 19.

…………….. is the obligation of a subordinate to properly perform the assigned duty.

(A) Authority
(B) Responsibility
(C) Accountability
(D) None of these
Answer:
(B) Responsibility

Explanation:
Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior-subordinate relationship because the subordinate is bound to perform the duty assigned to him by his superior.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 20.

………………….. implies being answerable for the final outcome.

(A) Authority
(B) Responsibility
(C) Accountability
(D) None of these
Answer:
(C) Accountability

Explanation:
Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability. It cannot be delegated and flows upwards, i.e., a subordinate will be accountable to a superior for satisfactory performance of work.

Question 21.

Which of the following importance of delegation establishes superior-subordinate relationship?

(A) Employee development
(B) Facilitation of growth
(C) Motivation of employees
(D) Basis of management hierarchy 10
Answer:
(D) Basis of management hierarchy 10

Explanation:
Delegation of authority establishes superior-subordinate relationships, which are the basis of hierarchy of management. It is the degree and flow of authority which determines who has to report to whom.

Question 22.

organisation is ………………….. when decision making authority is retained by higher management levels.

Answer:
(A) Centralised
(B) Decentralised
(C) Both (A) and (B)
(D) None of these
Answer:
(A) Centralised

Explanation:
Centralization refers to that organizational structure where decision-making power is confined to the top management, and the subordinates need to follow the instructions of their seniors.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 23.

Which of the following statements is incorrect?

(A) Superior-Subordinate relationship is the source of origin of ‘Responsibility’.
(B) Authority arises from the established ‘scalar chain’ which links various job positions and levels of an organisation.
(C) Centralisation leads to quick decision making.
(D) None of the above
Answer:
(C) Centralisation leads to quick decision making.

Explanation:
In centralisation, the top management directs the day to day operations, and the subordinates have to report directly to the senior management. At times when there is no managerial staff, the subordinates are unable to take immediate decisions, thus, resulting in slowing down of business operations.

Question 24.

Which of the following statements is not applicable to the concept of ‘Accountability’?

(A) It implies being answerable for the final outcome.
(B) It cannot be denied once authority has been delegated and responsibility has been accepted.
(C) It cannot be delegated.
(D) It flows downward.
Answer:
(D) It flows downward.

Explanation:
Accountability element of delegation refers to the answerability of a subordinate to his superior for the job or task that is assigned. Accountability flows in an upward direction, which means the subordinate is accountable to the superior.

Question 25.

“It refers to the right of an individual to command his subordinate and to take action within the scope of his position.” Which element of delegation is ‘ being referred to in the above statement?

(A) Accountability
(B) Responsibility
(C) Authority
(D) None of these
Answer:
(C) Authority

Explanation:
Authority is the power to complete an assigned task. Without authority a subordinate is unable to execute the task perfectly. In order to complete the task as is expected by the manager, the manager has to provide authority of executing that task to the subordinate.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising
Question 26.

Match the ELEMENTS of Delegation in Column I with the corresponding EXPLANATION in Column II.

Column I Column II
(a) Authority (i) Being answerable for the final outcome.
(b) Responsibility (ii) Right to take decisions inherent in a managerial position.
(c) Accountability (iii) Obligation of a subordinate to perform the assigned duty properly.

(A) (ii),(iii),(i)
(B) (iii),(ii),(i)
(C) (iii),(i), (ii)
(D) (ii), (i), (iii)
Answer:
(A) (ii),(iii),(i)

Assertion and Reason Based MCQs

Directions: In the following questions, a statement of Assertion (A) is followed by a statement of Reason (R). Mark the correct choice as:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

Question 1.

Assertion (A): Identification and division of work is the first step in the process of organising.
Reason (R): Organising involves identifying and dividing the work that has to be done in accordance with previously determined plAnswer

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The organising function begins with the division of total work into smaller units. Each unit of total work is called a job.
The division of work into smaller jobs leads to specialization because jobs are assigned to individuals according to their qualifications and capabilities.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 2.

Assertion (A): Organising provides a clear description of jobs and related duties.
Reason (R): Organising stimulates creativity amongst the managers.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Organising provides a clear description of jobs and related duties. This helps to avoid confusion and duplication, Clarity in working relationships enables proper execution of work.

Question 3.

Assertion (A): Organising leads to the proper usage of all material, financial and human resources. Reason (R): The proper assignment of jobs avoids overlapping of work and also makes possible the best use of resources.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Avoidance of duplication of work helps in preventing confusion and minimising the wastage of resources and efforts.

Question 4.

Assertion (A): It is essential for effective performance that a proper match is made between the nature of a job and the ability of an individual. Reason (R): It is not necessary to define the work of different job positions and accordingly allocate work to variou
employees.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Once departments have been formed, each of them is placed under the charge of an individual. Jobs are then allocated to the members of each department in accordance to their skills and competencies.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 5.

Assertion (A): A proper organisation structure is essential to ensure a smooth flow of communication and better control over the operations of a business enterprise.
Reason (R): An organisation structure provides the framework which enables the enterprise to function as an integrated unit by regulating and coordinating the responsibilities of individuals and departments. 0

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
The organisation structure can be defined as the framework within which managerial and operating tasks are performed, It specifies the relationships between people, 1 work and resources.

Question 6.

Assertion (A): Delegation of authority allows more time for managers to concentrate on the tasks that are of higher importance for the organisation. Reason (R): Delegation allows for changing of the routine work which brings a sense of freedom.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
By empowering the employees, the managers are able to function more efficiently as they get more time to concentrate on important matters. Freedom from doing routine work provides them with opportunities to excel in new areas.

Question 7.

Assertion (A): Authority refers to the official powers and position required to carry on any task.
Reason (R): Accountability refers to the obligation on the part of the subordinates, to whom responsibility and authority are granted to see to it that the work is done.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
When duties are assigned to subordinates then the required authority must also be conferred to him. The delegatee is fully answerable to his superior for performance of the task assigned to him. Thus, the superior ensures performance through accountability by his subordinate.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 8.

Assertion (A): Responsibility arises from a superior- subordinate relationship.
Reason (R): The subordinate is bound to perform the duty assigned to him by his superior.

Answer:
(A) Both (A) and (R) are true, and (R) is the correct explanation of (A).

Explanation:
Responsibility is the obligation of a subordinate to properly perform the assigned duty. It arises from a superior-subordinate _ relationship because the subordinate is bound to perform the duty assigned to him by his superior. Thus, responsibility flows upwards, i.e., a subordinate will always be responsible to his superior.

Question 9.

Assertion (A): Delegation helps in developing the talents of the employees.
Reason (R): Delegation does not facilitate the growth of the enterprise.

Answer:
(C) (A) is true, but (R) is false.

Explanation:
Delegation helps in the expansion of an organisation by providing a ready workforce to take up leading positions in new ventures. Trained and experienced employees are able to play significant roles in the launch of new projects by replicating the work ethos they have absorbed from existing units, in the newly set up branches.

Question 10.

Assertion (A): Functional structure makes training of employees easier as the focus is only on a limited range of skills.
Reason (R): Divisional heads are accountable for profits.

Answer:
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).

Explanation:
Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement. It also helps in fixation of responsibility in cases of poor performance of the division and appropriate remedial action can be taken.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Case-Based MCQs

I. Read the following text and Answer:the questions given below:

‘Pappu Sweets Makers’ is a sweets making company which has turnover in crores. In order to manage the work in the organisation, the departments have been created on the basis of functions.
Examine the following situations of this organisation and give answers accordingly:

Situation 1: It is expected that employees who are performing similar tasks work under the same department. So the company now has HR, Marketing and Finance departments. The division is based on specific functions.
Situation 2: There are similarities in the tasks performed within the same department.
Situation 3: The profit is increasing month by month due to the success of this structure of the organisation.
Situation 4: There has been minimum duplication of efforts as the same department is taking care of single function.

Question 1.

Which type of organisation structure is discussed in the above case?

(A) Functional
(B) Divisional
(C) Linear
(D) None of these
Answer:
(A) Functional

Explanation:
A functional structure leads to occupational specialisation since emphasis is placed on specific functions. This promotes efficiency in utilisation of manpower as employees perform similar tasks within a department and are able to improve’ performance.

Question 2.

What will be the outcome of Situation 2 ?

(A) Increase in control and coordination
(B) Quick decision-making
(C) More initiatives
(D) Flexibility
Answer:
(A) Increase in control and coordination

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 3.

Why do you think the profit is increasing as given in Situation 3?

(A) Due to product specialisation
(B) Due to managerial and operational efficiency
(C) Due to flexibility
(D) Due to no repetition of tasks
Answer:
(B) Due to managerial and operational efficiency

Question 4.

What will be the result of Situation 4?

(A) Reduction in cost
(B) Increase in cost
(C) Stability to the organization
(D) None of the above
Answer:
(A) Reduction in cost

II. Read the following text and Answer:the questions given below:

Bimal, the owner of ‘Reliable Constructions’ decided to begin a campaign in order to create awareness among the residents for creating a clean and safe environment. In an effort to develop clean surroundings in the area, he formed a team of 20 members to list the different ways that can be adopted for keeping the area clean.

Different people had different suggestions, someone suggested to take the help of local residents including young children, one suggestion was to involve unemployed youth. The idea to take the help of volunteers was also given. A combination of the most effective strategies after evaluating all options was selected for implementation. To achieve the desired goals and objectives, various activities were identified like:

(i) Purchase of essential items like dustbins, garbage bags, brooms, phenyl, etc.
(ii) Door-to-door collection of garbage.
(iii) Recycling of garbage.
(iv) Disposal of garbage, etc.

Thus, an organisational design was chosen which grouped similar activities together in order to minimize duplication of effort. After identification and grouping of these activities, the work was allocated among the different members.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 1.

“To achieve the desired goal various activities were identified like:….” Which step does this represent in the process of organizing?

(A) Identification and division of work
(B) Departmentalisation
(C) Assignment of duties
(D) Establishing reporting relationships
Answer:
(A) Identification and division of work

Explanation:
The process of organising involves identifying and dividing the work that has to be done in accordance with previously determined plans The work is divided into manageable activities so that duplication can be avoided and the burden of work can be shared among the employees.

Question 2.

“Thus, an organisational design was chosen which grouped similar activities together in order to minimize duplication of effort.” Which organisational design is being referred to in this line?

(A) Functional
(B) Divisional
(C) Formal
(D) Informal
Answer:
(A) Functional

Question 3.

“Thus, an organisational design was chosen which grouped similar activities together in order to minimize duplication of effort.” Which step under the process of organizing is being referred to in this line?

(A) Identification and division of work
(B) Departmentalisation
(C) Assignment of duties
(D) Establishing reporting relationships
Answer:
(B) Departmentalisation

Explanation:
Once work has been divided into small and manageable activities then those activities which are similar in nature are grouped together. Such sets facilitate specialisation. This grouping process is called departmentalisation.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 4.

“After identification of different activities the work was allocated to different members.” Which step does this represent in the process of organizing?

(A) Identification and division of work
(B) Departmentalisation
(C) Assignment of duties
(D) Establishing reporting relationships
Answer:
(C) Assignment of duties

III. Read the following text and Answer:the questions given below:

Alpha Tonics is a progressive company which has achieved new records in the field of medicines. Recently the company decided to go for a major shift in policy decision by handing over the decision making authority to the lower most level of employees. For this the company went for a thorough planning. Within four months the positive results of this major policy decision was recognizable. The employees felt a lot of development in their skill of taking first step to manage things on their own. Some major newspapers also covered this development. The production of the company increased. The company’s top management could now focus on new areas of innovation as the employees turned more reliable.

One day it so happened that the company’s manufacturing branch in south could not fulfill even half of its production target and the operations manager was held answerable for the assigned target. He was called in the office. When he was questioned it was found that his right to command the workers was insufficient and it should have been more to create results. The management decided to listen to him and he was given more power. When he went to the shop floor he told the workers that the standard of behaviour of the workers should come from the official rules and procedures.

Question 1.

Which concept of management has been related to in the first paragraph of the case?

(A) Delegation
(B) Decentralisation
(C) Both (A) and (B)
(D) None of the above
Answer:
(B) Decentralisation

Explanation:
Decentralisation explains the manner in which decision making responsibilities are divided among hierarchical levels. Decentralisation refers to delegation of authority throughout all the levels of the organisation.

MCQ Questions for Class 12 Business Studies Chapter 5 Organising

Question 2.

Which of the following advantages of decentralization have been highlighted in the above case?

(A) It helps in development of initiative among subordinates.
(B) It helps in developing managerial talent for the future.
(C) Both (A) and (B)
(D) None of the above
Answer:
(C) Both (A) and (B)

Question 3.

Which elements of delegation have been highlighted in the second paragraph of the case? (A) Accountability

(A) Accountability
(B) Authority
(C) Both (A) and (B)
(D) None of the above
Answer:
(C) Both (A) and (B)

Explanation:
Authority refers to the right of an individual to command his subordinates and to take action within the scope of his position. The concept of authority arises from the established scalar chain which links the various job positions and levels of an organisation. Accountability implies being answerable for the final outcome. Once authority has been delegated and responsibility accepted, one cannot deny accountability.

Question 4.

Which feature of the informal organisation has been opposed by the operations manager in the above case?

(A) The standards of behaviour originate from the group norms.
(B) Independent channels of communication without specified direction of flow of information are developed by group members.
(C) It emerges spontaneously and is not deliberately created by the management.
(D) None of the above.
Answer:
(A) The standards of behaviour originate from the group norms.

MCQ Questions for Class 12 Business Studies with Answers