Long Answer Questions<\/span><\/p>\nQuestion 1. \nWhat are services? Explain their distinct characteristics? \nAnswer: \nServices are essentially intangible activities which are separately identifiable and provide satisfaction wants. Their purchase does not result in the ownership of anything physical Services involve an interaction to be realized between the service provider and the consumer.<\/p>\n
(i) Intangibility: \nServices are intangible, i.e., they cannot be touched. They are experiential in nature. One cannot taste a doctor\u2019s treatment, or touch entertainment. One can only experience it. An important implication of this is that the quality of the offer can often not be determined before consumption and, therefore, purchase.<\/p>\n
It is, therefore, important for the service providers that they consciously work on creating the desired service so that the customer undergoes a favourable experience. For example, treatment by a doctor should be a favourable experience.<\/p>\n
(ii) Inconsistency: \nThe second important characteristic of services is inconsistency. Since there is no standard tangible product, services have to be performed exclusively each time. Different customers have different demands and expectations. Service providers need to have an opportunity to alter their offer to closely meet the requirements of the customers. This is happening, for example, in the case of mobile services.<\/p>\n
(iii) Inseparability: \nAnother important characteristic of services is the simultaneous activity of production and consumption being performed. This makes the production and consumption of services seem to be inseparable. While we can manufacture a car today and sell it after, say, a month this is often not possible with services that have to be consumed as and when they are produced.<\/p>\n
Service providers may design a substitute for the person by using appropriate technology but the interaction with the customer remains a key feature of services. Automated Teller Machines (ATMs) may replace the banking clerk for the front office activities like cash withdrawal and cheque deposit. But, at the same time, the presence of the customer, is required and his\/her interaction with the process has to be managed.<\/p>\n
(iv) Inventory (Less): \nServices have little or no tangible components and, therefore, cannot be stored for a future use. That is, services are perishable and providers can, at best, store some associated goods but not the service itself. This means that the demand and supply needs to be managed as the service has to be performed as and when the customer asks for it.<\/p>\n
They cannot be performed earlier to be consumed at a later date. For example, a railway ticket can be stored but the railway journey will be experienced only when the railways provide it.<\/p>\n
(v) Involvement: \nOne of the most important characteristics of services is the participation of the customer in the service delivery process. A customer has the opportunity to get the services modified according to specific requirements.<\/p>\n
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Question 2. \nExplain the functions of commercial banks with an example of each : \nAnswer: \nCommercial Banks \nCommercial banks are very popular in every country due to services rendered by them. A commercial bank is a financial institution; which deals in money and credit. It accepts deposits from those who have a surplus and lends to those who need them. The difference between the rate of interest on deposits and loans is the profit of the bank.<\/p>\n
Definition of the Bank – According to Indian Banking Companies Act 1949, \u201cA bank is an institution accepting for the purpose of lending or investment in deposit money from public repayable on demand or otherwise, withdrawal by cheque, drafts, order or otherwise’.<\/p>\n
In the words of R.S.Mayers, \u201cBanks are institutions whose debts are referred to as ‘bank deposits \u2019 and they are commonly accepted in final settlement of ‘other people s debts \u2019<\/p>\n
According to Justice Holmes, \u201cThe real business of banker is to obtain deposits of money which he may use for his own profits by lending it out again ‘<\/p>\n
Bank is German word, which means \u2018to collect\u2019. The main function of the bank is the collection of funds as deposits. Later on bank started performing other functions such as lending etc.<\/p>\n
Bank has occupied very important place in the economic structure of the country. After independence in order to achieve social objectives of the country banks were nationalised. According to 20 point programme of the government banks have been entrusted the responsibility for developing the undeveloped regions of the country.<\/p>\n
In the light of these recent thinking, banks may be defined as the financial institution dealing in money and credit to achieve the economic and social objectives of the business. In India, some of major commercial banks are – State Bank of India, Punjab National Bank, Bank of Baroda, Canera Bank and Syndicate Bank etc.<\/p>\n
Functions Of Commercial Bank \n <\/p>\n
(1) Accepting deposits – This is one of the primary function of the bank. The main purpose of banks is to promote savings and accept deposits from customers. Banks offer facilities in different ways to suit the needs, tastes and preferences of the customers. Deposits are accepted mainly in current, savings, fixed deposit, home safe and recurring deposits accounts.<\/p>\n
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(2) Advancing loans – This is also the important function of the bank. The bank advances loans to merchants and manufacturers at higher rates of interest than what it allows on deposits. The difference between the two rate of interest is the profit of the bank. The bank advances loans through cash credit, bank overdraft, discounting of bills etc.<\/p>\n
(a) Cash credit- In this method, the bank instead of making payment to the borrower in cash, deposits the money in the Current Account, opened in the name of the borrower. The borrower can withdraw the money by using cheques upto specified limit. The bank asks the borrower to submit a promissory note for the loan. Cash credit is like overdraft arrangement, but for this purpose it is not necessary to operate a current account. Interest is to be paid on the amounts with drums.<\/p>\n
(b) Bank overdraft – This facility is granted by the bank to its current account holders. Under this arrangement the customer is authorised to withdraw more than the amount deposited. The amount of overdraft is settled between the bank and customer. This facility is granted without holding security’. Interest is charged by the bank on the amount actually withdrawn on monthly basis. In practice the customer pledges security of stock of goods.<\/p>\n
(c) Discounting of the bills – Financial help can also be sought from the bank by discounting Bills of exchange before the due date. The bank charges interest in the shape of discount for the period between date of discounting and the due date of the bill. The bank pays the amount or credits the amount into the account of the drawer after deducting discount.<\/p>\n
3. Agency functions – Commercial banks perform the following agency functions:<\/p>\n
(a) Collection of cheques, bills and drafts- Bank collects cheques, drafts and bills on behalf of its customers. The customer deposits his cheques received from outside parties, bills accepted by other parties and bank drafts received from outside. Bank collects the amounts of these documents and credits the money into the customers\u2019 accounts.<\/p>\n
(b) Collection of interest and dividends etc. – The customer may – have invested in shares and debentures and received interest and dividend. \nThe bank may be instructed to collect interest and dividend on behalf of the customer and deposit in his account.<\/p>\n
(c) Payment of interest, instalment of loan and insurance premium etc.-The customer may instruct the bank to make the payment of his instalment of loan borrowed by him and interest thereon. He may also instruct the bank to make payment of his insurance premium, rent of the shop, factory, residence etc. The bank, after making payment of these expenses debits the amount to customers\u2019 account.<\/p>\n
(d) Purchase\/Sale of securities – The bank can also work as an agent of the customer and assist in purchasing\/selling shares, debentures, bonds, certificates and government securities.<\/p>\n
(e) Transfer of funds through drafts\/mail transfers – Bank provide facilities to transfer funds from one place to another place at nominal charges. Bank also provides the facility of purchase and sale in foreign currencies.<\/p>\n
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4. Other services – In addition to agency services banks provide other miscellaneous services also:<\/p>\n
(a) Issuing travellers cheques – There is always risk to undertake long journey from one place to another place with large sum of money in cash. Banks issue travellers cheques for the desired amount. The cheque can be encashed for the desired amount at different places. The amount paid against cheque are entered at its back. The total amount withdrawn cannot exceed the amount of the cheque. Travellers cheque ensure safe journey without risks.<\/p>\n
(b) Issuing letter of credit – The bank issues letter of credit on-demand to its customers. Sometimes suppliers of goods and lenders of money insist upon letter of credit issued by the bank.<\/p>\n
(c) Locker or custodial services – There is always great risk in keeping large amount of cash, jewellery and other valuables. The bank offers an opportunity in the form of lockers in the premises of the bank itself, where valuables can be kept on payment of nominal charges. There are two or three keys of the locker, so for opening and closing it both the keys (one kept by the bank and the other kept by the customers) are used. The locker is operated by the customer as and when required.<\/p>\n
(d) Underwriting securities – Underwriting means undertaking the risk to subscribe for shares and debentures of Companies in case applications from public fall short. Banks also underwrite shares and debentures of companies. In this way, banks help in building and strengthening capital market.<\/p>\n
(e) Dealing in foreign exchange – Foreign currency is required for import, export, foreign travel and all sorts of foreign dealings. We can get foreign exchange through banks.<\/p>\n
(f) Providing references – Sometimes creditors and money lenders require from the customers trade references, preferably from banks. Reference services are also provided by the government.<\/p>\n
(g) Issuing bank drafts – Bank drafts are the economical and safest means of sending money. It is an instruction of the bank to its branch to pay the certain specified amount to the particular party. These bank drafts can be obtained against bank account and can also be obtained by cash payment.<\/p>\n
(h) Advisory functions – Bank also functions as a friend, philosopher and guide of his customers. Bank renders advisory services on economic matters to its customers.<\/p>\n
Question 3. \nWrite a detailed note on various facilities offered by the Indian Postal Department. \nAnswer: \nIndian post and telegraph department provides various postal services a cross India. For providing these services the whole country had been divided into 22 postal circles. These circles manage the day-to-day functioning of the various head post offices, sub-post offices and branch post offices. Through their regional and divisional level arrangements, the various facilities provided by postal department are broadly categorized into:<\/p>\n
(i) Financial facilities: \nThese facilities are provided through the post office\u2019 savings scheme like Public Provident Fund (PPF), Kisan Vikas Patra and National Saving Certificates in association to normal retail banking functions of monthly income schemes, recurring deposits, savings account, time deposits and money order facility.<\/p>\n
(ii) Mail facilities: \nMail services consist of parcel facilities that is the transmission of articles from one place to another; registration facility to provide security of the transmitted articles and insurance facility to provide insurance cover for all risks in the course of transmission by post.<\/p>\n
(iii) Financial services: (SCSS, PPF, KVP, NSC, TDJ) \nSenior Citizen Savings Scheme (SCSS): Any individual who has attained the age 60 years on the date of opening or who has attained the age of 55 years and who has voluntarily retired from the service can open this account. Here, the account holder gets an attractive interest. Automatic transfer of interest into savings account facility is available.<\/p>\n
Joint account is opened with the spouse only and not with any other person. The amount of deposit is Rs. 500\/- and maximum is Rs. 1.0 lakh. Subject to certain conditions loan facilities are available after 3 years. The investment by an individual will qualify for tax deduction under section 88 of IT Act. .<\/p>\n
(iv) Kisan Vikas Patras (KVP): \nThe certificates will be available in the denominations of Rs. 100, Rs.500, Rs. 1000, Rs.5000, Rs. 10000 and Rs.50000. certificates will be issued to individuals only. There is no limit for purchase. Certificates can be cashed at any time after expiry of 2 years and 6 months from the date of purchase. Nomination and identity slip facilities are available. .<\/p>\n
(v) National Saving Certificate (NSC): \nNSC VIII Issue available in denominations of. 100,500,1000,5000 and 10,000 can be issued to individuals only. The maturity period shall be 6 years from the date of issue. There is no limit for purchase. Only local cheques are accepted. They can be pledged as security.<\/p>\n
A nomination facility is available. No premature encashment is permitted in the normal course. Investments by individuals will qualify for tax deduction under Income Tax Act.<\/p>\n
(vi) Time Deposit Accounts (TD): \nThere are four types of accounts, namely 1-year, 2-year, 3-year and 5-year accounts. A single can open an account, two adults jointly, Guardian on behalf of a minor or a minor himself who has attained the age of 10 years. Any number of accounts can be opened. There shall be only one deposit in an account.<\/p>\n
The deposit should be in multiples of Rs. 200 and there is no maximum limit. Annual interest can be automatically credited to the savings account of the depositors, Post maturity interest shall be allowed for a maximum period of 24 months SB rate premature closure of the account is permitted on some conditions.<\/p>\n
Question 4. \nDescribe various types of insurance and examine the nature of risks protected by each type of insurance. \nAnswer: \n1. Life Insurance \nLife insurance is a contract between a person and an Insurance company. According to the contract of insurance a specified sum of money is payable by insurance company on the death of the insured or after the expiry of the policy period, whichever is earlier in consideration to the payment of the premiums, whenever due. The amount of the premium is determined on the basis of the amount of the policy, the period of the policy and terms of the premium, whether monthly, quarterly, half-yearly or annually.<\/p>\n
There is an element of investment in the life insurance, because the amount of the policy is received in both the cases i.e. on the death of the insured or at the expiry of the policy. Life insurance is not a contract of indemnity because it is impossible to compensate the deceased policyholder. The person whose life is insured is called the assured. The consideration paid to the insurance company is premium. It is based on good faith and based on insurable interest in the like assured.<\/p>\n
2. Fire Insurance \nFire insurance is an agreement between the insurance company and the owner of the property, wherein insurance company, after receiving specified premium assures actual loss or the amount of the fire policy (whichever is less) will be paid if the insured property catches fire.<\/p>\n
Fire insurance is a contract of indemnity. It is based upon the principle of good faith. The insured must have an Insurable interest in the subject-matter of Insurance. It must exist both at the time of insurance and at the time of loss. It is a contract from year to year on a renewable basis.<\/p>\n
3. Marine Insurance \nMarine insurance is an agreement in which the insurance company assures to compensate for the loss, if any, caused by insured marine perils after the receipt of the premium. Marine policies can be taken for the ship, loaded goods (cargo) for freight” and salaries of employees etc.<\/p>\n
This contract is based on utmost good faith. Both the insured and the insurer must disclose everything which is in their knowledge and can affect the contract. Insurable interest must exist at the time of actual loss incurred and based on the approximate cause for which insurance policy is taken.<\/p>\n
4. Miscellaneous Insurance \nSome important types of insurance have been discussed below:<\/p>\n
(1) Motor Vehicle Insurance – Under this insurance vehicles on roads such as motors, trucks, cars, vans, motorcycles, scooters etc. are insured. If the insured vehicle is lost or damaged or becomes the victim of accident, the insurance company compensates for the actual loss or the amount of the policy, whichever is lower. If the insured vehicle causes damage to any other vehicle the insurance company will compensate to the owner of other vehicle. Motor vehicle insurance is classified as follows:<\/p>\n
(a) Comprehensive Insurance \u2014 This insurance covers all types of risk causing damage to the insured vehicle.<\/p>\n
(b) Third Party Insurance – If any vehicle causes damage to any person or vehicle the owner of the vehicle will compensate. The insurance company under Third Party Insurance will compensate to the owner of vehicle only.<\/p>\n
(2) Burglary Insurance – Under this insurance, loss due to theft or burglary is compensated by the insurance company. While taking policy detailed information of the article to be insured is furnished. The insurance company compensates for the loss of the insured due to theft or burglary. Insured items may include gold and ornaments, other household items such as refrigerator, T.V., Air Conditioners etc.<\/p>\n
(3) Personal Accident Insurance – This insurance policy is taken to compensate for the loss caused by accident. If the insured person dies or meets any fatal accident, the insurance company makes the payment of the insured amount to the person himself if he survives or to the nominee of the insured person, if he dies. In case of partial disability the amount is paid according to the terms and conditions of the insurance policy. The insurer, in an accident policy, is liable only if the unfair or death is caused by an accident and not due to natural causes.<\/p>\n
(4) Fidelity Insurance-This insurance policy protects against the loss caused by embezzlement, dishonesty and fraud of employees. In order to protect itself from losses caused by these misshaping the insurance company guarantees to compensate for the loss caused by dishonesty of employees. If the business suffers any lose due to the fraud of the employee, the insurance company compensates for it. In case of this insurance policy the business cannot make any change in the service conditions of the employee without consulting insurance company.<\/p>\n
(5) Employees Accident Insurance – Workers working in the factory may be subjected to any accident.at any time while working in the factory. In case of partial loss of limbs or disability, the owner of the factories have to compensate for the loss to the employees as per the provisions of factory act. If the factory owner desires, he can get the risk insured with the insurance company. In the case of insurance, the insurance company will have to compensate the employee.<\/p>\n
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(6) Health Insurance – Under this insurance policy medical expenses of illness and disability are covered by the Insurance. This type of Insurance can transfer the burden, of the costs of illness or accident, so that people do not have to face financial ruin, because of poor health. This insurance covers basic medical expenses, major medical expenses, disability income and long term hospitalization reimbursement of charges.<\/p>\n
Question 5. \nExplain in detail the warehousing services. \nAnswer: \nFunctions Of Warehousing \n(1) Stability in prices-Warehousing maintains the stability of price by storing goods in the godown and releasing as per requirements of the market. Prices of seasonal commodities can be stabilised. Warehousing help in removing violent fluctuation in the prices of goods through smooth supply throughout the year.<\/p>\n
(2) Surety for loan – The warehouse receipt can be deposited with the bank and the lending institution as security against loans borrowed.<\/p>\n
(3) Storage facility\u2014Surplus goods required to be used in future can be stored in godown and taken back, whenever required.<\/p>\n
(4) Safety of goods – Godowns are specially made to keep goods safe. Certain godown storing specific commodities are built to suit the nature of the commodity. Goods are always safe in their proper godowns. Godown safeguards the show of merchandise from deterioration pilferage and vastage etc.<\/p>\n
(5) Other functions-Warehouses provide facilities for grading and packaging of goods. In case of bonded warehouse, the importer gets reasonable time to arrange funds to make the payment of customs and other dock charges.<\/p>\n
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Importance Of Warehousing<\/strong><\/p>\nGoods are stored by manufacturers, producers, farmers, wholesalers and even retailers. Storage and warehousing have the following advantages and importance:<\/p>\n
(1) Protection of goods-A warehouse protect goods against pilferage, theft and damage. After keeping goods in the godown the businessman are carefree. Goods are preserved free from rain moisture, pests, fire etc.<\/p>\n
(2) Useful for seasonal goods – There are certain things which are produced once in a year and used throughout the year, such as wheat, rice, sugar, potatoes etc. By keeping goods in the warehouses, goods are available throughout the year.<\/p>\n
(3) Seasonal consumption of goods – There are certain commodities which are produced throughout the year but consumed during the season. These commodities are woolen garments, heaters, coolers etc. As such in order to maintain balance between demand and supply these commodities are required to be stored safely. A warehouse acts as a reservoir of store house of surplus goods.<\/p>\n
(4) Production to meet future demand – These days goods are produced on a large scale in anticipation of future demand. There is time gap between the production and consumption of goods. It is, therefore, necessary that goods should be kept safe and secured during this period.<\/p>\n
(5) Storage of raw material – Production is a continuing activity, so raw material is required throughout the year. Supply of raw material can be maintained throughout the year by proper storing of raw material.<\/p>\n
(6) Stability of prices – In order to maintain the stability of price, it is necessary that surplus goods during the season should be stored and brought out during the offseason. This will also check the fluctuation of price.<\/p>\n
(7) Facilitating foreign trade – An importer can keep the imported goods in bonded warehouses if they is unable or unwilling to pay custom duty immediately. He can pay duties in installments and draw goods gradually. \n <\/p>\n","protected":false},"excerpt":{"rendered":"
Detailed, Step-by-Step NCERT Solutions for 11 Business Studies Chapter 4 Business Services Questions and Answers were solved by Expert Teachers as per NCERT (CBSE) Book guidelines covering each topic in chapter to ensure complete preparation. Business Services NCERT Solutions for Class 11 Business Studies Chapter 4 Business Services Questions and Answers Class 11 Business Studies …<\/p>\n
NCERT Solutions for Class 11 Business Studies Chapter 4 Business Services<\/span> Read More »<\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"default","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","spay_email":""},"categories":[3],"tags":[],"yoast_head":"\nNCERT Solutions for Class 11 Business Studies Chapter 4 Business Services - MCQ Questions<\/title>\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\t \n\t \n\t \n