Balbharti Maharashtra State Board Organisation of Commerce and Management 12th Textbook Solutions

Chapter 4 Business Services Textbook Exercise Questions and Answers.

1. (A) Select the correct option and rewrite the sentence.

Question 1.
Door to door service is provided by …………….. transport.
(a) railway
(b) road
(c) air
Answer:
(b) road

Question 2.
…………….. creates time utility.
(a) Warehouse
(b) Transport
(c) Communication
Answer:
(a) Warehouse



Question 3.
…………….. warehouses provide facilities for perishable commodities.
(a) Bonded
(b) Cold storage
(c) Government
Answer:
(b) Cold storage

Question 4.
……………. policy covers all types of risks of a vessel while it is anchored at the port for a particular period of time.
(a) Port risk
(b) Voyage
(c) Floating
Answer:
(a) Port risk

Question 5.
Principle of …………….. is not applicable to life insurance.
(a) insurable interest
(b) utmost good faith
(c) indemnity
Answer:
(c) indemnity

1. (B) Match the pairs.

Question 1.

Group A	Group B
(A) Air Transport	(1) Time utility
(B) Warehousing	(2) Intangible in nature
(C) Money remittance	(3) Fastest mode of transport
(D)  Pipeline Transport	(4) April,2019
(E) Business Service	(5) Western Union Money Transfer
	(6) Fixed deposit account
	(7) Petroleum and gas
	(8) Tangible
	(9) Place utility
	(10)  Savings account

Answer:

Group A	Group B
(A) Air Transport	(3) Fastest mode of transport
(B) Warehousing	(1) Time utility
(C) Money remittance	(5) Western Union Money Transfer
(D)  Pipeline Transport	(7) Petroleum and gas
(E) Business Service	(2) Intangible in nature

1. (C) Give one word/phrase/term for the following sentence.

Question 1.
These warehouses are owned, managed and controlled by central and state governments or public authorities.
Answer:
government warehouse

Question 2.
An art of exchanging ideas, facts, information etc. from one person or entity to another.
Answer:
Communication

Question 3.
A rail system in which the track consists of a single rail or a beam.
Answer:
monorail

Question 4.
A transport system used to carry petroleum and gases.
Answer:
pipeline transport

Question 5.
A ministry who looks after development of surface transport throughout country.
Answer:
Ministry of Road Transport and Highways

1. (D) State whether following statements are true or false.

Question 1.
Business services are important for the growth of business.
Answer:
True

Question 2.
Current Account is opened by salaried persons.
Answer:
False

Question 3.
NEFT stands for National Electric Fund Transfer.
Answer:
False

Question 4.
Air transport is cheapest mode of transport.
Answer:
False

Question 5.
The Internet is the global system of interconnected computer networks that use the internet protocol suite to link devices worldwide.
Answer:
True

1. (E) Find the odd one.

Question 1.
Primary credit co-operative society, state co-operative bank, district co-operative bank, exchange bank.
Answer:
exchange bank

Question 2.
NABARD, RBI, SIDBI, EXIM.
Answer:
RBI

Question 3.
Direct mail, Logistics post, Business post, Parcel
Answer:
Parcel

Question 4.
Endowment policy, Whole life policy, Money back policy, Blanket policy.
Answer:
Blanket policy.

1. (F) Complete the sentence.

Question 1.
The term bank comes from the French word …………….. .
Answer:
Banco

Question 2.
…………….. warehouses provide facilities for perishable commodities
Answer:
Cold storage

Question 3.
In ……………… policy, several ships belonging to one owner are insured under the same policy.
Answer:
fleet

Question 4.
…………….. banking refers to the use of banking services with the help of mobile phones.
Answer:
Mobile

1. (G) Select the correct option and complete the following table.

(RTGS, SIDBI, apex financial institution in banking industry of country, recurring deposit, long term loans)

	Group A	Group B
A.	……………	fund transfer on real time and gross basis
B.	loans to meet long term capital requirements	……………
C.	……………	Account  operated  by  salaried  and businessmen both.
D.	Central bank	……………
E.	……………	Principal financial institution for MSMEs

Answer:

	Group A	Group B
A.	RTGS	fund transfer on real time and gross basis
B.	loans to meet long term capital requirements	long term loans
C.	Recurring Deposit	Account  operated  by  salaried  and businessmen both.
D.	Central bank	apex financial institution in banking industry of country
E.	SIDBI	Principal financial institution for MSMEs

1. (H) Answer in one sentence

Question 1.
What is debit card?
Answer:
A debit card is a card which is used by the cardholders to make purchases and avail of services at different places without making cash payment but payment is deducted from or debited to the account of the debit cardholders immediately.

Question 2.
What is ‘subject matter’ In insurance?
Answer:
‘Subject matter’ In Insurance refers to life, property, cargo or ship, etc. which is Insured against whose insurance policy Is taken.



Question 3.
What is government warehouse?
Answer:
The warehouses which are owned. managed and controlled by the Central and State Governments or public authorities to assist small farmers, businessmen, traders in storing goods at nominal charges are called government Warehouses.

Question 4.
What is air transport?
Answer:
The mode of transport which is operated above the surface of the earth and carries goods and passengers through airways by using different aircrafts Is called air transport.

Question 5.
What is communication?
Answer:
The term ‘communication’ means any exchange of Ideas, facts, information, messages. feelings and emotions among two or more persons in a way that they share common understanding about it.

1. (I) Correct the underlined word and rewrite the following sentences.

Question 1.
Overdraft facility is available for savings bank account holder.
Answer:
Current

Question 2.
Services are tangible in nature.
Answer:
Intangible

Question 3.
Insurance helps to maximize the risks in the business.
Answer:
Minimise

Question 4.
The foreign bank is the apex financial institution in banking industry in the country.
Answer:
Centrals

Question 5.
RTGS stands for Reasonable Time Gross Settlement.
Answer:
real

1. (J) Arrange in proper order.

Question 1.
Claim, Accident, Taking the policy, Compensation.
Answer:
Taking the policy, Accident, Claim, Compensation

Question 2.
Email, Inland letter, Courier
Answer:
Inland letter, Courier, E-mail

2. Explain the following terms/concepts.

Question 1.
Transport
Answer:
(1) Service or facility which creates physical movement of men, materials, goods. animals. etc. from one place (location) to another is called transport. Transportation can be defined as a means of carrying or transferring goods. people, animals, material. etc. from one place to another.

(2) Usually transportation is carried through various modes like land transport (i.e Railways and Roadways), water transport and air transport. It brings mobility both to human resources and physical resources. Transport plays key role in nations economy and economic development. After 1991, in India. development of infrastructure within the country has made progress at rapid rate and today there are different modes of transport operated in India. Transport helps in production. expands market, create place utility in goods and services, brings stability to prices, creates employment opportunities, improves standard of living of the people, provides help during emergency and facilitates economic development.

Question 2.
Communication
Answer:
(1) The term ‘communication’ means any interchange of ideas, messages, facts, information, feelings and emotions among two or more persons In a way that they share common understanding about it. It Is a process of giving away or passing on any information by any person to some other person with the help of some medium. Thus, receiver after receiving the message understands it in the desired form and acts accordingly.

(2) Means of communication consist of magazines, newspaper, post and telegraphs. telephone. Internet, e-mail, television, etc. Communication facilitates transmit business Information more quickly among the businessmen. The difficulty of distance is effectively solved by various means of communication. Effective communication facilitates the development and growth of domestic and international markets which bring prosperity to the country.



Question 3.
Banking
Answer:
(1) The term ‘Bank’ Is derived from the French word ‘Banco’ which means a ‘bench’. In olden days, moneylenders used to display coins and currencies on the tables or benches for the purpose of lending or exchanging. An organisation which is dealing with money is called bank. An institution offering certain financial services such as the safe keeping of money and lending money to needy people is called Bank.

(2) According to the Indian Banking Regulation Act, 1949, bankIng company means “any company which transacts the business of banking in India.” The word banking has defined further as “acceptingfor the purpose of lending or investment of deposits of money from the public repayable on demand or otherwise and withdrawable by cheques. drafts, order or otherwise.” Bank accepts deposits repayable on demand by cheques or drafts and lends or invests the surplus money as a part of normal business. It makes a profit by accepting deposits at a lower rate of Interest and lending money at a higher rate of Interest.

Question 4.
Insurance
Answer:
(1) Business involves various risks like accident, fire, theft, flood, cyclone, etc. It is very difficult for a trader to bear risks of loss. Similarly, human life is subject to various risks such as death by accident, premature death, etc. The specialised agency called insurance company has emerged to provide financial protection against the possible loss due to the happening of such events. Insurance company gives financial protection by charging certain amount as a premium. It. is a risk management, primarily meant to hedge or for compensating against the risk of a contingent or uncertain loss.

(2) Insurance is a contract between two parties whereby one of them (the insurer) agrees in return for a premium to indemnify the other (the insured) against a monetary loss that may be suffered by the other on the happening of some specified event. According to Insurance Act of 1938, “Insurance Is defined as, “A provision which a prudent man makes against inevitable contingencies”.

Question 5.
Warehousing
Answer:
(1) Warehousing means storing of goods in a godown to hold them in stock from the time of production or purchase till the time of their sale. It is generally used to denote all those activities which are concerned with the storage of goods in a godown or warehouse. One of the marketing processes or a group activity is to hold the goods in stock from the time of production till the time of consumption. When storage of goods is required to be arranged on a large scale In a specified manner, it is called warchousing’. Warehouse means a building in which especially retail goods are stored.

(2) Warehousing is defined as “an establishment for the storage of or accumulation of goocis.’ Warehousing gives protection to goods and helps businessmen to raise finance. It facilitates and provides space for grading. branding and processing. It creates time utility and help in price stabilisation of goods. Thus, warehousing implies a group of activities connected with the storing and preserving of stored goods from the time of their production or purchase till the Urne of their sale or consumption.

3. Study the following case/situation and express your opinion.

Question 1.
Ms. Harshali has started new business two years ago. Her customers are located in different parts of the country and hence they are directly depositing bill amount in her business account. At the same time she used to pay various payments from this account only.

(i) Identify Type of account maintained by Ms. Harshali.
(ii) Suggest any one modern way of money transfer to Ms.Harshali.
(iii) State any one facility she gets on her bank account?
Answer:
(i) Ms. Harshali is a businesswoman and hence she has maintained current account to suit the needs of her business.

(ii) NEFT which stands for National Electronic Funds Transfer is the one of the modern ways of transferring fund (money) from one branch to another branch or from one bank to another bank safely can be suggested to Ms. Harshall to transfer money.

(iii) Ms. Harshali gets overdraft facility on her current account.

Question 2.
Mr. Jagan is a salaried person. He wants to take policy for his two children which assures them protection as well as completes their financial needs once they become major by age.

(i) Suggest him a policy which can satisfy requirements of his children.
(ii) Who are beneficiaries of policy?
(iii) In above case which principle is involved?
Answer:
(i) Mr. Jagan. a salaried person should take “Child Insurance Policy” to satisfy the financial requirements of his children.
(ii) In child insurance policy, children of the insured person are the beneficiaries.
(iii) In the above case, principle of Insurable interest is involved.

Question 3.
Mr. Sharan is successful manufacturer. He is having production units at various locations. He is having multiple production units, he has large stock of raw material and finished goods. He is worried about safeguarding goods from any unwanted financial loss. He also requires to transfer raw material and finished goods from one unit to other but does not have any facility for that. He also requires funds for expansion.

(i) Name the service which will help him to safeguard goods from any damage?
(ii) Which service will help him to remove difficulty of place?
(iii) From which service sector will he get financial support?
Answer:
(i) Warehousing’ is the service that helps Mr. Sharan to safeguard his goods from any damage.
(ii) Transport service will help Mr. Sharan to remove the difficulty of place.
(iii) Mr. Sharan will get financial support from Banking sector.



Question 4.
Mr. Amit is a businessman. He has his own factories in Pune and Nashik. He lives in Pune with his wife and 2 daughters aged 5 and 8 years.

(i) Can Mr. Amit take a life insurance policy for his wife and 2 children?
(ii) Can Mr. Amit take a marine insurance policy for his factories?
(iii) Which type of insurance should Mr. Amit take for protecting his factories from loss due to fire?
Answer:
(i) Mr. Amit can take whole life policy or term insurance policy for his wife and child insurance policy or money back policy for his daughters.
(ii) Mr. Amit cannot take marine insurance policy for his factories.
(iii) Mr. Amit can take Floating Fire Insurance Policy for protecting his factories at Pune and Nashik.

4. Distinguish between.

Question 1.
Duty Paid Warehouse and Bonded Warehouse
Answer:

	Duty Paid Warehouse	Bonded Warehouse
1. Meaning	Duty-paid warehouse is a warehouse which stocks on which duty is already paid.	Bonded warehouse is the warehouse which stocks goods the goods on which duty is yet to be paid.
2. Location	These warehouses are situated near dock area or port.	These warehouses are situated within the dock area.
3. Markets	Goods stored in duty-paid warehouses are meant mostly for the domestic markets.	Goods stored in bonded warehouses are meant mostly for re-export.
4. Supervision	These warehouses are free from the supervision of customs authority. However, they are controlled by port authority	These warehouses are under the close supervision of customs authority.
5. Delivery	Delivery of goods is given only after the payment of rent and service charges of the warehouse.	Goods are held in bond and its delivery is given only after the payment of import duty.
6. Ownership	This warehouse is owned and managed by the dock (public) authorities.	This warehouse is owned by the dock or private authorities.

Question 2.
Central Bank and Commercial Bank
Answer:

	Central Bank	Commercial Bank
1. Meaning	The central bank regulates money supply in the country by exercising control over the commercial banks.	A commercial bank accepts deposits from the public, grant loans to businessmen and public.
2. PrInting and Currency	The central bank is authorised to print currency notes.	The commercial bank is not authorlsed to print currency notes.
3. Acceptance of deposits	The central bank does not accept deposit from the public.	The commercial bank accepts deposit from general public.
4. Loans	The central bank provides loans and advances to banks and other financial institutions.	The commercial bank grants loans and advances to businessmen, industry and people.
5. Ownership	The central bank is owned and controlled by the Central government of the concerned country.	The commercial banks can be owned and controlled by the government as well as private sector organisations.
6. Number	There can be only one central bank for the whole country.	There is a large network of different commercial banks in the country.

Question 3.
Road Transport and Air Transport
Answer:

	Road Transport	Air Transport
1. Speed	Road Transport vehicles have limited speed particularly over long distances due to rough roads, hilly areas, traffic jams, observation of signaling system, road accidents, etc.	Air transport has very high speed. It is fastest mode of transport. It is due to aerial route, no signaling system to observe, straight route, no disturbance in speed, etc.
2. Suitability	It is suitable for short distances and for carrying perishable goods such as fruits, fish, vegetables, foodgrains and other consumer goods.	Air transport is suitable to carry light, perishable and valuable goods to any part of the world.
3. Door-to-door service	It provides door-to-door service. It reaches the goods at the doorsteps of the buyer.	It cannot provide door to door services. It carries goods and passengers from one airport to other air port.
4. Cost	It requires limited capital investment for construction of roads and their maintenance.	It requires relatively huge capital investment in terms of construction of airport, aircraft, runways, air control towers and their maintenance.
5. Means of transport	Road transport uses bullock carts, cycles, motor- cycles, autorickshaws, cars, tempos, trucks, buses, etc.	Air transport uses aircraft, cargo planes, jets, helicopters, etc.
6. Accidents	Chances of accidents are more due to poor road conditions and negligent drivers.	Changes of accident are very less because maintenance and appointment of expert and trained pilots.

Question 4.
Life Insurance and Marine Insurance
Answer:

	Life Insurance	Marine Insurance
1. Meaning	Life insurance is a contract whereby the insurance company in consideration of a premium, undertakes to pay a certain sum of money either on death of assured person or on maturity of policy whichever is earlier.	Marine insurance is a contract of indemnity against loss or damage to cargo (goods) or ships arising due to perils of sea.
2. Who takes it?	Life insurance policy is usually taken by an individual for his own life or for the benefit of his family members.	Marine insurance policy is taken by importers, exporters and shipping companies.
3. Subject-matter	In life insurance, the life of the insured person is a subject-matter.	In marine insurance, goods lying in the ship, cargo and freight are the subject-matter.
4. Period	Life insurance is usually a long term contract, usually more than ten years or even death.	Marine insurance is usually for a short period which may range from one month to a year.
5. Principle of Indemnity	The principle of indemnity is not applicable to life insurance contract because life of human being cannot be valued in terms of money for calculating actual loss.	The principle of indemnity is applicable to marine insurance as insurance company indemnifies the financial loss to bring back insured in the same financial condition that he was before the event.
6. Insurable Interest	In life insurance contract, insurable interest must exist at the time of contract.	The insurable interest must exist at the time of the contract and also at the time of happening of the event.

Question 5.
Savings Account and Current Account
Answer:

	Savings Account	Current Account
1. Meaning	A savings account is a type of bank account meant for any individual for safe keeping of his money and for making savings.	A current account is a type of bank account meant for a businessman or a firm or commercial organisations for facilitating regular trading operations.
2. Facilities	The facilities of overdraft and cash credit Eire not given to the saving accountholders.	Overdraft and cash credit facilities are given to the current accountholders only.
3. Suitability	Saving account is suitable for regular income earners and salaried or wage earners.	Current account is suitable for traders, businessmen, commercial organisations and institutions.
4. Restrictions on withdrawal	There are certain restrictions on the number of withdrawals and the amount to be withdrawn at a time.	There are no restrictions on withdrawal of money from this account as long as there is balance in the account.
5. Interest	Interest at low rate is credited monthly, quarterly, half-yearly and yearly basis in this account.	No interest is paid in this account.
6. Documents	The documents like passbook, balance on SMS, account statement, etc. are provide in this account.	Banks provide monthly statement of account every month in this account.

Question 6.
Life Insurance and Fire Insurance
Answer:

	Life Insurance	Fire Insurance
1. Meaning	Life insurance is a contract whereby the insurance company in consideration of a premium, undertakes to pay a certain sum of money either on death of assured person or on maturity of policy whichever is earlier.	Fire insurance is a contract of indemnity against loss or damage to goods or property arising from fire or related events.
2. Who takes it?	Life insurance policy is usually taken by an individual for his own life or for the benefit of his family members.	Fire insurance policy is taken by individuals, property owners or businessmen for their goods and business properties.
3. Subject-matter	In life insurance, the life of the insured person is a subject-matter.	In fire insurance, the property, assets or goods of the insured is the subject-matter.
4. Period	Life insurance is usually a long term contract, usually more than ten years or even death.	Fire insurance contract is generally for one year or even for a lesser period.
5. Principle of indemnity	The principle of indemnity is not applicable to life insurance contract because life of human being cannot be valued in terms of money for calculating actual loss.	The principle of indemnity is applicable to fire insurance contract because the amount of loss of property can be calculated easily. The-amount of loss or the policy amount whichever is less is paid to the insured.
6. Insurable interest	In life insurance contract, insurable interest must exist at the time of contract.	In fire insurance contract, insurable interest must exist both at the time of taking policy and also at the time of event.

Question 7.
Road Transport and Rail Transport
Answer:

	Road Transport	Rail Transport
1. Meaning	Road Transport vehicles have limited speed particularly over long distances due to rough roads, hilly areas, traffic jams, observation of signaling system, road accidents, etc.	Rail transport operates at a high speed due to mechanical devices, straight railway tracks and absence of obstructions on the railway tracks.
2. Suitability	It is suitable for short distances and for carrying perishable goods such as fruits, fish, vegetables, foodgrains and other consumer goods.	It is suitable for carrying heavy and bulky goods such as machinery, cotton, coal, etc. for long distances.
3. Door to Door services	It provides door-to-door services. It reaches the goods at the doorsteps of the buyer.	It cannot provide door-to-door services. It carries goods and passengers from one railway station to another.
4. Carrying Capacity	It has limited carrying capacity.	It has large carrying capacity.
5. Cost of construction and maintenance	It requires relatively less capital investment in terms of construction of roads and their maintenance.	The cost of construction and maintenance of trains, railway tracks and stations is very high.
6. Transport charges	Transport charges are not fixed but they are usually high due to increase in fuel charges.	Transport charges are fixed according to the distance and they are relatively low.

Question 8.
Rail Transport and Air Transport
Answer:

	Rail Transport	Air Transport
1. Speed	Railway transport has comparatively low speed.	Air transport has very high speed. It is the fastest mode of transport.
2. Carrying capacity	Its carrying capacity is very high.	Its carrying capacity is comparatively limited.
3. Suitability	It is more suitable to carry bulky and heavy goods over long distance.	It is suitable to carry light, perishable and valuable goods to any part of the world.
4. Transport charges	Transport charges are relatively low.	Transport charges are very high.
5. Ownership	It is owned only by public sector i.e. the government.	It is owned by both public sector as well as private sector.
6. Means of transport	It uses passenger trains and goods trains.	It uses aircraft, jets, cargo planes, helicopters, etc.

Question 9.
Current Account and Fixed Deposit Account
Answer:

	Current Account	Fixed Deposit Account
1. Meaning	A Current Account is a type of bank account under which there are no restrictions on depositing and withdrawing money.	A Fixed Deposit Account is a type of bank account under which fixed amount is deposited for a fixed period of time.
2. Withdrawals	There are no restrictions on withdrawal of money from this account as long as there is balance in the account.	No withdrawal is permitted before the date of maturity. However, a certain amount by way of loan can be granted against the FDR.
3. Facilities	Overdraft and cash credit facilities are given to the current account holders only.	Overdraft and Cash credit facilities are not given to the fixed deposit account holders.
4. Rate of interest	Generally no interest is paid on the balance standing in this account.	Banks offer higher rates of interest. Longer the period, higher will be the rate of interest and vice versa.
5. Duration	This account has no fixed duration. It may run as long as the accountholder desires.	This account is run for a fixed period after which the amount is repaid along with interest thereon.
6. Receipt	Bank provide statement of account at the end of every month to the current accountholders.	A Fixed Deposit Receipt (FDR) is issued by the bank to the accountholder.