ORGANIZATION OF COMMERCE & MANAGEMENT - TRUE AND FALSE WITH REASON

ORGANIZATION OF COMMERCE & MANAGEMENT 

A. State whether the following statements are true or false.

1. There is no limit for membership in Joint Hindu family business - True

Ans - This statement is True.

Reason - 

(a) The number of members in case of Joint Hindu Family business is uncertain. It is determined by the size of the family. There is no limit on maximum number of members in a Joint Hindu Family.

(b) Joint Hindu Family business comes into existence due to operation of Hindu Law. The person becomes member by status. Therefore, membership comes to a person naturally by birth.

(c) The number of members fluctuates according to birth rate and death rate of the family. A male person who is born in a Hindu Family automatically becomes a member by the virtue of his birth. At the same time, the death of a person reduce the number of members.

(d) Unlike Joint Stock Company, Outsiders can not become the members of a Joint Hindu Family. The membership is confined to family members. The firm does not entertain partnership outside.

2. The liability of a karta in a Joint Hindu family firm is limited - False

Ans - This statement is False.

Reason - 

(a) The liability of a Karta in joint Hindu family firm is unlimited. All the debt obligations fall on the head of Karta. Though Karta is assisted by coparceners, he is the final authority to take decisions. He individually faces risks and uncertainty. Thus Karta is held responsible for any wrong decision and has to pay off the liabilities.

(b) The joint Hindu family business does not enjoy a separate legal status. Karta is solely responsible for any outcome of business.

(c) The law does not make any distinction between business assets and family assets of Karta. In case of a crisis, the Karta has to sell off all personal assets to meet debt obligations.

(d) All other members (co-parcerners) have limited liability. Their liability is limited to the share of each member in the family business. On the contrary, Karta faces unlimited liability.

(e) Joint Hindu Family does not entertain any outsider to become coparcener. Thus there is no possibility of risks divided and liability shared. Therefore Karta faces unlimited liability.

3. The maximum number of members in a Joint Hindu family firm is 20 - False

Ans - This statement is False.

Reason - 

(a) The number of members in case of Joint Hindu Family business is uncertain. It is determined by the size of the family. There is no limit on maximum number of members in a Joint Hindu Family.

(b) Joint Hindu Family business comes into existence due to operation of Hindu Law. The person becomes member by status. Therefore, membership comes to a person naturally by birth.

(c) The number of members fluctuates according to birth rate and death rate of the family. A male person who is born in a Hindu Family automatically becomes a member by the virtue of his birth. At the same time, the death of a person reduce the number of members.

(d) Unlike Joint Stock Company, Outsiders can not become the members of a Joint Hindu Family. The membership is confined to family members. The firm does not entertain partnership outside.

4. A joint stock company can raise huge capital - True

Ans - This statement is True.

Reason - 

(a) A joint stock company can raise capital through issue of shares and debenture. It can raise loans from financial institutions like LIC, UTI, RCTC. Development banks like IDBI, SIDBI, IPCI also provide long term loans

(b) It can invite general public to keep their money in deposits. It can approach commercial banks for overdraft, cash loans, cash credit, bills discounting, etc.

(c) A joint stock company can raise capital in international market through Global Depose Receipts (GDR) and American Depository Receipts (ADR).

(d) Joint stock company is in a position to sell its shares to all sections - rich, middle etc. and poor. Since capital of the company is divided into shares of small denominations, reaches even the poor sections of the society.

(e)The features like attractive dividends, voting rights, transferability of shares etc. act incentive to impress large size of investors. Joint stock company provides many options to investors such as equity shares, preferences shares, debentures etc. which suits different types of investors.

5. The ownership and management are not separate in joint stock company (OR) Share holders can manage the business - False

Ans - This statement is False.

Reason - 

(a) Being registered organization, joint stock company enjoys a separate legal status. The members are not liable for the action of the company. The company is an artificial person purely created by law. It can function independently.

(b) Shareholders enjoy the ownership of the company. They do not manage company affairs. However company cannot manage and control management activities like human beings. Therefore shareholders elect among themselves directors who act as the in charge of the company.

(c) The directors recruit group of executives and other employees to manage company affairs. These managers and other staff implement the decisions of the directors. Thus management falls in the hands of directors an employees.

(d) In a joint stock company there is complete separation of ownership and management. A member a owner but he cannot bind company by his act. His activities are personal and nothing to do with company affairs.

(e) Shareholders enjoy voting rights which can be used by them to influence management indirectly. If shareholders are not satisfied with the performance of directors, they can be ranged by the members. Policy decisions taken by the board must be approved by the shareholders.

6. The main purpose of a co-operative organization is to earn profit - False

Ans - This statement is False

Reason -

(a) The main motto of co-operative society is to promote mutual welfare of the members and not maximization of profit. Service above self is the spirit of co-operation The primary objective of a co-operative society is to provide service to its members. The secondary objective of a co-operative society is to make profit.

(b) The co-operative organization come into existence due to economic and social imbalance during the period of industrial revolution. Its main aim is to protect weaker sections from the exploitation of private monopoly.

(c) Co-operative societies distribute goods of fair quality at lowest possible prices. Since many office bearers provide honorary services, its operating cost remains less. Thus it supplies goods at lower prices. The main objective is to provide service and not to earn profit.

(d) It aims at mutual prosperity of all and not of few at the cost of others. Thus it safeguards the community against the evil of monopoly. The principle of ‘One man – One vote’ aims at maintaining equal status for all.

(e) The co-operative organization gives scope for self – government to its members. It promotes the feeling of goodwill and co-operation among its members. Thus the basic and fundamental objective of co-operative is to provide service to its members.

7. The membership of a co-operative society is voluntary - True

Ans - This statement is True.

Reason - 

(a) Co-operative organization is defined as a voluntary association of people who have joined together to promote their common economic interest.

(b) It is voluntary association of persons and not of capital. It is formed with the consent of its members. Any person can join organization at his own will at time and also can leave at any time by giving due notice to the society. No one is compelled to become a member.

(c) The membership of a co-operative society is kept open to any person. It is not based on caste or creed. No discrimination is applied on the basis of sex, colour race etc.

(d) A co-operative society is formed with the basic idea of promoting common social and economic interest. It is expected to remain away from the religion and politics i.e. people cannot form a co-operative society for a particular religion or a political party.

(e) Generally the face value of share is kept at a relatively lower level. It enables everyone to become the member.

8. Co-operative society differs from other forms of commercial organizations - True

Ans – This statement is True.

Reason –

(a) The basic objective of all other commercial organisation is to earn profit, while the objective of a co-operative organisations is to provide service to its members. It is voluntary organisation where membership is open to all irrespective of caste or religic.

(b) The co-operative organisation is formed to uphold the principle of "All for each and each for all". It stands for the view that self help and mutual help can promote common welfare. The other organisations are personal organisation promoting personal interest.

(c) The private organisation are guided by self interest and profit motive. The cooperative organisation is formed by people from weaker section to protect their interest.

(d) Private organisations like Joint Stock Company encourage concentration of power in hands of few and growth of monopoly. It is based on the principle of one share one vote. In co-operative society, the voting rights are based on the principle of 'one man one vote. There is democratic management and equality.  

(e) Business organisation like Joint Stock Company serves the interest of rich and mid class who invest their money on shares. Co-operative society serves the interest of p people. It works for the noble cause of removing poverty and reducing inequality.

9. Maximization of profit is the main motto of co-operative society - False

Ans – This statement is False.

Reason –

(a) The main motto of co-operative society is to promote mutual welfare of the members and not maximization of profit. Service above self is the spirit of co-operation. The primary objective of a co-operative society is to provide service to its members. The secondary objective of a co-operative society is to make profit.

(b) The co-operative organization come into existence due to economic and social imbalance during the period of industrial revolution. Its main aim is to protect weaker sections from the exploitation of private monopoly.

(c) Co-operative societies distribute goods of fair quality at lowest possible prices. Since many office bearers provide honorary services, its operating cost remains less. Thus it supplies goods at lower prices. The main objective is to provide service and not to earn profit.

(d) It aims at mutual prosperity of all and not of few at the cost of others. Thus it safeguards the community against the evil of monopoly. The principle of ‘One man – One vote’ aims at maintaining equal status for all.

(e) The co-operative organization gives scope for self – government to its members. It promotes the feeling of goodwill and co-operation among its members. Thus the basic and fundamental objective of co-operative is to provide service to its members.

10. In partnership agreement may be oral or written - True

Ans – This statement is True.

Reason –

(a) Partnership is created out of agreement. In the absence of agreement, the partnership is not valid. In India the agreement may be" oral or written. However it is advisable to have written agreement for the sake of security.

(b) Partnership is not created out of relationship or status. Whatever may be the close relationship one may have with the partners, it can not quality them as partners. It is the agreement between them that constitutes partnership.

(c) The fact that somebody is participating in the operation of the partnership firm does not mean he is a partner. For example, in case of joint Hindu family all family members (coparceners) operate the firm together and share the profit. But joint Hindu family business is not a partnership organisation. Therefore, an agreement is a must for partnership.

(d) A partnership firm may use the services of a person to assist the firm in it work. The person may be paid a certain percentage of profit for that work. Here the person works on good understanding and not on agreement. He will not be recognized as a partners unless they have agreed to that effect.

(e) Partners put their agreements in the form of document called "partnership deed". It reveals all aspects including amount of capital invested by each partners, ratio of share of profit etc. This document is a security to protect the rights and claims of partners. Such an written agreement avoids misunderstanding and disputes.

11. In a partnership the liability of every partner of a firm is unlimited - True

Ans – This statement is True.

Reason –

(a) All partners have an unlimited liability for the firm's obligation towards outsiders. They are jointly and severally liable for all debts and obligations of the firm whether incurred by themselves or other partners.

(b) It is a voluntary association which enjoys no separate legal status. The ownership as well as management lie with the partners In other words there is no difference between the firm and the management in the eyes of the law. Thus they are liable for all profit and loss arising out of their deals

(c) All the partners have an unlimited liability for the firm’s obligation towards outsiders. If the business assets are not sufficient to pay the debts, the personal assets of the partners may be attached for that purpose. They are jointly and severally liable for all debts and obligations of the firm whether incurred by themselves or by other partners as agents of the firm.

(d) Partnership allows only limited members. There is no outside member to share liability. They do not invite general public to become members. Thus all partner have to bear unlimited liability.

12. The owner of the sole proprietorship is the sole decision maker of his business - True

Ans – This statement is True.

Reason –

(a) Sole trading concern is a one man organization. The entire business is owned, managed and controlled by the sole trader himself.

(b) Sole trader brings in the capital of the business and therefore the sole trader owns the business.

(c) Sole trader himself manages the business and not need any consultation in the management of the business. He can take advice or suggestion from friends, relatives, etc.

(d) But it is not compulsory for the sole trader to implement advice/suggestion taken from others. So the sole trader is the only person who takes the decision in his business.

13. Sole proprietorship is useful for small business (OR) It is difficult for a sole trader to operate his business in an international market - True

Ans – This statement is True.

Reason –

(a) Sole trader generally operates in a local market. His activities are generally confined to a limited or local area, covering local consumers. His business activities are mainly spread in areas like groceries, tea stalls, fashion designing, furniture mart, laundry, restaurants etc. which are purely local in nature. Thus local business is suitable for a small business.

(b) A sole trader has a limited capacity to raise finance. Limited financial resources restricts his operations within the local areas. National and International business requires large scale investment.

(c) Expansion or diversification of business requires special skills and professional management. He cannot hire expensive managerial skills. He cannot invest huge capital on modern infrastructure. Therefore he prefers to run a small business.

(d) His liability being unlimited, he has to take calculated risk and never jumps to large scale business. Being a one man show, he cannot expand business beyond certain limit.

(e) His bargaining power is weak due to limited financial resources. He cannot influence market as a buyer. He cannot become a leader and therefore remains a small player. Thus he generally operates in a local market.

14. A sole trading concern is easiest to form - True

Ans – This statement is True.

Reason –

(a) Unlike joint stock company, sole trading company need not follow complicated legal formalities. There are few, simple legal formalities to be observed. This makes the formation easy. Anybody who is a major and normal person can start the business. It requires no special qualification.

(b) There is no long procedure of getting the organisation registered under any law. He can start the business as soon as the idea is born.

(c) The business is usually of small size. There is no need to go for establishment of strong infrastructure including machinery and modern technology. Therefore it can be easily organised.

(d) The sole trading business requires small capital which can be easily mobilised through personal sources. He need not go for public issue of shares and debentures which require a time consuming procedure.

(e) Every aspect of businesses individually under the control of sole trader himself. There is no member or partner. It makes the task easy and quick. There is no need to consult or meet anybody to take a decision.

15. A sole trader has a limited liability – False

Ans – This statement is False.

Reason –

(a) A sole trader has unlimited liability. The sole trader himself invests entire capital and bears all the risks in business. There is no other member or partner to share the liability. He is entirely responsible for the consequences of his business.

(b) The law does not make any distinction between personal assets and business assets of the sole trader.

(c) Being the single owner of the firm, the sole trader is alone responsible for the debts of the firm. He has to single handled manage all affairs of business and faces risks and .uncertainty. Eventually all the losses fall on his head.

16. A sole trader has a weak bargaining power – True.

Ans – This statement is True.

Reason –

(a) A sole trader has limited financial resources. Therefore, he can invest only less amount of capital and sell goods in small quantity.

(b) As the sole trader does not undertake large scale business, he has a limited capacity as a bargainer in the market. In the absence of bulk purchase, he can not influence the market as a buyer.

(c) A sole trader may not possess the skills of bargaining. Unlike joint stock companies, he can not hire professional managers. Therefore, he may not be able to get goods at competitive terms from the market.

(d) Big organisations like joint stock companies divert their surplus funds towards expansion . and diversification and become leaders. More they grow, more they dominate and bargain. This is not the case of a sole trader who has no scope for expansion and diversification and plays a less important role with a weak bargaining capacity.

(e) A sole trader can also become a victim of sudden change in the market or a rise in the number of competitors. This may be due to his limited financial capacity. ,,Thus a sole trader has a weak bargaining power

17. A sole trader can take quick decisions and prompt action for his business – True

Ans – This statement is True.

Reason –

(a) A sole trader enjoys a complete authority over the affairs of the business. He invests the entire capital and become the sole authority of taking major decision.

(b) He is sole owner, manager and controller of the business. There is nobody to challenge his authority. Though he keeps assistants, they are only his subordinates who readily accepts his decisions and implement the same.

(c) Even if the business suffers losses, there is no need for him to provide an explanation to anybody. He is not even answerable for any action regarding the affairs of the business.

(d) Sole trader does not allow any outsider to join his business. It is distinctively meant for single man ownership. In the absence of partners, the entire responsibility of investment, decision making, risk taking and uncertainty bearing rests with him. Therefore his authority is unlimited.

(e) Unlike joint stock company, there is no need for sole trader to conduct board meetings and share holder meetings to get their approval. Sole trader is free from time consuming meetings and extensive discussions. There is no need to consult anybody to take decisions. Therefore, he can take quick decisions and prompt action for his business.

18. A sole trading concern can maintain complete business secrecy – True

Ans – This statement is True.

Reason –

(a) Being one man show he never consults anybody while taking business decisions .There is no source to leak information. He keeps all information and decisions close to his heart. If needed, he may not share information with his family members also.

(b) A sole trader need not publish his books of accounts. There is no statutory requirements like publishing balance sheet, annual report, etc. Thus there is no source of leakage. All the secrets of business remain with him.

(c) His new ideas for business promotion are not to be known to his competitors as he need not disclose this information to outsiders.

(d) Even during crisis time no one will come to know about his position. In case he is suffering losses, no outsider would come to know unless he is ready to share the information. He never dares to open his mouth in this regard. Thus complete business secrecy can be maintained by sole trading concern.

19. Profit motive is the primary objective of a business Organisation – False.

Ans – This statement is False.

Reason –

(a) Profit motive is not the primary objective of all business organisations. Organisations like co-operative society and public sector units (PSUs) are not profit oriented. They have other objectives besides earning profit. Only private enterprises are purely profit oriented.

(b) Public Sector Business Organisations and co-operative organisations are not guided by self interest and profit motive. Their primary objective is to provide service. A part of the profit earned by public sector organisations is spent on Poverty Alleviation Programmes.

(c) Public Sector Organisations and co-operative organisations are welfare oriented. Though they earn profit their main goal is to promote welfare of the general public. "All for each -Each for all" is the principle of co-operative organisation. Balanced economic development, reduction of inequality are the goals of public sector.

(d) The public enterprises like Indian Railways are influenced by various socio economic and political considerations and not by profit motive. Public organisations provide utility services like provision of water, electricity, health and education at reasonable cost. They generate millions of job opportunities.

(e) Public sector units work towards stimulating economic growth. They serve the economy by providing strong net work of infrastructure. Their contribution spread in different areas including transport, communication, fertilizers, coal, oil etc.

20. Joint Hindu Family emerges out of an agreement between co-oparceners. (OR) Co-parcener are the partners of the Joint Hindu Family business - False.

Ans – This statement is False.

Reason –

(a) Co-parcener are the members of the business, but they are not partners of the business. Only Karta is authorized to enter into contract on behalf of the firm.

(b) Joint Hindu Family business comes into existence due to status and not due to contractual agreement. It has no partnership deed. It comes into existence by the operation of Hindu Law. In the absence of agreement, the co-parceners are not partners though they share profit.

(c) A partner has a right to represent himself as a principal as well as an agent of the firm to the third party, (principal agent relationship). A co-parcener has no right to act as a principal cum agent of the firm to the third party.

(d) Every partner has unlimited liability. But the liability of the co-parcener is limited to the extent of their share in the joint Hindu family business.

(e) In a partnership firm, every partner receives profit on the basic of ratio agreed upon. But there is no such ratio of sharing profit among co-parceners. Profit is equally shared between Karta and co-parceners. Thus co-parceners are not partners in business.

21. There is continuity in the Joint Hindu Family Business – True

Ans – This statement is True.

Reason –

(a) Joint Hindu Family business can continue for a long period of time. It does not come to an end and passes from one generation to another.

(b) This business comes into existence due to operation of Hindu Law. According to Hindu law business is considered as a heritable asset. Hindu law states that the family business is passed on to three successive generations i.e. sons, grandsons and great grandsons become joint owners of the property due to birth in the family.

(c) Death of 'Karta' does not affect the existence of the firm. The next eldest member of a family can take over the position of 'Karta'. Even the death of Co-parcener does not affect the business.

(d) Mutual trust and help keep the family united forever. The wisdom of elders and leadership of Karta ensure togetherness. When one of the members faces a problem, the entire family stands behind him and show their solidarity. It strengthens the spirit of unity.

22. The voting of the co-operative society is based on the principle of ‘one share on vote – False

Ans – This statement is False.

Reason –

(a) The voting rights of co-operative society are based on the principle of ‘One man one vote’ Co-operative organization is based on democratic management. In co-operative organization each member is given equal right.

(b) Co-operative organization is formed with the purpose of avoiding individual domination and to promote mutual welfare. Therefore, voting rights are not based on number of shares.

(c) Unlike joint stock company the entire management body of the co-operative organization is elected by its members. Even the chairman is elected by its members. Thus it upheld the democratic principle.

(d) In a joint stock company people who have majority shares enjoy excess power a-d keeps management under their control. They can influence decisions in favour of theft ideas and earn surplus profit. It leads to concentration of economic power. In a co-operate society, individual domination is eliminated and mutual welfare is promoted.

23. The shares of a co-operative society are easily transferable – False

Ans – This statement is False.

Reason –

(a) Shares of a co-operative society are not easily transferable in the market. Shares of a co-operative society are generally returned to the society.

(b) Shares of a co-operative society are not listed on a stock exchange. Therefore they not be bought and sold. Thus there is proper trading centre for shares of co-open society.

(c) The shareholders of a co-operative society neither get higher rate of dividend nor voting powers on the basis of individual holdings. Therefore, buying shares is not an attract option for the investors.

(d) Co-operative society aims at the prosperity of all the members of the society. Therefore the membership is always kept open. Co-operatives, instead of offering shares to the members, encourages new membership.

24. Registration is not compulsory for Joint Stock Companies – False.

Ans – This statement is False.

Reason –

(a) It is compulsory on the part of every joint stock company to register itself under Indian Companies Act 1956. Companies operating without registration are treated illegal.

(b) The company has to apply for registration in prescribed form. Once the Registrar is satisfied with the documents, he will enter the name in his register. After registration, the Registrar issues a certificate of Incorporation. The company becomes a distinct legal entity from the date mentioned in this certificate.

(c) Registration provides an exclusive identity to exist independently. The survival of the company does not depend upon members. Thus Joint Stock Company enjoys a separate legal status on account of registration.

(d) The formation and working of the company is regulated by the provisions of the Indian companies Act. Registration signals the beginning of the company. No company can function without registration.

(e) The existence of a joint stock company does not come to an end due to the death or insolvency of a member or director. The company is established by law. Even if all members and directors die, the company continues to survive.

25. Public limited company shares are freely transferable – True

Ans – This statement is True.

Reason –

(a) There are no restrictions (except preference shares) on transferability of public limited company share. A shareholder of a public limited company can sell his shares to anybody he likes. Every member is free to transfer his shares to anyone without the concern of other members.

(b) The shares of public limited company are traded in secondary market known as stock exchange. They can be purchased and sold through the stock exchange.

(c) Free transferability of share encourages public to invest shares. Crores of shares are bought and sold in a day

(d) Joint Stock Company is a voluntary association where e; member join the company on their own will. Every member is free to invest in Initial Pu Offer (IPO) irrespective of their economic status and later they are free to sell the same anybody they like.

26. A joint stock company ensures perpetual succession – True.

Ans – This statement is True.

Reason –

(a) The death, insolvency, lunacy etc. of its members and directors does not affect the sui of the company. Thus it enjoys perpetual succession.

(b) A joint stock company is an artificial person created by law. It has distinct legal state Members may come, members may go. But the company exists. Even if all member and directors die, the company continues to exist.

(c) Since company is formed under the provisions of the companies Act 1956, it can would up its operations only through the legal process.

(d) Compared to sole trader and partnership, the joint stock company enjoy greater degree of stability and growth. In fact stability and perpetual succession and complimentary to each other.

27. Company form of organisation has developed before industrial revolution – False.

Ans – This statement is False.

Reason –

(a) Industrial revolution brought up sudden changes in the scale of operation of industry. Company form of organisation is very suitable for large scale business. Therefore joint stock company appeared after industrial revolution.

(b) At the time of industrial revolution only two kinds of organisation were existing trading concern & ii) Partnership organisation. Both of these organisation could not cope up with the industrial revolution. It resulted in the arrival of company organisaion.

(c) Industrial revolution brought major changes in production such as factory system, large scale investment and professional management. Such changes necessitated the introduction of company form of organization.

(d) Industrial revolution mainly focused on innovation technology, market research and risk. A joint stock company fulfills such aspects.

(e) Small units suffered from various limitation such as limited resources, lack of professionalism, unlimited liability, lack of modernization etc. Joint Stock Company became the suitable organization to fulfill the objectives of industrial revolution. Therefore, company form of organization was introduced after industrial revolution.

28. Registration of Joint Hindu Family business is compulsory – False.

Ans – This statement is False.

Reason –

(a) Registration of Joint Hindu family business is not compulsory.

(b) The joint hindu family business is a business existing only in India.This business is governed by the Hindu Law.

(c) The senior most member of the family manages and controls the business, he is called as the Karta. The other members of the family assist the Karta in managing the business.

(d) Though registration is not compulsory, registration is always beneficial to the business.

29. The liability of the members of a co-operative is unlimited – False.

Ans – This statement is False.

Reason –

(a) The liability of the members of a Co-operative Society is limited to the extent of unpaid amount on shares.

(b) The co-operative society is a voluntary registered association. It is registered under the Co-operatives Societies Act.

(c) The main aim of co-operative society is to provide service. It is formed with the purpose of promotion, upliftment and protecting the weaker section of the society.

(d) The co-operative society collects capital by way of fees, donations and issue of shares. Every shareholder is liable to pay only the unpaid amount of shares.

30. A minor partner can be admitted into partnership firm – False.

Ans – This statement is False.

Reason –

(a) A partnership is a business carried on by two or more persons who agree to conduct lawful business, and agree to share in the profit and loss in the agreed proportion.

(b) To enter into partnership, a person (i) should have completed 18 years of age (ii) should be a solvent person (iii) should be of a sound mind (iv) should not be convicted by law.

(c) Every partner must fulfill the above conditions in order to enter into partnership. However, if all the partners agree, a minor can be admitted as a partner for the benefit of the firm.

(d) The liability of a minor partner is limited and he is entitled to share in the profits.

1. Central bank (RBI) cannot accept deposit from the public - True.

Ans – This statement is True.

Reason –

(a) Central bank act as the bank of the government. It accepts government deposits. It provides loans to government. But it does accept deposits from general public

(b) Central bank does not entertain general public to open account and operate transactions. Central Bank only facilities government transaction not general public

(c) Central bank is the apex body of banking sector which works to promote economic growth of the nation. It brings price stability. Unlike commercial banks, central Bank is not profit oriented. It never invites general public to keep deposits to earn profit.

(d) The primary objective of central bank is to work for the welfare of the nation. It does not involve in commercial operations for the sake of profit. It designs and implements monetary policy. It helps commercial banks when they meet financial crisis. But it does not accept deposits from general public.

2. Overdraft facility is given to saving account holders - False.

Ans – This statement is False.

Reason –

(a) Business firms, companies and businessmen holding current account are eligible to enjoy overdraft facility. It is granted to those account holders who enjoy a good track record and reputation in their business transactions.

(b) Businessmen holding current account face shortage of funds to meet their commitments. Overdraft facility helps to adjust their need for money.

(c) Over draft facility is an indirect loan available to current account holders. It supports businessman to withdraw over and above their actual balance so as to clear their cheques. The extra amount is treated as loan and interest is charged.

(d) Overdraft facility is a special privilege enjoyed by current account holders. Other accounts like saving account do not enjoy such facilities.

3. Current account is suitable for salaried people - False.

Ans – This statement is False.

Reason –

(a) Current account is operated by businessmen to facilitate transactions in business. Current account is exclusively opened for the purpose of handling money transaction in their day to day business activities.

(b) Generally salaried people operate saving accounts. It is more convenient to salaried classes. Businessmen always operate current account. He can withdraw entire money keeping only minimum balance. There are no restrictions in withdrawals as long as balance is kept in the account. Therefore current account suits businessman more than the salaried people.

(c) Current account holders are eligible to enjoy overdraft facility. It enables the businessman to withdraw over and above the actual balance. It is very useful to businessman whenever he faces temporary shortage of funds. Therefore a businessman always prefers to operate current account.

(d) The businessman who have clean track record and reputation in their current account transaction stand to enjoy certain other facilities. They can get cash credit facility and other agency services from commercial banks.

4. Cash can be withdrawn from ATM at any time - True.

Ans – This statement is True.

Reason –

(a) ATM provides 24 hours x 7 days service to customers throughout the year. Therefor customer can withdraw money at any time.

(b) ATM is installed all over the country almost at every important place. You can find ATM at all shopping centres, near railway stations, business centres etc. As it covers all important centres, the consumer has the option of withdrawing money from anywhere at anytime.

(c) When the customers visit different places, they have to carry their ATM card to withdraw money. It is very helpful to travellers when they visit different locations and picnic spot.

(d) ATM facilitates fast and quick money transactions for the customer. They can with money at restaurants, malls, shopping centres and any other place to settle the payments. The customer can operate all his deals without the risk of carrying large amount cash. He can insert the card and receive money anytime at any place.

5. The principle of indemnity applies to life insurance - False.

Ans – This statement is False.

Reason –

(a) The principle of indemnity is not applicable in case of life insurance. The contracts and marine are based on the principle of indemnity. This principle prevents the insurer recover anything more than the value of his own insurable interest. 

(b) The principle of indemnity ensures that the insured will not get compensation more than the value of loss. In case life insurance, loss is caused by death. It cannot be estimates terms of money. No monetary compensation is equal to the value of life.

(c) In case of fire and marine insurance the subject matter is property or goods. The value goods or property can be estimated in terms of money. Therefore principle of indemnity is applicable in case of fire and marine insurance.

(d) In case of marine and fire insurance, the indemnity principle discourages the policy I to exploit the opportunity to make profit out of loss. In the absence of indemnity, insured will intentionally destroy his property or goods to make profit. In case of life insurance the compensation is paid at the time of death. Life of a person is more valuable and not be treated like property or goods. Therefore it is illogical to apply the principle of indemnity.

6. Insured must have insurable interest in the subject matter at the time of taking the policy - True.

Ans – This statement is True.

Reason –

(a) Insurable interest means the insured should suffer financial losses if any harm or damage happens to the property and he benefits if the insured object is safe.

(b) Person taking the insurance must have insurable interest in the subject matter he is going to insure. 

(c) All the contracts of insurance follow this principle. If there is no insurable interest then the contract of insurance becomes invalid.

(d) Ownership of the property at the time of taking the policy as well at time of making the claim is essential in order for the insurer to have insurable interest in the property.

(e) A person has insurable interest in his own life and property. A wife has insurable interest in the life of her husband. A businessman has insurable interest in the goods and property of his business. Thus, for an insurance contract to be valid the insured should have an insurable interest in the subject matter at the time of taking the policy.

7. An individual must always tries to minimize the loss by fire as far as possible - True.

Ans – This statement is True.

Reason –

(a) According to the principle of mitigation of loss, the insured should take all necessary steps to take care of the subject matter. He should extend protection to subject matter as of no policy is taken.

(b) It is the duty of the insured to take utmost care and precaution to prevent damages on goods or property. He should not take it for granted in the matter of protection. Such an approach will minimise the loss.

(c) The policy holder should personally take initiative to ensure security of the subject matter. For example, in case of fire insurance, the insured should have all security arrangements like fire extinguisher, water facility, sand etc.

(d) The insured should not have a casual attitude towards protection of the property. If Mr. A's godown is on fire, the insured should not simply watch the situation. He should try all possible efforts to stop fire like calling fire brigade, pouring water on fire, calling the neighbours to join fighting etc to stop spreading of fire.

8. Duty paid warehouses help to provide storage for perishable commodities - False.

Ans – This statement is False.

Reason –

(a) Duty paid warehouses accommodate imported goods. Generally importer keep their imported goods until they are transported.

(b) The duty paid warehouse are located near ports. Therefore it is very convenient for importers to keep their goods in such warehouses. It is very helpful when they face problems in transportation.

(c) Duty paid warehouses do not provide cold storage facilities to store perishable goods are convenient for the importers to keep their goods until they are transported to their places

(d) Duty paid warehouse also provides various other services like assembling grading packaging, labeling etc. It promotes business prospectus of importers

9. Private warehouse are used only by its owner - True.

Ans – This statement is True.

Reason –

(a) Private warehouses are owned and operated by manufacturers and their own purpose. They do not allow outsiders to use this facility. Most of the implant warehouses and field warehouses are private warehouses.

(b) Private Warehouses are build by manufacturers to keep their finished goods before they are distributed to wholesalers and retailors. They are helpful to them to store the goods during the waiting period. Thus they are used for their own purpose and not to help others.

(c) Manufacturers use these warehouses to keep safety stock. Whenever there is emergency demand, they release this stock immediately.

(d) Some goods are produced throughout the year. But they are demanded only during seasons. To meet such seasonal demand, the manufacturers keep the goods in private warehouses. There is no possibility of such warehouses extending services to other businessmen.

(e) Some producers receive different goods from different plants which are to be mixed at one place. For example in case of fertilizer, different chemicals are to be mixed in right proportion. Private warehouses facilitate such service to their owners.

10. Post offices provide money remittance services- True.

Ans – This statement is True.

Reason –

(a) Money order is a facility extended by post office to send certain amount of me-person to whom it is to be sent through post office. The name of the payee and se" written in the money order form. Payee is the name of the person to whom the sur sent. The money is delivered at the home of the payee.

(b) It is the facility of online transfer of money to the payee. It is very convenient, reliable and affordable. It is a web based system through which one can transfer amount Rs. 10000 to Rs. 50000. It is a simple process.

(c) This is a scheme which is useful to send personal remittance from abroad to beneficiaries in India. It entertains only inward remittances into India. There is no service for outward remittances fro India

(d) The Money Gram services is available to selected post office in India. This service was introduced in India since 29th September 2011. It facilitates international money transfer.

(e) This scheme was launched in February 2008. This scheme facilitates quick and easy transfer of money between people of India and UAE. Indian post and Emirate post jointly run this scheme through an agreement signed by them.

11. E-payment facility is not available to general public - False.

Ans – This statement is False.

Reason –

(a) E-payment means payment transaction carried but with the help of computer system. Any user having a PC and a browser can access the bank website and avail of services.

(b) Salary, pension, dividend on shares, interest on debentures, commission, royalty etc. are directly credited to the bank account of a person.

(c) Loan installment, school fees, insurance premium, telephone bills, electricity bills, water bills, club membership fee, credit card dues are directly debited to the bank account of the account holder.

(d) Customers can use e-payment facility at any time according to their convenience. Customers get 24 hours and 365 days a - year services. Customers can make transactions from residence or office or even while travelling.

12. Air transport is suitable for short distance - False.

Ans – This statement is False.

Reason –

(a) Generally air journey is expensive. In case the short distance it is very expensive. As the cost of operation remains high, the average cost for short distance tends to be high.

(b) Inspite of arrival of several airlines, the competition has not reduced the cost drastically. Every year the fuel price is hiked and so the cost of air transport.

(c) Most of the airports situated away from city. Air transport does not cover all the locations i.e road transport. Air transport cannot take the passengers directly to their destination. There is no door-to door service. It is common that the passengers seek assistance from -cad transport to reach their place from airport.

(d) In case of air transport, passengers do not have several options. Many airlines do not operate routes for short distance locations. The frequency of air journey to such places is less. Thus passengers find it difficult to book tickets to suit their time of convenience.

(e) Even advance booking will not help the passengers. Due to climate changes and management staff conflicts, there are cancellations. This will upset the schedule of the passengers. It is difficult to book tickets from alternative airlines.

13. Transport helps in raising standard of living - True.

Ans – This statement is True.

Reason –

(a) Transport facilitates movement of goods from factory to consumers. Modem transport assures quick distribution of goods at national and international level. Thus consumer stands to enjoy variety of goods of their choice. The availability of all means of transport encourages competition among sellers. Goods of reasonable quality are sold at cheap prices. As a result, the standard of living improves.

(b) Transport facilitates supply of essential goods like foodgrain, fruit, vegetable, medicines in adequate quantity to people. Nobody can live without the assurance of supply of such goods. Adequate supply at reasonable prices improve their standard of living

(c) Transport enables quick transport of essential goods from one place to another place. In the absence of transport, there may be scarcity of goods. It results on black marketing and rising prices. Thus transport plays an important role in stability prices

(d) Transport sector acts as a source of employment for millions of job seekers. The various types of transport like road, railways, airways and seaways, generate pie"-opportunities.

(e) Transport contributes towards the success of industrialisation. Industrialisation contributes to national income and per capita income. When per capita income increases, standard of living rises.

14. Water transport is the costliest means of transport - False.

Ans – This statement is False.

Reason –

(a) Water ways are the cheapest of all means of transport. Its operating cost is Practically there is no construction and maintenance cost for water ways.

(b) Lakes, rivers and ocean are the gifts of nature. They are available at free of cos: I capital required to operate water transport is relatively lower.

(c) They can carry goods at lower rates.

(d) Since they consume less energy, they are cost effective. The average cost c remains low.

15. Rail transport provides door to door services - False.

Ans – This statement is False.

Reason –

(a) Unlike motor transport, trains cannot facilitate door to door service. People have i with further transportation to carry the goods from railway stations to homes f-o stations to homes or godowns. It also results in additional expenditure for loa unloading.

(b) The coverage of Indian railways is still inadequate Most of the remote villages in the backward areas still remain isolated

(c) The buses, taxis and autos take you directly to your destination. The trains can only drop you at the respective stations. In some places, the railway stations are located for away from their home.

(d) The goods trains which transport raw material and machinery do not take them to factories. The goods are left at stations. The business mean must arrange to the means of transport to carry goods from railway stations to his factory.

(e) Road transport is convenient to travel to any part of the country. There are different transport companies operating at different routes. Routes can be changed according to the convenience of the passengers. Rail transport travels by one way track. Once entered, the routes cannot be diverted. They can transport goods and passengers only those places which are located in this route.

16. Profit motive is the primary objectives of commercial banks, (or) Commercial sanks are not service oriented organisations – True.

Ans – This statement is True.

Reason –

(a) A commercial bank is a financial intermediary which performs certain functions purely for re purpose of earning profit. All its financial operations are based on profit motive.

(b) Commercial banks accept deposits frojjn public by promising certain rate of interest. From such deposits, they grant loans ra households and business firms at a relatively higher rate of interest. The difference in interest becomes profit. Thus profit earning is the Tiotive behind such operations.

(c) Commercial banks are concerned with the business of investing money on government bills and securities. They also invest part of their money on shares. This provides them enough profit.

(d) Profitability is one of the fundamental principles of commercial banks. They undertake various agency services such as collection of bills, payment of premium, role of undertaker, issuing letter of credit, traveller cheque, Dmat service etc. For all such services they collect commission which adds to their income.

17. Water transport promotes international trade  - True.

Ans – This statement is True.

Reason –

(a) Sea transport is very suitable for international trade. They are helpful in expansion of global trade. It enjoys greater scope than air transport. At present three - fourth of the world trade is based on sea transport.

(b) Ships posses higher carrying capacity. They are suitable for transporting bulky goods. The capacity of ship is greater than any other means of transport. They are more suitable for international trade.

(c) Lakes, rivers and ocean are the gifts of nature. They are available at free of cost. Thus the capital required to operate water transport is relatively lower. 

(d) Water transport enjoys the merit of flexibility. If required, sea route can be diverted during the time of voyage.

(e) Unlike air and road transport, ships consume less energy to operate. Thus they save energy.

1. The term e-business is derived from the terms e-mail and e-commerce (OR) or E-business is a broader concept than E-commerce- True

Ans – This statement is True.

Reason –

(a) The terms E-mail, E-commerce and E-business are based on computer application through internet. They use electronic technology to operate different activities. E-business is raj leading industry whereas E-commerce and E-mail act as branch and sub branch of the E business.

(b) E-commerce is a branch of E-business. E-commerce is concerned with distribution a goods and services whereas E-business is concerned with manufacturing goods. Thus I commerce is the trading aspect of E-business.

(c) E-business covers the full range of business activities via E-mail and Ecommerce E-business refers to production of goods and services which is carried out through electron processing and transmission of data. E-commerce refers to all forms of trading activities of those goods which is carried out through electronic processing. E-mail is handled by E-business to transfer valuable information to different places or persons. E-mail connects E-business to various sections of the society.

(d) E-business is a broader concept than E-commerce. E-commerce deals exclusively distribution of goods and services whereas E-business involves production, sale, distribution, after sale, inter firm business transactions etc. 

2. Credit cards are used for cash payments - False

Ans – This statement is False.

Reason –

(a) Credit Cards are also known as Plastic money. These are generally issued by banks to their customers.

(b) Credit Cards can be used for making online payments as there is no physical exchange of cash over the internet. Credit cards are also used at restaurants, retail outlets or stores.

(c) The payment made through credit card is usually authorized by the card issuing bank by way of a fully secured payment mechanism.

(d) Unlike, when using debit cards, where the amount gets debited from the account, here the payment is made by the card issuing bank on the customer’s behalf. The bank generally gives a month’s credit period to the cardholder to pay the credit amount.

(e) The card holder can later make the payment to the bank either in full or in installments.

(f) The advantage of credit card is the person can use his card even if he does not have money in his pocket or in his bank account. They are the replacement for currency notes. Therefore, credit cards are used for making credit payments and not cash payments. 

3. In on-line transactions 'Account' and `Shopping cart' are password protected - True

Ans – This statement is True.

Reason –

(a) There is possibility of hackers entering into the account and misuse the same. Password protection is offered to check illegal entry of hackers.

(b) Unlike traditional business, the buyer and seller do not see each other while doing business Anybody who is an expert in application of computer technology can easily enter and misuse shopping cart. Therefore password protection is necessary.

(c) E-business identity the person only in terms of numbers and names. Anybody can visit the site in disguise as a customer and misuse the site. They can enter into the account of the customer and play a spoil game. Therefore it is necessary to keep pass words.

(d) Traditional business can be started by anybody who has sufficient capital. E-Business requires technical resources other than money. In the absence of availability of such resources it is difficult to implement E-business. The success depends upon the efficiency of computer professional and technical experts.

(e) The primary requirement which is most essential for the operation of E-Business is the ' availability of computer Hardware. The system must provide adequate speed and memory so as to meet the growing volume of business transactions.

(f) There must be an army of highly skilled technical staff who are well versed with internet operations. They should be well trained in the art of handling trade enquires, contacting customers and book orders through internet. In the absence of well trained and adequate staff, it is impossible to implement E-business.

(g) One more important requirement is setting up of a comprehensive website. The company requires to keep communication with various sections like customers, suppliers, dealers, employees, government etc. The website facilitates all such communication. If the website does not work, the business has to be closed down.

(h) Tele-communication is a pre-requirement for implementation of E-business. E-business should be connected to effective telecommunication system to ensure smooth operation. In the absence of adequate and effective telephone lines and internet facilities, the E-business cannot succeed.

(i) E-business needs to be supported by an effective and efficient system of payment. Payments are received and paid. The system should facilitate both the services smoothly. The customer makes electronic payments for settlement of orders. If the system goes defective, E-business will have to be closed down. 

4. It is easy to set up e-business as compared to traditional business - True

Ans – This statement is True.

Reason –

(a) Unlike a host of procedural requirements for setting up an industry, ebusiness is relatively easy to start.

(b) The initial investment for stating up an business is generally lower than the costs associated with starting an equivalent business using a traditional model.

(c) Online sellers are able to reduce their overheads as they don’t need expensive shop fronts, too many employees or large inventory on hand.

(d) E-business does not require physical space. It requires qualified technical professionals. Thus, it is easy to set up e-business as compared to traditional business. 

5. E-business allows you to work across the globe in any field - True

Ans – This statement is True.

Reason –

(a) E-business facilitates global contacts. It is possible to reach partners, agents, distributors globally. The most important benefit is to reach customers from any part of the world. It helps businessman to expand global market.

(b) E-business facilitates direct contacts with the customers and dealers. The customer from any country can contact businessman without the help of agents. Thus it keeps middle men away and saves money. Websites are loaded with simple instructions and sufficient directions to guide the customer.

(c) The outstanding service provided by E-business is quick response. All queries from part of the world will be responded quickly and information reaches faster. Students can contact universities. Tourists can contact guides and book tickets. Hospitals can be contacted for any kind of medical treatment.

(d) E-business has become the most convenient tool to effect foreign collaboration. India businessman can contact foreign firms and acquire technology.

(e) Exports can contact their customers through internet. They can contact every customer individually and look after their specific requirements. Importers can easily contact sour and collect necessary information regarding products, manufacturers, prices and terms and conditions. Both importers and exporters can make electronic payments through internet. 

1. A business unit is a part of society. - True

Ans – This statement is True.

Reason –

(a) Business acts as a trustee of society. This is because it is one of the most important elements of society. Therefore it must discharge its obligations towards various sections of the society. It is the duty of the enterprise to protect the interest of the members of the society.

(b) Business provides goods and services to the society which are demanded by the society If there is change in expectation of society, business should provide goods and service accordingly. Otherwise profit of business organisation will disappear.

(c) Business organisations try to maintain their standard in order to create goodwill and image in society. For this purpose business organisation takes care of every element of society, (e.g.) They look after workers by giving fair wages and non-monetary benefits and take care of consumer by providing better quality of goods at reasonable prices which may increase their standard of living etc. This will enhance their image.

(d) A business organisation has to look after the welfare of various interest groups such as shareholders, customers, employees, suppliers, creditors etc. A socially responsible organisation is in a position to work for the interest of all of them rather than serving a small segment of the society.

2. Tangible goal of earning profit is the sole objective of business - False

Ans – This statement is False.

Reason –

(a) Modern business firms do not aim at profit alone. Besides profit they like to earn goodwill and reputation. Therefore they are more concerned about their social responsibilities.

(b) The modern firms are very much interested in maintaining corporate governance. They want to be more responsible and more accountable business units. They believe in honesty and transparency. They want to adopt a open minded policy.

(c) The corporate sector respects ethical values in terms of human rights. They want to ensure fair wages and other monetary incentives to workers. They take efforts to avoid unfair treatment and exploitation of workers.

(d) All business activities centre around consumers. Consumers are vital section of the society whose behaviour determines the future of the business organisation. Corporate governance can check such anti-consumer stand and promote the welfare of the consumers.

(e) Business activities are now considered as socio-economic activities. Therefore, the sole aim of the business organization is not maximizing profit. The business organizations have social responsibility. 

3. Expectations of society and public towards business are changing - True

Ans – This statement is True.

Reason –

(a) Expectation of society and public towards business are changing. World is changing, growing, and expanding rapidly. Business must operate as per expectations of society.

(b) Over the years, social demands have changed and business has to respond positively to the changes.

(c) Public and society are becoming aware of their rights. They expect business organizations to protects and promote their rights. Overall knowledge level of public and society is also increasing. Business organization should not do anything that is harmful to the society.

(d) Expectations of society and public towards business are changing and business has to meet their expectation. 

4. Business organization can use natural resources as they want - False

Ans – This statement is False.

Reason –

(a) Business organizations cannot use natural resources as they want.

(b) Business organizations operate within the society. They use the natural resources of the society.

(c) They should make proper use of the country’s natural resources. There should be optimum utilization of the resources. As supply of natural resources is limited, their wastage should be avoided.

(d) The available resources should be used for the benefit of society. They should extract resources in limited quantity. Damage to environment should be avoided while utilizing the natural resources.

(e) Through proper use of resources the business organization can take care of the welfare of society. 

5. Business organization can participate in solving complex social problems - True

Ans – This statement is True.

Reason –

(a) The business organization should create employment opportunities and provide better life to the society.

(b) The organization should prevent environmental pollution by taking the necessary preventive measures and maintain ecological balance.

(c) The organisation provides financial help to social and cultural activities by contributing towards society for education, primary health care, population control and rural development.

(d) The business organisation should try to promote and develop small scale industries rural area and also labor oriented industries in rural area. Thus it should help in develop of underdeveloped areas.

(e) The business organisation should set up industries in different areas, which may a\ over population in big cities. 

6. Role of media exerts major influence on business organization - True

Ans – This statement is True.

Reason –

(a) Role of media exerts a major influence on business organization.

(b) Media plays a very important role in public life. Reach of media to common people is very easy.

(c) Media is very powerful and it can speak against wrong policies of business. It can raise its voice against business malpractices and consumer exploitation.

(d) Television channels, radio, newspapers can give publicity to unfair practices. Media is very vibrant and active. Media can easily influence the masses in the society.

(e) Business organizations should fulfill their social responsibilities. They should not ignore social values. Therefore, it is rightly said that media exerts major influence on business organization. 

7. Business should not disclose their records to investors - False

Ans – This statement is False.

Reason –

(a) Companies must ensure a fair degree of corporate governance in their behaviour. Corp governance refers to open and honest policy in running company in the interest shareholders.

(b) The companies are subject to financial accountability. They should submit standard financial report to shareholders and government.

(c) The company should arrange proper communication facility to inform the shareholder about all developments of the company.

(d) The management is expected to maintain proper accounts which are duly audited time to time. There should be high degree of transparency in such matters. Even shareholder must get a copy of balance sheet of the company along with the details profit and loss account.

(e) It must not prepare manipulated accounts with suppressed profit in order to deny on reduce dividends to the shareholders. It should not falsify the accounts to escape the burden 

8. Providing career opportunities to employees is the responsibility of business - True

Ans – This statement is True.

Reason –

(a) Providing career opportunities to employees is the responsibility of business. Employees are the human resources of an organization. They must be treated with dignity and respect.

(b) Mutual trust and confidence on employees will bring success to managerial goals.

(c) Business should offer adequate opportunities of promotion to their talented employees. They should provide the employees with proper information about qualifications, skills, and experience required to obtain promotion.

(d) They should increase awareness among the employees so that employees will be motivated to take the efforts. Employees with talent should be provided with career opportunities.

(e) Organization should aim at all round development of personality. Therefore, providing career opportunities to employees is the responsibility of business organization. 

9. Management should avoid worker's participation while making decisions - False

Ans – This statement is False.

Reason –

(a) Management should encourage workers’ participation while taking business decisions. Employees are the human resources of an organization. They must be treated with dignity and respect.

(b) Workers should be encouraged to participate in the management.

(c) Workers are the people who face day to day problems arising in the functioning of company. So, they are well aware of these problems. Therefore, they are the right people to find practical solutions to these problems.

(d) Schemes such as common suggestion system for cost saving, quality, circles, profit sharing, co-partnership should be introduced, so as to encourage workers’ participation in the decision making process.

(e) It will help to raise the morale of the employees and will create cordial labour - management relations. It will also help to create a sense of belongingness with the organization.

(f) Mutual trust and confidence in employees will enable to achieve managerial goals. 

10. Business organization is not liable to control pollution - False

Ans – This statement is False.

Reason –

(a) Business organization is liable to control pollution as working of business units result in pollution of air, water, and noise.

(b) The carbon particles, dust, harmful gases, chemicals create air pollution. Smoke emitted from the factories causes air pollution.

(c) Harmful chemicals drained in water resources causes water contamination.

(d) Sound of machines in the factories can cause noise pollution.

(e) Extraction of natural resources cause damage to eco-system.

(g) They should adopt eco-friendly products. They should introduce eco-friendly manufacturing process, use renewable and clean source of energy.

(h) They should follow highest standards of packaging. Business organizations should invest in renewable energy projects. They should aim at reducing carbon emissions.

(i) Business is a part of society. Therefore, it cannot ignore its responsibility of protecting environment. Thus business organizations are liable to control pollution. 

11. Business organization cannot contribute to raise standard of living of society - False

Ans – This statement is False.

Reason –

(a) A producer must produce and supply those goods which are environmentally free. He must avoid supplying goods which will harm the society by bringing environmental degradation. It will improve standard of living.

(b) The business organisation should create employment opportunities and provide better life to the society.

(c) The organisation should pay fair wages and allowances to the employees. Employees should be given allowances like medical facilities, bonus, educational allowances, travelling allowance. There should be regular increment and revision in salary and wages.

(d) The business organisation should try to promote and develop small scale industries in rural area and also labor oriented industries in rural area. Thus it should help in development of underdeveloped areas.

(e) The business organisation should set up industries in different areas, which may avoid overpopulation in big cities. 

12. Ethics is a branch of politics - False

Ans – This statement is False.

Reason –

(a) Ethics is a branch of social service which is concerned with the moral behaviour. It tells us what is good and bad. It guides us what to do and what not to do.

(b) Ethics is a system which prescribes moral values. It provides moral guidelines to give a good character to human being including businessman.

The term ethics is derived from greek word 'Ethos' which means character. Thus it is moral science which is a branch of social science.

(c) Business ethics suggests rules or standards which a businessman must follow in order to maintain a good conduct or character. It is also concerned with corporate ethics which is to be followed by professionals and businessman. Thus it is concerned with moral values and not politics.

(d) Business ethics is a code of conduct which is to be adopted by businessman. It specifies what should be done and what should be avoided for the welfare of the society. It creates a healthy and competitive business atmosphere.

13. Business ethics are applicable to all business organizations OR Every business organization should pay attention to business ethics while conducting their activities.- True

Ans – This statement is True.

Reason –

(a) Business ethics refers to the code of conduct which every businessman which expect to follow. It is necessary to maintain harmonious relationship with all sections of the society.

(b) Business ethics is the common moral principle which is to be adopted by every business whether it is small scale or large scale. A business man can create a healthy a competitive business atmosphere only by respecting moral values

(c) Business ethics is a global principle. Business ethics is not restricted to a particular business man or a particular country. Ethical principles are applicable to all presence and organisations. All types of organisation whether sole trader or partnership, co-operative or joint stock company, small or big. Asian company or American company everyone has to follow ethical principles.

(d) Ethics insists on fair treatment to all section of the society. It assures equal importance to consumers, workers, shareholders, investors, government and society. Therefore every businessman recognises and respects business ethics.

(e) Ethics provides guidelines for businessmen as how to frame their business policies in accordance with the values existing in the society. 

14. Business ethics can be considered as a tool for social development - True

Ans – This statement is True.

Reason –

(a) Business ethics is a code of conduct evolved for regulating the activities of business towards society and other business units. Business ethics is a relative term. It is different in every country.

(b) Business ethics is applicable to all business organizations. It protects interest of all the constituents of the society i.e. consumers, investors, employees, etc.

(c) It creates a healthy and competitive business atmosphere. It specifies what should be done and what should be avoided for the welfare of the society.

(d) It involves fair treatment with the consumers, workers, suppliers, shareholders, government, competitors and the entire community. It promotes honesty, sincerity, fairness, and justice in business dealings.

(e) Business ethics defines the social, legal, cultural and economics limits within which business organizations have to plan and conduct their activities.

(f) It guides the business organization to formulate the business policies in a justified manner. Thus, business ethics practiced by businessmen in the right spirit can be considered as a tool for social development. 

15. Introducing Environment Management techniques benefit business organization - True

Ans – This statement is True.

Reason –

(a) Introducing Environment Management techniques benefit business organization.

(b) Environmental Management System (EMS)is a document developed by business organization to assess their environmental impact and improve efficiency.

(c) ISO 140001 -2004 is an environmental management standard.

(d) It specifies a set of environmental management requirements.

(e) The purpose of this standard is to help all types of organizations to protect the environment, to prevent pollution, and to improve their environmental performance.

(f) ISO 14005-2010 EMS which has been recently introduced provides guidelines for the phased implementation of EMS including use of environmental performance evaluation.

(g) ISO 14006 – 2011 EMS provides guidelines for incorporating eco-design. Thus EMS is beneficial to a business organization as the organization can make a difference by reducing the impact of their products and services on environment from process of design, materials used, packaging, delivering, marketing, disposal, etc.

16. Business and environmental protection are contradictory - True

Ans – This statement is True.

Reason –

(a) Business and environmental protection seems to be contradictory. Rapid industrialization has placed tremendous burden on natural resources. Environmental components i.e. air, water, and land have been polluted.

(b) Industrialization has resulted in i) Increase in pollution ii) Increase in transportation iii) Growing consumer economy iv) Increase in population v) Unrestricted extraction of resources.

(c) Though business and environmental protection seem to be contradictory, rules should be framed in a proper manner. It should be able to satisfy environmentalists as well as industrialists.

(d) Growth of business is essentially important and so is protection of environment also. Rules should be strong enough to protect environment. At the same time rules should not hurt the progress of business. 

1. The consumer protection act was passed in the interest of the sellers (OR) Consumers have been given no rights in India. (OR) Consumer protection Act provides protection to the sellers. - False

Ans – This statement is False.

Reason –

The Consumer act in India has been passed to protect the rights of consumer and to promote their welfare. According Consumer Protection Act 1986, following are the consumer rights :

(a) The right to safety: This is the right to protect consumer from the evil effects of hazardous goods and services. The goods and services marketed should protect long term life interest besides serving the present needs. Consumers must insist on the quality of life as well as on the guarantee of the products and services.

(b) Right to be informed: This is the right to be informed about the quality, quantity, potency, purity, standard and price of goods so as to protect the consumers against unfair trade practices.

(c) Right to choice: This is right to have access to variety of goods and services at competitive price. When a consumer is given option of the products of varying qualities, prices, sizes and designs he enjoys the freedom to choose the best among them according to his needs and capacity.

(d) Right to be heard: This is the right to listen to consumer's disputes and to assure justice through various fours.

(e) Right to consumer education: This is the right to provide necessary education and create awareness and understanding the market economy. Ignorance and lack of awareness among the consumers are the m factors responsible for exploitation. They should know their rights and exercise them.

(f) The right to redress: The manufacturer should recognise and readily redress the genuine claims and grievances' the consumer. The consumer must be compensated for misrepresentation or unsatisfactory services. The defective product must be repaired, replaced or taken back by the seller. Thus consumer protection act has been passed with the main objective of protective interest of the consumers.

2. In India consumer protection act is not required - False

Ans – This statement is False.

Reason –

(a) Consumer organisation can play a vital role in protecting consumer rights by influencing consumer behaviour in several respects. Since consumer organisations are organised at the community level, they can make the movement a success through collective action.

(b) Individually the capacity of a consumer is limited to fight and get justice. Consumer organises can provide a supporting hand in matters like filing cases, guidance and advice in facing disputes etc. This will help the consumer to get quick justice.

(c) Consumer movement can also spread consumer education. They can play an effective role in creating awareness among consumers and make them understand the need to fight for consumer rights.

(d) Unlike western countries, there are no effective laws to protect Indian consumers from sophisticated but hazardous products and equipments. Many household appliance equipment, electrical and mechanical devices sold in the market are defective in functional Use of such products may result in serious injuries or may result in death. Most of such victims in India are women and children. Consumer organisations fight for their rights.

(e) Most of the industries in the fields of chemical, fertilizer and refinery do not follow adequall safety measures resulting air, water and food pollution. Consumer organisations can take such issues and fight for protection of consumers from pollution.

(f) Big firms involve in deceptive and unfair trade practices to cheat and exploit innocent consumer. Consumer organisation educate consumers about their rights and help them to protect against business malpractices and frauds.

3. Lok Adalat can rightly be described as "people's court" - True

Ans – This statement is True.

Reason –

(a) Lok Adalat can be rightly described as people’s court. Lok Adalat is established by the government to settle disputes by compromise.

(b) It is a mock court held by State / District authority, Supreme Court / High Court / Taluka Legal Service committee.

(c) It accepts cases pending in regular courts. The cases are settled on the basis of compromise.

(d) Both the parties have to agree to transfer the case to Lok Adalat from the regular court.  No court fee is charged.

(e) If the matter is not resolved by Lok Adalat, then it is referred back to the regular court.

(f) Resolution of disputes by Lok Adalat gets Statutory recognition. Railways, Telephones, Electricity Boards also hold Lok Adalat.

4. Consumer Protection Act is a blessing for the consumers (OR)Consumer Movement aims at the protection of consumer interest (OR) Main object of consumer movement is to protect the rights of the consumers.  - True

Ans – This statement is True.

Reason –

(a) Consumer movement started to protect consumer interest in the market by putting consumers pressure on business community. The Consumer Protection Act, 1986 was passed in the interest of the consumers.

(b) Consumer movement enables consumers to have better knowledge and information regarding the price structure, sizes, designs and quality of the various products available in the market Consumer protection Act creates awareness about basic rights like right to choose, safety choice, to be heard, redress etc. among consumers.

(c) Individually the capacity of a consumer is limited to fight and get justice. Consumer protection act will help the consumer to get quick justice and protect all his rights. Consumer organisation can provide a supporting hand in matters like filing cases, guidance and advice in facing legal disputes etc.

(d) Consumers are exploited and cheated through malpractices and advertising. Most of the consumers in countries like India are ignorant and illiterates who have no idea of consume rights. Consumer organisation effectively uses the consumer protection Act to protect such consumers from great injustice and large scale exploitation.

(e) Many household appliances, equipment, electrical and mechanical devices sold in the market are defective in functioning. Consumer movement aims at helping such customers.

5. The Government alone is fighting for consumer protection - False

Ans – This statement is False.

Reason –

(a) Business associations like Federation of Indian Chambers of commerce and industry (FIO and Confederation of Indian Industry (CII) have framed code of conduct to be followed by i firms in trade practices. They prescribe well defined guidelines to be followed in looking after grievances of the consumers and recognising consumer rights.
(b) If the consumers are aware of their rights it is difficult to exploit them. Many social organisations (NGOs) take interest in educating consumers about their rights. They spread awareness among consumers and guide them how to fight for rights. Self-help is best device to keep away all forms of exploitation.

(c) The consumer organisations in India started appearing since 1915. The first consumer organisation called Passengers and Traffic Relief Association was forward in 1915. Its major objective is to check quality of food items and consumer durables At present there are more than 500 consumer organisations functioning in India. Following are some of the important organisations. Following are some of the important consumer organisations formed at the national level (i) Consumer Guidance Society of India. (CGSI). (ii) Council for fair business practices. (CFP) (iii) Consumer Action Group (CAG). (iv) Bombay Telephone users Association (BTUA). (v) Confederation of Indian Consumer Organisations (CICO). (vi) Consumer co-ordination Council (CCC).

(d) Lok Adalat referred as People's Court is established by the government to settle disputes by compromise. It is held by state Authority, District authority, Supreme court Legal Services Committee, High Court Legal Service Committee or Taluka Legal Service. It accepts pending cases in the regular courts and solves disputes by compromise. The affected consumer can directly present his grievance to a Lok Adalat. It charges no court fee. Thus it saves money and time. This system is speedy and economical.

6. Order issued by District Forum on a complaint is final - False

Ans – This statement is False.

Reason –

(a) Order issued by District Forum on the complaint is not final.

(b) The consumer Protection Act was passed in the Parliament. It is a quasi-judiciary machinery for redressing consumer grievances.

(c) A three tier machinery has been established. i) District Forum ii) State Commission iii) National Commission.

(d) The District Forum is established by the State government in every district. It entertains complaints where value of goods and services and the compensation if any does not exceed Rs.20 lakhs.

(e) A person who does not agree with the orders of District Forum can file an appeal against the order to the state commission within 30 days of the order.

(f) A person aggrieved with the decision of State Commission can file an appeal to the National Commission within 30 days from the order.

(g) If consumer is dissatisfied with the order of national commission. He can appeal to supreme court within 30 days of such order. Therefore the above statement that the order issued by District Forum on a complaint is final is false.

7. Consumer, being the king of the market, does not have any responsibilities - False

Consumer has several responsibilities.

Ans – This statement is False.

Reason –

(a) Consumers should respect environment and put all possible efforts to create environment awareness among others. They should co-ordinate with others to create a pollution free society. They should put pressure on industrialists to adopt adequate safety measures to avoid air, water and sound pollution.

(b) Consumer movement can also spread consumer education. They can play an effective role in creating awareness among consumers and make them understand the need to fight for consumer rights. They involve in various kinds of activities such as seminars, conferences, workshops, public meetings, street plays, counseling, demonstrations and exhibition to spread awareness.

(c) Big firms involve in deceptive and unfair trade practices to cheat and exploit innocent consumers. Consumer organisations educate consumers about their rights and help them to protect against business malpractices and frauds. Consumer organisation can play an useful role in moulding the consumer behaviour in the right direction.

(d) Every consumer must aware of his rights and come forward to exercise his rights whenever and wherever required. The consumer protection act 1986 provides rights and responsibilities to consumers. The consumer rights will deliver benefits only when the consumer himself exercise such rights. He must choose the commodity, according to his likes and dislikes. If he is not satisfied with the quality of the product, he must immediately protest and exercise his right to protect him.

(e) Most of the consumers do not show interest in collecting bills or cash memo. Every consumer must insist on the issue of cash memo or receipts for the goods delivered. Even for a product of small value, cash memo must be issued. They will act as legal documents to file cases if the products turn out to be defective or duplicate later. It will also put pressure on the seller to be more quality conscious.

8. Consumer movement is a political movement – False.

Ans – This statement is False.

Reason –

(a) Consumer movement is a social movement aiming at creating awareness among consumers who have no knowledge of their rights. Its main objective is to fight for the rights of the of consumers. It is not a political movement.

(b) The movement helps the consumer to fight and get justice through legal links. It helps them in filing cases, facing legal disputes etc. Thus there is clear objective of consumer welfare. There is no political ambition in such a social movement.

(c) Consumer movement in India has put pressure on government to introduce various legislative measures to protect consumer rights. The consumer protection Act 1986 has been introduced exclusively for the protection of consumer rights in India.

(d) Consumer movement is purely a movement for consumer welfare. There is absolutely no interference of any political party or political person in such a consumer based movement.

(e) Consumer movement is concerned with spreading knowledge of consumer rights. It aims at educating consumers about their rights.

1. Taylor is called as the father of scientific management - True

Ans – This statement is True.

Reason –

(a) Fredrick Winsloco Taylor, an American engineer is the first expert who advocated scientific methods of management. According to him every element or movement of work and the performance of the worker must be scientifically analysed. This will help to frame a scientific approach in determining standard time, standard method of doing work with maximum efficiency.

(b) Taylor never favoured traditional methods of management. According to him the decision of how to produce and how much to produce should not be decided on the basis of will and wish of the manager. The manager must adopt a scientific approach to determine standard time, production target and how many workers required to complete the job etc.

(c) Most of the ideas of Taylor are based on his own observation and experience. Taylor himself adopted a scientific approach by introducing new techniques and principles, the methods must be tried to reach the best one. The method which exploits maximum resources with minimum cost must be selected. All such scientific techniques resulted increasing productivity of workers and best performance.

(d) Taylor advocated pre-determined standards in connection with material, method, quality and time. He insisted on the application of scientifically developed standard tools and equipments. He advocated standardised working conditions and standard time. All sin suggestions are scientific in nature.

(e) Taylor insisted that workers must be selected through a standard procedure to ensure right person for the right job. It must be followed up by scientific training. A well trained worker can assure perfection in his job. Thus all his ideas and methods are based on scientific approach. Therefore he is rights ailed the father of scientific management.

2. Principles of management are rigid (OR) Principles of management are neither universal nor dynamic - False

Ans – This statement is False.

Reason –

(a) Unlike the natural sciences like physics and chemistry, the principles of management are dynamic in nature. They are flexible and not rigid or static. They act under the influence of several socio-cultural and economic factors. The principles of management are made so flexible that they are applicable to people and environment which are frequently changing. Thus dynamic attitude is the basic feature of management.

(b) Unlike scientific principles which are absolute and uniform, the principles of management cannot be used for readymade solutions. They are only guidelines to solve the problem Management principles are relative and adjusted in accordance with the existing environment. They do not offer immediate remedy. They only help the manager to understand the situation and find out the necessary solution. They cannot be accepted blindly. The manager must keep in mind the size, nature and requirements of the organisation while applying these principles.

(c) According to thinkers like Megginson, Fayol and Dalton Mc Farland management principles are universal and are applicable everywhere. It is practiced by all organisations under all kinds of situations whether it is business, government, military university, clubs or church. In the words of Professor Megginson - "Management principles are true in all managerial situations and are universally applicable in business, government, religious.

(d) Management principles can be transferred from one person to another person and one country to another country. According to Fayol presidents, college deans, bishops and heads of government follow same principles. People from developing countries can learn management principles from developed countries.

(e) Management principles are only guidelines. Managers can not follow them blindly. They have to alter them according to the situation existing. They cannot be applied in rigid form. It is possible to alter them as per the situation warrants.

3. Principles of management improve the efficiency of employees - True

Ans – This statement is True.

Reason –

(a) Managers of business organisations are effectively guided and supported by the principles of management in their strategy to achieve the organisational objectives. Through application of such principles under different situations, a manager is bound to gain great experience and maturity. This will certainly improve his knowledge, ability and understanding of various managerial situations. These principles helps them to learn from mistakes and guide them to take right decisions at the right time.

(b) Application of management principles provides necessary training to the managers and educate them how to face different challenges. It also facilitates them with a great degree wisdom. The experience and the wisdom enable the manager to evaluate any kind of management job. Taylor strongly believed that a well trained worker delivers maximum productivity.

(c) Principles of management suggest systematic planning and scientific application of strategies, help to avoid wastage and improve efficiency. Taylor's scientific management suggest best method to eliminate wasteful movements by setting up a standard time to complete task.

(d) The management principles motivate the employees to contribute their best to company. The principles of management advocate policy of incentives and promote to improve the performance of the employees.

(e) Many reputed organisations adopt principles which develop team spirit and ordination among the workers. Team spirit avoids confrontation and conflicts ensures smooth functioning of the organisation.

4. According to Taylor there should be scientific selection and training of employees - True

Ans – This statement is True.

Reason – 

(a) The job of selection should be entrusted with experts and specialists who are caps of recruiting right persons for the right jobs. Such a responsibility should not give to foreman who may not possess the required knowledge. Taylor suggested a variety of tests to be faced by the candidates before finalise selection.

(b) Taylor strongly believed that workers need to be well trained for the jobs. Training makes them more efficient. The training must be given according to the requirement of the job.

(c) Scientific management believes in developing each worker to his greatest efficiency and prosperity. Workers are selected carefully and scientifically trained to achieve highest level of efficiency. Training is given in accordance with the requirements the jobs. This will enable him to earn higher remuneration and mental satisfaction.

(d) According to Taylor the objective of scientific management is to achieve maximum prosperity for employer and employee. Maximum prosperity for employer means just not huge profit in the short run. It is the overall development of the organisation in order to achieve permanent prosperity. Workers achieve maximum prosperity not just by immediately getting higher wage but through development of their ability. This will enable them to work efficiently.

(e) Scientific management prescribes standards in respect of physical conditions such a working space, ventilation, lighting, temperature, humidity etc. It ensures optimum utilisation of the capacity of machines and workers.

5. The principle of equity says that the employees should be differentiated while distributing the work and making payment - False

Ans – This statement is False.

Reason –

(a) Equity does not mean equal salary or differentiated salary. It does not say that a peon should be paid equal salary like a manager. It is concerned about the equal treatment to all employees with respect to application of rules.

(b) Equity favours fair and just treatment to all employees irrespective of their status and position. The manager must adopt a kind and fair approach to ensure justice for all. This will induce the workers to put their maximum efforts.

(c) Equity implies unbiased treatment. Principle of equity advocates that a manager must remain unbiased in dealing with employees. He should not favour one group and unfavour other group. It will only divide the employees. If the manager is unbiased the employees will put their efforts unitedly.

(d) A manager must follow same disciplinary rules for employees whether they are peons or supervisors. The procedure of application of rules must be uniform for all irrespective of their position, grade and gender. 

1. Planning is an intellectual process - True

Ans – This statement is True.

Reason –

(a) Planning is chiefly an intellectual process which means thinking before doing. The success of planning depends on the manager and his ability to collect the facts which are likely to affect planning.

(b) Whether these facts are connected with the present situation or the estimated future change what matters is how correctly he takes his decision on their bases.

(c) The whole process happens to be intellectual and for the successful completion of all these activities the planner should have farsightedness, imagination power and decision making capacity.

(d) Therefore, it can be said that planning requires thinking at every step and hence it can be considered as an intellectual process. 

2. Every action in the organization is initiated through directing - True

Ans – This statement is True.

Reason –

(a) Directing as a function of management is concerned with instructing, guiding and inspiring people in the organization to achieve its objectives.

(b) Directing is one of the essential element of management process, therefore it is said that “Directing is the heart of management process’.

(c) Other functions of management i.e. planning, organizing, staffing are initiated when the directing function is performed.

(d) Actual actions are initiated when managers direct their subordinates. The subordinates in the organization start working when they get instruction from their superiors.

(e) Therefore, every action in the organization is initiated through directing.

3. Staffing is just to determine the number of people required in the organization - False

Ans – This statement is False.

Reason –

(a) Staffing means appointing competent persons according to the importance of the post of the organization.

(b) It means that more capable persons are appointed on more important posts and comparatively less competent persons can be appointed on less important posts.

(c) Staffing involves recruitment and selection of employees, performance appraisal of the employees, promotion and transfer of employees, training and development, motivating and rewarding the employees.

(d) Hence, staffing is not just to determine the number of people required in the organization.

4. Controlling is the indispensable function of management - True

Ans – This statement is True.

Reason –

(a) Control is an important function of management and consists of all managerial functions such as planning organizing and staffing.

(b) Nature of controlling at different levels of the organization is different.

(c) For instance, top management is responsible for administrative control, middle level management is responsible for execution of policy and low level management is responsible for execution of activities.

(d) If controlling is excluded, all other functions of management are rendered meaningless.

(e) Thus, controlling is the indispensable function of management.

5. Co-ordination is the essence of management - True

Ans – This statement is True.

Reason –

(a) Organization is a system which is made up of many parts and sub systems which are interdependent, interlinked and interactive.

(b) Coordination gives common direction to all the people in the organization.

(c) The harmony among these sub-system or parts decides the success of the system as whole.

(d) Without coordination any system will collapse in no time.

(e) Thus coordination is the essence of management.

6. Planning function alone can help to achieve organizational objectives - False

Ans – This statement is False.

Reason –

(a) Planning is beginning of managerial activities. It is one of the foremost functions of organization.

(b) Control is always exercised in the light of planning. Control without planning is an impossible one. In absence of planning it would be very difficult to find out what is going wrong in the organization. It prevents managements from taking corrective measures to control the situation.

(c) Planning determines the activities of different individuals, groups and departments in such a way, that maximum coordination between physical and human resources may emerge. Thus, there will be betters coordination in the enterprise.

(d) Planning provides direction for action by stating in advance how work is to be done.

(e) Thus, planning depends on other functions of management such as directing, controlling, coordination. Thus planning function alone cannot help to achieve organizational objectives. 

7. Staffing is one-time process as people have to he appointed once - False

Ans – This statement is False.

Reason –

(a) Staffing means appointing competent persons according to the importance of the post of organization. It means that more capable persons are appointed on more important posts and comparatively less competent persons can be appointed on less important posts.

(b) Taking into consideration the long term needs of the enterprise, right men should be appointed at the right time for the right job. This can be done through recruitment.

(c) Recruitment is an activity of establishing contact between the employer and the employee.

(d) Once an organization could place the right man at the right job, it is easy to plan, organize, coordinate, direct and control the human activities to get desired results economically and efficiently.

(e) In short, staffing includes manpower planning, recruitment, selection, training, placement and development of the right personnel for the enterprise. Therefore, staffing is not a onetime process as people have to be appointed from time to time.

8. Planning and controlling are interdependent and interlinked activities - True

Ans – This statement is True.

Reason –

(a) Planning and controlling are two separate functions of management process. Despite being independent, both the functions are interdependent to each other.

(b) Controlling seeks to appraise the performance only in relation to objectives set in advance. Without prior objectives, there can be no performance and hence no appraisal and no controlling.

(c) Therefore, it can be said planning is pre-requisite for controlling.

(d) Thus, planning and controlling are complementary, supplementary and interdependent to each other.

9. Co-ordination is same as co-operation - False

Ans – This statement is False.

Reason –

(a) Coordination and co-operation are not one and the same.

(b) Co-operation means helping one another to reach individual targets.

(c) Co-operation can take place among managers or non-managers.

(d) However, coordination is the function of managers, whereby they try to interlink the activities of their subordinates.

(e) Coordination is broader in scope than co-operation.

10. Corrective, action is not possible through controlling - False

Ans – This statement is False.

Reason –

(a) Controlling is a basic management function which implies measures of actual performance of subordinates, comparing it with standards set by plans and correction of deviations to ensure attainment of objectives according to plans.

(b) Therefore, the difference between the expected results and the actual results is reduced to the minimum.

(c) In this way, controlling is helpful in takings corrective action.

11. Planning is of vital importance in the management process - True

Ans – This statement is True.

Reason –

(a) Planning is very first function of management. Planning means deciding in the present what to do in the future.

(b) It bridges the gap between where we are and where we want to be.

(c) Planning is performed by all three levels of management viz. Top level management, Middle level management, and Lower level management.

(d) A well prepared plan helps to improve moral of employees. At the same time effective planning helps to avoid or reduce wastage in the organization.

(e) Thus planning reduces risks and uncertainties, encourages innovation, facilitates controlling, facilitates coordination. Therefore planning is of vital importance in the managerial process. 

12. Staffing includes human resource management - True

Ans – This statement is True.

Reason –

(a) Human resource management is the recruitment, selection, development, utilization, compensation and motivation of human resources of the organization.

(b) Human resource management is a wider term as compared to staffing.

(c) It includes staffing, record keeping, personnel policies formulation, conducting personnel research, providing expert services. etc.

(d) Hence staffing is a part of the human resource management and not all of it.

13. Directing is not required at all in management of the organization - False

Ans – This statement is False.

Reason –

(a) Directing as a function of management is concerned with instructing, guiding and inspiring people in the organization to achieve its objectives.

(b) Other functions of management i.e. planning, organizing, staffing are initiated when the directing function is performed.

(c) Directing motivates the workers by providing monetary and non-monetary incentives to work efficiently and contribute their maximum efforts towards achievements of organizational goals.

(d) Effective directing results in efficient utilization of resources like time, money, material and even efforts.

(e) The directing function involves training and guiding of the subordinates and also their supervision. This enhances their efficiency. Thus to achieve organizational goals and objectives, directing is required at all levels of management of the organization.

14. Organizing is the process of defining and grouping the activities of the organization - True

Ans – This statement is True.

Reason –

(a) Organizing is an important function of management. It is concerned with bringing together various resources i.e. men, machines, materials, money methods and establishing relationships among them for the accomplishment of specific objectives.

(b) Organizing is process of implementing the plans by clearly defining the jobs, working relationships and effectively deploying physical, human and financial resources for achieving organizational goals.

(c) By means of organizing, various abilities are utilized and interest is fund together.

(d) Hence, organizing is the process of defining and grouping the activities of the organization. 

15. Co-ordination is needed at all the levels of management - True

Ans – This statement is True.

Reason –

(a) The element of coordination needs to be everywhere.

(b) Activities of all departments need to be coordinated. Within the department the efforts of individuals and teams should be coordinated.

(c) Managers need to coordinate money with materials, materials with machines, Machines with technology, products with market and so on.

(d) Thus managers at all levels and in all sections need to be coordinated. There is no area of management in an organization where coordination is not needed.

(e) Coordination is needed at all levels of management. Therefore, it is called pervasive.

16. Directing function is not directly related with human factor - False

Ans – This statement is False.

Reason –

(a) Directing as a function of managements is concerned with instructing, guiding and inspiring people in the organization to achieve its objectives.

(b) Directing is one of the essential elements of management process, therefore it is said that “Directing is the heart of management process”.

(c) Planning, organizing, staffing has no significance if directing function does not take place. It is the part of management process which ensures the efficiency and effectiveness of the employees.

(d) Many philosophers call directing as “Life spark of an enterprise” as it sets everything in motion.

(e) Hence, directing function is directly related with human factor.

17. Division of work is not required in organizing function - False

Ans – This statement is False.

Reason –

(a) Organizing is a division of work

(b) Total work to be done is divided into manageable activities so that duplication is avoided and work can be completed as per predetermined goals.

(c) Division of work facilitates specialization in work and skills which is essential, as no individual alone can perform the entire work efficiently and effectively.

(d) Division of work is an important organizing function.

18. Functions of management has no role to play in success or failure of an organization - False

Ans – This statement is False.

Reason –

(a) The functions of management are forecasting and planning, organizing, commanding, coordinating and controlling.

(b) George Terry has given much importance to Planning, Organizing, Directing and Controlling. These functions are called the basic functions of management

(c) Manager needs to perform many activities in order to manage daily tasks. These are termed as functions of management.

(d) If all functions are performed effectively, and efficiently then organization can achieve its aims and objectives.

(e) Hence functions of management have significant role to play in success or failure of an organization. 

19. Co-ordination is similar to staffing – False.

Ans – This statement is False.

Reason –

(a) Staffing is the process of matching jobs with right individuals. It is the process of filling all positions in the organisation with adequate and qualified personnel. Co-ordination is the interrelating factor which brings together separate work units departments within an ogranisation.

(b) Staffing specialisation are functions like selecting, training, placement, compensation etc. Co-ordination specialises on uniting and co-relating, arrangement of group effort, inters and motivating working forces etc.

(c) The primary objective of staffing is to keep right type of people at right positions and at the right time. The primary objective of co-ordination is to co-ordinate different departments for ensuring successful implementation of the policy.

(d) Staffing function has become important with growing size of organisation, technology advancement and recognition of human factor in industry. Co-ordination enables the management to utilise the energies of the working force in the best possible manner.

1. Training broadens the vision of entrepreneurs - True

Ans – This statement is True.

Reason –

(a) Training means the act of increasing the knowledge and skills of an employee or dong a particular job.

(b) Training implies activities that teach employees how to perform their present job better. It is the training that prepares people to perform their present jobs better. In short, training prepares people to perform their present jobs more efficiently.

(c) Training teaches employees required skills, knowledge or attitude and helps them in improving performance by improving new skills, new technique of doing the work and by improving their work habits.

(d) Training is thus aimed at improving performance of personnel in their present position or jobs.

(e) Thus, training broadens the vision of entrepreneurs.

2. Attitudes build an entrepreneur. - True

Ans – This statement is True.

Reason –

(a) An attitude can be defined as a positive or negative evaluation of people, objects, event, activities, ideas, or just about anything in business environment.

(b) Entrepreneurial Attitude is measured in terms of individual attitude towards opportunity recognition.

(c) Entrepreneur requires various attitude traits that enables for achieving entrepreneurial success.

(d) Attitude attributes such as a burning passion, trustworthiness, flexible except with core value, free from fear of failure, timely decision, entrepreneur as a company assets, ego under control, belief in himself, accept criticism, maintain a strong work ethic, rebound quickly from setbacks, get out from comfort zone can put an entrepreneur in the right mindset for achieving entrepreneurial success.

(e) Thus attitudes build an entrepreneur. 

3. Motivation is an important factor in the development of an entrepreneur - True

Ans – This statement is True.

Reason –

(a) Motivation is the driving force that inspires people to put their efforts willingly for the achieving of organizational goals.

(b) It is a psychological phenomenon which energizes, activities and stimulated the internal feeling of the employees to accomplish desired goals.

(c) The objective of motivation process is to know from where does it start and where does it end. This is work that cannot be finished at one go but it is a combination of many steps.

(d) Hence Motivation is an important factor in the development of an entrepreneur.