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CUET 2023 Business Studies Question Paper with Answers & Solutions

50 questions with answer key & explanations

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Q1.
Consider the following facts about management. A. Efficiency and effectiveness both terms have similar meaning B. Effectiveness and efficiency both terms do not have similar meaning C. Management has four dimensions D. Management has three dimensions E. Principles of management are not as exact as the Principles of Science Choose the correct answer from the options given below:
A. A, B, C only
B. A, D, C only
C. B, D E only ✓
D. B, C, E only
Show answer & explanation

Correct answer: C

Efficiency and effectiveness are different (B correct). Management has three dimensions (management of work, of people, of operations) so D correct. Management principles are not as exact as science principles (E correct). Hence B, D, E.

Q2.
Identify the correct features of Business Environment.
A. Certainty, relatively and independent
B. Static, complexity and inter-relatedness
C. Complexity, Relatively and inter- relatedness ✓
D. Relativity, static and complexity
Show answer & explanation

Correct answer: C

Features of business environment per NCERT: totality of external forces, specific and general forces, inter-relatedness, dynamic nature, uncertainty, complexity and relativity. Among options, Complexity, Relativity and inter-relatedness are all genuine features (environment is dynamic not static, uncertain not certain).

Q3.
Choose the correct sequence of first five steps of setting up a business. A. Appraisal by the funding agencies B. Scanning the environment for entrepreneurial opportunities C. Assessment of feasibility of the idea and preparation of business plan D. Resource mobilisation E. Development of product/service idea Choose the correct answer from the options given below:
A. B, D, A, C, E ✓
B. D, B, A, E, C
C. D, B, E, C, A
D. D, B, C, E, A
Show answer & explanation

Correct answer: A

Logical sequence: Scan environment for opportunities (B), develop product/service idea... Among options the correct entrepreneurial process begins with scanning environment (B) then identifying/developing idea, assessing feasibility (C), mobilising resources (D), appraisal by funding agencies (A). Sequence B, E, C, D, A is ideal but only option starting with B is option 1: B, D, A, C, E. Given choices, B (scanning) must be first; option A is the only one beginning with B.

Q4.
Which among the following factors affects capital Budgeting decision. A. Floatation cost B. Cash flow of project C. Control considerations D. The rate of return E. The investment criteria involved Choose the correct answer from the options given below:
A. B, D and E only ✓
B. C, A, and B only
C. D, B and C only
D. A, B and C only
Show answer & explanation

Correct answer: A

Factors affecting capital budgeting (investment) decision per NCERT: cash flows of the project (B), the rate of return (D), and the investment criteria involved (E). Floatation cost and control considerations are factors of financing decision/capital structure, not capital budgeting. Hence B, D, E.

Q5.
Consumer protection is important due to widespread ______ of consumers about their rights and reliefs.
A. Unorganised
B. Ignorance ✓
C. Enlightened
D. Protected
Show answer & explanation

Correct answer: B

Consumer protection is important because of widespread ignorance of consumers about their rights and the reliefs available to them.

Q6.
Arrange the following in a proper sequence (in respect of distribution channel). A. Agent B. Retailer C. Customer D. Manufacturer E. Wholesaler Choose the correct answer from the options given below:
A. D, C, B, A, E
B. D, A, E, B, C ✓
C. D, B, E, A, C
D. D, E, A, B, C
Show answer & explanation

Correct answer: B

Typical distribution channel: Manufacturer (D) -> Agent (A) -> Wholesaler (E) -> Retailer (B) -> Customer (C). This matches D, A, E, B, C.

Q7.
Identify the step/ element which is not a part of motivation process.
A. Unsatisfied need
B. Tension
C. Relaxation ✓
D. Drives
Show answer & explanation

Correct answer: C

Motivation process: unsatisfied need -> tension -> drives -> search behaviour -> satisfied need -> reduction of tension. 'Relaxation' is not a recognised step of the motivation process.

Q8.
Match List I with List II LIST I: A. Production concept, B. Product concept, C. Selling concept, D. Marketing concept LIST II: I. Satisfaction of customer needs, II. Quantity of product, III. Aggressive selling techniques, IV. Quality of product Choose the correct answer from the options given below:
A. A-I, B-II, C-III, D-IV
B. A-II, B-IV, C-III, D-I ✓
C. A-III, B-IV, C-II, D-I
D. A-II, B-I, C-III, D-IV
Show answer & explanation

Correct answer: B

Production concept = quantity/mass production (II); Product concept = quality of product (IV); Selling concept = aggressive selling techniques (III); Marketing concept = satisfaction of customer needs (I). Hence A-II, B-IV, C-III, D-I.

If there was no planning, employees would be working in different directions and the organisation would not be able to achieve its desired goals.
Q9.
Which of the following importance of planning is highlighted in the above lines?
A. Planning provides directions ✓
B. Planning reduces the risk of uncertainty
C. Planning facilitates decision making
D. Planning provides innovative ideas
Show answer & explanation

Correct answer: A

The lines stress that without planning employees work in different directions; this highlights that planning provides direction by stating in advance how work is to be done.

Q10.
As per Consumer Protection Act, 2019. District commission has a jurisdiction to entertain complaints where value of goods or services paid as consideration.
A. Exceeds one crore rupees
B. Does not exceed one crore rupees ✓
C. Exceeds two crore rupees
D. Does not exceed two crore rupees
Show answer & explanation

Correct answer: B

Under the Consumer Protection Act 2019 (as originally enacted), the District Commission entertains complaints where the value of goods or services paid as consideration does not exceed one crore rupees.

Q11.
Capital Structure refers to the mix between owners and borrowed funds. Which of the following is the correct formula.
A. Debt/Equity ✓
B. Equity/Debt
C. Debt - Equity
D. Debt * Equity
Show answer & explanation

Correct answer: A

Capital structure is computed as the ratio of borrowed funds to owners' funds, i.e. Debt/Equity.

Q12.
'To become a Chartered Accountant in India, a candidate has to clear a specified examination conducted by the Institute of Chartered Accountants of India' Which Characteristic of management as a profession is highlighted in the above statement?
A. Ethical code of conduct
B. Professional Association
C. Well defined body of knowledge
D. Restricted entry ✓
Show answer & explanation

Correct answer: D

Clearing a specified examination to enter the profession reflects restricted entry, a characteristic of a profession.

Q13.
Identify the correct sequence of first 5 steps of planning process:- A. Developing premises B. Identifying alternative courses of action C. Evaluating alternative courses D. Setting objectives E. Selecting an alternative Choose the correct answer from the options given below:
A. C, D, B, E, A
B. D, A, B, C, E ✓
C. A, D, C, B, E
D. C, D, A, B, E
Show answer & explanation

Correct answer: B

Planning steps: Setting objectives (D) -> Developing premises (A) -> Identifying alternative courses (B) -> Evaluating alternatives (C) -> Selecting an alternative (E). Hence D, A, B, C, E.

Q14.
Match List I with List II LIST I: A. Unity of command, B. Remuneration, C. Equity, D. Decentralisation LIST II: I. Pay and compensation should be fair to employees and organisation, II. Distribution of decision making authority amongst many personnels, III. Only one boss for every Individual employee, IV. Fairness to all employees Choose the correct answer from the options given below:
A. A-II, B-III, C-IV, D-I
B. A-I, B-II, C-III, D-IV
C. A-II, B-I, C-III, D-IV
D. A-III, B-I, C-IV, D-II ✓
Show answer & explanation

Correct answer: D

Unity of command = only one boss for each employee (III); Remuneration = fair pay/compensation (I); Equity = fairness to all employees (IV); Decentralisation = distribution of decision-making authority (II). Hence A-III, B-I, C-IV, D-II.

Q15.
Match List I with List II LIST I: A. Political environment, B. Economic environment, C. Social environment, D. Technological environment LIST II: I. Consumption & habits pattern of household, II. Scientific improvements and innovations, III. General stability of elected govt and its attitude towards business, IV. Change in interest rate, inflation and disposable income Choose the correct answer from the options given below:
A. A-IV, B-III, C-I, D-II
B. A-III, B-IV, C-I, D-II ✓
C. A-II, B-I, C-III, D-IV
D. A-I, B-II, C-III, D-IV
Show answer & explanation

Correct answer: B

Political = stability of govt and attitude towards business (III); Economic = interest rate, inflation, disposable income (IV); Social = consumption & habits pattern of household (I); Technological = scientific improvements and innovations (II). Hence A-III, B-IV, C-I, D-II.

Q16.
Arrange the following steps of organising process in a logical sequence. A. Establishing authority and reporting relationship B. Identification of work C. Departmentalisation D. Division of work E. Assignment of duties Choose the correct answer from the options given below:
A. C, D, E, A, B
B. C, E, A B, D
C. B, D, C, E, A ✓
D. A, B, C, D, E
Show answer & explanation

Correct answer: C

Organising process: Identification and division of work (B), then division of work (D), grouping into departments/Departmentalisation (C), Assignment of duties (E), Establishing reporting relationships (A). Sequence B, D, C, E, A.

Q17.
"The Formal lines of authority from highest to lowest ranks are known as ______."
A. Order
B. Equity
C. Unity of direction
D. Scalar chain ✓
Show answer & explanation

Correct answer: D

Scalar chain is the formal line of authority from the highest to the lowest ranks (Fayol's principle).

Q18.
Which among these is not a traditional method of controlling.
A. Statistical reports
B. Breakeven analysis
C. PERT and CPM ✓
D. Budgetary control
Show answer & explanation

Correct answer: C

Traditional techniques of control include personal observation, statistical reports, breakeven analysis and budgetary control. PERT and CPM are modern techniques of controlling.

Q19.
Characteristics of entrepreneurship include. A. Lawful and purposeful Activity B. Low level of risk C. Innovation D. Systematic Activity E. Organisation of production Choose the correct answer from the options given below:
A. A, B and C only
B. B, C and D only
C. A, B, E and D only
D. A, C, D and E only ✓
Show answer & explanation

Correct answer: D

Characteristics of entrepreneurship: lawful and purposeful activity (A), innovation (C), systematic activity (D), organisation of production (E), and risk bearing. Entrepreneurship involves risk, not 'low level of risk', so B is excluded. Hence A, C, D, E.

Q20.
Identify single use plans from the following plans
A. Project and Budget ✓
B. Methods and Budget
C. Procedures and Project
D. Rules and Programme
Show answer & explanation

Correct answer: A

Single-use plans are made for a one-time event/project, e.g. Project, Budget and Programme. Methods, Procedures and Rules are standing plans. Among given options, 'Project and Budget' are both single-use plans.

Q21.
Arrange the steps of controlling process in their correct order or sequence. A. Setting performance Standards B. Measurement of actual performance C. Analysing deviations D. Taking corrective action E. Comparison of actual performance with standards Choose the correct answer from the options given below:
A. B, A, C, D, E
B. A, B, E, C, D ✓
C. A, E, B, C, D
D. C, A, D, B, E
Show answer & explanation

Correct answer: B

Controlling steps: Setting performance standards (A) -> Measurement of actual performance (B) -> Comparison with standards (E) -> Analysing deviations (C) -> Taking corrective action (D). Hence A, B, E, C, D.

Q22.
Techniques of controlling includes. A. Ratio analysis B. PERT and CPM C. On the job training D. Management audit E. Off the job training Choose the correct answer from the options given below:
A. A, C, D and E only
B. A, B and D only ✓
C. B, C, D and E only
D. C, D and E only
Show answer & explanation

Correct answer: B

Modern/standard techniques of controlling include ratio analysis (A), PERT and CPM (B), and management audit (D). On-the-job and off-the-job are training methods (staffing), not control techniques. Hence A, B, D.

Q23.
" A comprehensive plan which helps in accomplishing an organisation objective.
A. Policy
B. Strategy ✓
C. Procedure
D. Rule
Show answer & explanation

Correct answer: B

A strategy is a comprehensive plan for accomplishing an organisation's objectives.

Q24.
Match List I with List II LIST I: A. Fixed capital, B. Working capital, C. Interest coverage Ratio, D. Financial leverage LIST II: I. EBIT/ interest, II. Investment in non-current Assets, III. Investment in current Assets, IV. Proportion of debt in the capital structure Choose the correct answer from the options given below:
A. A-I, B-IV, C-III, D-II
B. A-II, B-III, C-I, D-IV ✓
C. A-III, B-II, C-IV, D-I
D. A-IV, B-II, C-III, D-I
Show answer & explanation

Correct answer: B

Fixed capital = investment in non-current assets (II); Working capital = investment in current assets (III); Interest coverage ratio = EBIT/interest (I); Financial leverage = proportion of debt in capital structure (IV). Hence A-II, B-III, C-I, D-IV.

Q25.
Arrange the following steps involved in communication process. A. Encoding B. Sender C. Message D. Decoding E. Receiver Choose the correct answer from the options given below:
A. B, C, A, D, E ✓
B. B, E, D, A, C
C. B, D, E, C, A
D. B, E, C, D, A
Show answer & explanation

Correct answer: A

Communication process: Sender (B) -> Encoding (A) -> Message (C) -> media/channel -> Decoding (D) by Receiver (E) -> feedback. Among options, the sequence B, ... should be Sender, Encoding, Message, Decoding, Receiver = B, A, C, D, E.

Q26.
Identify the correct pair of elements of directing.
A. Co-ordination and Leadership
B. Motivation and Communication ✓
C. Supervision and Decentralisation
D. Delegation and Communication
Show answer & explanation

Correct answer: B

Elements of directing per NCERT: Supervision, Motivation, Leadership and Communication. The correct pair from options is Motivation and Communication.

Q27.
Reduction of controlling power of existing equity shareholders in a company is a result of.
A. Issue of new equity shares ✓
B. Issue of new preference shares
C. Issue of new debentures
D. Issue of new bonds
Show answer & explanation

Correct answer: A

Issuing new equity shares dilutes the proportionate holding and hence the controlling power of existing equity shareholders. Preference shares, debentures and bonds do not carry voting/control over the company.

Q28.
Labelling is an element of which 'p' of marketing mix?
A. Product ✓
B. Price
C. Place
D. Promotion
Show answer & explanation

Correct answer: A

Labelling, along with branding and packaging, is an element of the Product component of the marketing mix.

Q29.
Identify the incorrect option about planing from the following.
A. Planning is mental exercise
B. Planning is futuristic
C. Planning is only for long run ✓
D. Planning involves decision making
Show answer & explanation

Correct answer: C

Planning is a mental exercise, is futuristic and involves decision making. It is done for both short run and long run, so 'Planning is only for long run' is incorrect.

Q30.
Essential element(s) of delegation is /are.
A. Authority only
B. Responsibility only
C. Authority and responsibility only
D. Authority, responsibility and Accountability ✓
Show answer & explanation

Correct answer: D

Delegation has three essential elements: authority, responsibility and accountability.

Q31.
Identify the factor, which does not affect the pricing of a product.
A. Cost of product and its Utility ✓
B. Pricing of product and Extent of competition
C. Cost of product and Marketing method used
D. Marketing method used and Pricing objective
Show answer & explanation

Correct answer: A

Factors affecting pricing: cost of product, extent of competition, marketing methods used, pricing objectives, product cost, and demand/utility. The pair containing 'Utility' (utility of product to the customer relates to demand) — among options, 'Cost of product and its Utility' is the pair where 'Utility' is not a standard listed pricing factor in NCERT (utility is a determinant of demand, not directly listed). Hence option A is identified as the one not a recognised pricing factor.

Q32.
Identify the last step of communication process.
A. Feedback ✓
B. Decoding
C. Encoding
D. Message
Show answer & explanation

Correct answer: A

Feedback is the last step of the communication process.

Q33.
Match List I with List II LIST I: A. Consumer Protection Act, B. District Forum, C. State Commission, D. National Commission LIST II: I. Claim exceeds 10 crore, II. Settlement of claim exceeds 1 crore but does not exceed 10 crore, III. Established in 1986, IV. Settlement of claim up to 1 crore Choose the correct answer from the options given below:
A. A-III, B-I, C-II, D-IV
B. A-III, B-IV, C-II, D-I ✓
C. A-III, B-II, C-I, D-IV
D. A-III, B-IV, C-I, D-II
Show answer & explanation

Correct answer: B

Consumer Protection Act = established in 1986 (III); District Forum = claim up to 1 crore (IV); State Commission = exceeds 1 crore but not 10 crore (II); National Commission = exceeds 10 crore (I). Hence A-III, B-IV, C-II, D-I.

Q34.
Which of the following is not an element of delegation?
A. Authority
B. Responsibility
C. Accountability
D. Centralisation ✓
Show answer & explanation

Correct answer: D

Elements of delegation are authority, responsibility and accountability. Centralisation is not an element of delegation.

Q35.
Match List I with List II LIST I: A. Unclarified assumptions, B. Distrust, C. Status, D. Lack of proper incentives LIST II: I. Organisational Barriers, II. Personal Barriers, III. Semantic Barriers, IV. Psychological Barriers Choose the correct answer from the options given below:
A. A-I, B-II, C-III, D-IV
B. A-III, B-IV, C-I, D-II ✓
C. A-III, B-IV, C-II, D-I
D. A-III, B-II, C-I, D-IV
Show answer & explanation

Correct answer: B

Unclarified assumptions = semantic barrier (III); Distrust = psychological barrier (IV); Status = organisational barrier (I); Lack of proper incentives = personal barrier (II). Hence A-III, B-IV, C-I, D-II.

Q36.
Arrange the Functions of Management in correct sequence. A. Planning B. Directing C. Organising D. Controlling E. Staffing Choose the correct answer from the options given below
A. B, C, D, A, E
B. A, B, C, D, E
C. C, D, A, B, E
D. A, C, E, B, D ✓
Show answer & explanation

Correct answer: D

Functions of management in sequence: Planning (A), Organising (C), Staffing (E), Directing (B), Controlling (D). Hence A, C, E, B, D.

Q37.
Fayol's 14 Principles of management does not include. A. Authority and responsibility B. Division of work C. Unstability of personnel D. Indiscipline E. Initiative Choose the correct answer from the options given below:
A. A and C only
B. B and D only
C. C and D only ✓
D. C and E only
Show answer & explanation

Correct answer: C

Fayol's principles include 'Stability of personnel' (not unstability) and 'Discipline' (not indiscipline). So 'Unstability of personnel' (C) and 'Indiscipline' (D) are not among Fayol's principles. Hence C and D.

Q38.
Delegation refers to the:
A. Upward transfer of responsibility from a subordinate to a superior
B. Downward transfer of responsibility from a superior to a subordinate
C. Upward transfer of authority from a subordinate to a superior
D. Downward transfer of authority from a superior to a subordinate ✓
Show answer & explanation

Correct answer: D

Delegation is the downward transfer of authority from a superior to a subordinate.

Q39.
Cross Ltd, a company manufacturing cars is a highly successful organisation. For designing their cars, they follow assembly line production which entails the sequence of operations, place for men, machines and raw materials etc. Identify the technique of scientific management being followed by Cross Ltd.
A. Time study
B. Motion study
C. Method study ✓
D. Fatigue study
Show answer & explanation

Correct answer: C

Method study aims to find out the best way of doing a job, including the sequence of operations and layout of men, machines and materials — exactly what is described. Hence Method study.

Q40.
A manager should replace "I" with "We" in all his conversation with workers to foster team spirit. Identify the principle of management stated above.
A. Stability of personnel
B. Order
C. Discipline
D. Espirit De Corps ✓
Show answer & explanation

Correct answer: D

Esprit de Corps (union/team spirit) — Fayol suggested replacing 'I' with 'We' to develop a sense of belonging and team spirit.

Adhunik Ltd is a consumer goods manufacturing unit running the business for the last 11 years. The C.E.O Mr Aman wants to raise capital with an objective to modernise the existing plant. For this he has made a plan to offer equity and preference shares in the primary market. He uses a combination of methods. He got the prospectus printed, so as to make a direct appeal to investors. Also he has invited offers from some brokers to buy shares at an enbloc value Since Mr. Aman has a great circle of friends who are institutional investors, he can soon gather capital. Another method, that he wants to use is the online system of stock exchange.
Q41.
"He got the prospectus printed, so as to make a ______ direct appeal to investors" Identify the method of floatation mentioned in these lines.
A. E-IPO
B. Rights issue
C. Offer for sale
D. Offer through prospectus ✓
Show answer & explanation

Correct answer: D

Getting a prospectus printed to make a direct appeal to the public for subscription is the 'Offer through prospectus' method of floatation.

Q42.
"He has invited offers from some brokers to buy shares ______ at an enbloc value." Identify the method of floatation used in these lines
A. Offer for sale ✓
B. Offer through prospectus
C. Rights issue
D. Private placement
Show answer & explanation

Correct answer: A

Inviting brokers/intermediaries to buy shares en bloc (who then resell to the public) is the 'Offer for sale' method.

Q43.
"Mr Aman has a great circle of friends who are institutional investors." Identify the method of floatation used in these lines
A. Private placement ✓
B. Rights issue
C. Offer for sale
D. E-IPO
Show answer & explanation

Correct answer: A

Allotting securities to selected institutional investors/friends is 'Private placement'.

Q44.
"Another method he wants to use is the online system of stock exchange." Identify the method of floatation used in these lines.
A. Private placement
B. Offer through prospectors
C. E-IPO ✓
D. Offer for sale
Show answer & explanation

Correct answer: C

Issuing capital to the public through the online system of the stock exchange is an E-IPO (electronic initial public offer).

Q45.
In the above case Mr Aman is using all methods of floatation which are used in primary market because.
A. It deals in new securities issued for the first time ✓
B. It is more transparent
C. No permissions are required from SEBI
D. Existing shares can be easily traded here
Show answer & explanation

Correct answer: A

The primary market deals in new securities issued for the first time, which is why the methods of floatation (prospectus, offer for sale, private placement, rights, E-IPO) apply there.

Lenovo India decided to strengthen its diversing numbers. It decided to tap its referral system. The company asked its employees to recommend candidates and decided to reward those who successfully recommended more women for the same roles. Today technology major infosys for instance, has enhanced the use of technology for the employees referral process. It has created a portal where employees can view requirements and submit profiles of candidates directly. Employees can then track the status of their referral real-time.
Q46.
Which external source of recruitment is used by Lenovo India?
A. Direct Recruitment
B. Casual callers
C. Transfer
D. Recommendations of Employees ✓
Show answer & explanation

Correct answer: D

Lenovo used its referral system where employees recommend candidates — this is 'Recommendations of Employees', an external source of recruitment.

Q47.
It involves shifting of an employee from one job to another. Identify the source of internal recruitment.
A. Transfers ✓
B. Promotions
C. Direct Recruitment
D. Casual callers
Show answer & explanation

Correct answer: A

Transfer involves shifting of an employee from one job to another (without substantial change in responsibilities) — an internal source of recruitment.

Q48.
Under which external source of recruitment organisations keep a database of unsolicited applicants in their offices?
A. Employment Exchange
B. Campus Recruitment
C. Placement agencies
D. Casual callers ✓
Show answer & explanation

Correct answer: D

Casual callers / unsolicited applicants — organisations maintain a database of such applicants and contact them when vacancies arise.

Q49.
Which of the following is an internal source of recruitment?
A. Direct Requirement
B. Advertisement
C. Promotions ✓
D. Campus Recruitment
Show answer & explanation

Correct answer: C

Promotions (and transfers) are internal sources of recruitment. Direct recruitment, advertisement and campus recruitment are external sources.

Q50.
Which of the following is not included in external sources of recruitment?
A. Direct recruitment
B. Advertisement
C. Labour contractor
D. Transfers ✓
Show answer & explanation

Correct answer: D

Transfers are an internal source of recruitment, so they are not included in external sources. Direct recruitment, advertisement and labour contractors are external sources.

Original question paper source: National Testing Agency (NTA), CUET (UG) 2023. Reproduced for educational use. Answers & explanations by UniDrill.