Here, we will discuss the summary and key facts in MCQ format of Chapter 4: Business Services | Part I: Foundations of Business | Business Studies |Textbook for Class XI
1. Which is the most important characteristic of services?
b) Transfer of ownership
b) Tangibility
c) Storability
d) Intangibility
Answer: d) Intangibility
Services are intangible economic activities, as they cannot be touched or physically stored. Example: doctor's treatment.
2. Which characteristic of services means that production and consumption generally occur simultaneously?
a) Intangibility
b) Inconsistency
c) Inseparability
d) Involvement
Answer: c) Inseparability
Another 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. For example, eating ice cream in a restaurant.
3. Services cannot generally be stored for future use. This characteristic is known as:
a) Inventory( less) nature
b) Involvement
c) Inconsistency
d) Inseparability
Answer: a) Inventory-less nature
Services have little or no tangible components and, therefore, cannot be stored for 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 need to be
managed, as the service has to be performed as and when the customer asks for it. A railway journey, for example, cannot be stored for later consumption.
4. Which of the following is a business service?
a) Tourism
b) Recreational service
c) Slum welfare service
d) Banking
Answer: d) Banking
Business services are used by business enterprises in conducting their activities. Examples include banking, insurance, transportation, warehousing, and communication.
5. Which of the following correctly matches the type of service with its example?
a) Business service — Tourism
b) Social service — Banking
c) Personal service — Restaurant
d) Social service — Warehousing
Answer: c) Personal service — Restaurant
Personal services vary according to the provider and customer's preferences. Examples include tourism, recreation, and restaurants
6. The primary function of a commercial bank is to:
a) Credit and debit money
b) Accept deposits and lend funds
c) Collect taxes
d) Issue government securities
Answer: b) Accept deposits and lend funds
Commercial banks are institutions dealing in money. These are governed by the Indian Banking Regulation Act, 1949, and according to it, banking means accepting deposits of money from the public for the purpose of lending or investment.
7. Which type of bank provides cheap credit to its members and rural/agricultural financing?
a) Commercial bank
b) Foreign exchange bank
c) Central bank
d) Cooperative bank
Answer: d) Cooperative bank
Cooperative Banks are governed by the provisions of State Cooperative Societies Act and meant essentially for providing
cheap credit to their members. It is an important source of rural credit, i.e., agricultural financing in India.
8. Which is the central bank of India?
a) Reserve Bank of India
b) Punjab National Bank
c) State Bank of India
d) NABARD
Answer: a) Reserve Bank of India
The Central bank of any country supervises, controls and regulates the activities of all the commercial banks of that country. It also acts as a government banker. It controls and coordinates currency
and credit policies of any country. The Reserve Bank of India is the central bank of our country.
9. The deposit in a bank that gives a higher rate of interest and has a fixed period is known as?
a) Current account
b) Savings account
c) Fixed deposit
d) Current deposit
Answer: c) Fixed deposit
Deposits are generally taken through current accounts, savings accounts, and fixed deposits. Current account deposits can be withdrawn to the extent of the balance at any time without any prior
notice. Fixed accounts are time deposits with higher rate of interest as compared to the savings accounts. A premature withdrawal is permissible with a percentage of interest being forfeited.
10. Which cheque can be encashed immediately at the bank counter?
a) Crossed cheque
b) Post-dated cheque
c) Account-payee cheque
d) Bearer cheque
Answer: d) Bearer cheque
There are two types of cheques mainly: (a) bearer cheques, which are encashable immediately at bank counters, and (b) crossed cheques, which are to be deposited only in the payee's account
11. Which method is used for transferring funds in commercial banks?
a) Bank draft
b) Equity share
c) Debenture
d) Preference share
Answer: a) Bank draft
The transfer of funds is administered by using bank drafts, pay orders or mail transfers, on nominal commission charges. The bank issues a draft for the amount on its own branches at other places or other banks at those places.
12. e-Banking refers to:
a) Banking only through physical branches
b) Banking using electronic media
c) Banking without customer accounts
d) Lending to industries
Answer: b) Banking using electronic media
In this new digital marketplace, banks and financial institutions have
started providing services over the internet. These type of services provided by the banks on the internet, called e-banking, lowers the transaction cost, add value to the banking relationship, and empower customers. E-banking is electronic banking, or banking using electronic media
13. Which pair represents two electronic fund transfer systems mentioned in the chapter?
a) ATM and PoS
b) Credit Card and PoS
c) EDI and ATM
d) NEFT and RTGS
Answer: d) NEFT and RTGS
The range of services offered by e-banking is: Automated Teller
Machines (ATM) and Point of Sale (PoS), Electronic Data Interchange
(EDI) and credit cards, electronic or Digital cash, and Electronic bank
transfer (EFT). The two ways in which EFT can be done are: NEFT (National Electronic Fund Transfer) and RTGS (Real Time Gross Settlement).
14. Which of the following is NOT a benefit of e-Banking to customers?
a) 24×365 availability
b) Digital payments
c) Increased dependence on branch visits
d) Convenient transactions while travelling
Answer: c) Increased dependence on branch visits
There are various benefits of e-banking provided to customers, which are: (i) E-banking facilitates digital payments and promotes transparency in financial statements.
(ii) e-banking provides 24 hours, 365 days a year services to the customers of the bank;
(iii) Customers can make some of the permitted transactions from office or house or while travelling via mobile telephone;
(iv) It inculcates a sense of financial discipline by recording each and every transaction;
(v) Greater customer satisfaction by offering unlimited access to the bank, not limited by the walls of the branch, and less risk and greater security to the customer, as they can avoid travelling with cash.
15. Which change represents the shift in banking policy towards social objectives?
a) Rural orientation → Urban orientation
b) Mass banking → Class banking
c) Urban orientation → Rural orientation
d) Development objectives → Short-term objectives
Answer: c) Urban orientation → Rural orientation
In the recent past there has been a concerted effort by the policymakers in reorienting banking towards achieving social objectives. There has been a major shift in the banking policy of the country:
from to
(i) Urban orientation — Rural orientation
(ii) Class banking — Mass banking
(iii) Traditional — Innovative practices
(iv) Short term objectives — Development objectives
16. Insurance is a device that helps in:
a) Eliminating all risks
b) Avoiding payment of premium
c) Increasing business risk
d) Spreading the financial impact of risk
Answer: d) Spreading the financial impact of risk
Life is full of uncertainties. The chances of occurrence of an event causing losses are quite uncertain. There are risks of death and disability for human life; fire and burglary risk for property; perils of the sea for shipment of goods and, so on. If any of these takes place, the individuals and/or, organisations may suffer a great loss, sometimes beyond their capacities to bear the same. It is to minimise the impact of such uncertainties that there is a need for insurance. Insurance is thus a device by which the loss likely to be caused by an uncertain event is spread over a number of persons who are exposed to it and who prepare to insure themselves against such an event
17. The amount paid by the insured to the insurer for insurance protection is called:
a) Claim
b) Compensation
c) Premium
d) Maturity
Answer: c) Premium
Premium is the amount paid by the insured for insurance protection.
18. Which principle requires both the insurer and insured to disclose all material facts honestly?
a) Indemnity
b) Contribution
c) Utmost good faith
d) Subrogation
Answer: c) Utmost good faith
A contract of insurance is a contract of uberrimae fidei i.e., a contract found on utmost good faith. Both the insurer and the insured should display good faith towards each other in regard to the contract. It is the duty of the insured to voluntarily make full, accurate disclosure of all facts, material to the risk being proposed and the insurer to make clear all the terms and conditions in the insurance contract.
19. The principle of indemnity is applicable to:
a) Life insurance only
b) Fire and marine insurance
c) Life and health insurance only
d) All insurance without exception
Answer: c) Life and health insurance only
All insurance contracts of fire or marine insurance are contracts of indemnity. According to it, the insurer undertakes to put the insured, in the event of loss, in the same position that he occupied immediately before the happening of the event insured against. In other words the insurer undertakes to compensate the insured for the loss caused to him/her due to damage or destruction of property insured. The compensation payable and the loss suffered are to be measured in terms of money. The principle of indemnity is not applicable to life insurance.
20. The principle that requires the insured to take reasonable steps to minimise the loss is:
a) Contribution
b) Mitigation
c) Subrogation
d) Insurable interest
Answer: b) Mitigation
Mitigation requires the insured to take reasonable precautions to minimise loss or damage. This principle states that it is the duty of the insured to take reasonable steps to minimise the loss or damage to the insured property. Suppose goods kept in a store house catch fire then the owner of the goods should try to recover the goods and save them from fire to minimise the loss or damage. The insured must behave with great prudence and not be careless just because there is an insurance cover. If reasonable care is not taken like any prudent person then the claim from the insurance company may be lost.
21. In case of double insurance, the principle under which insurers share the loss is:
a) Contribution
b) Proximate cause
c) Indemnity
d) Good faith
Answer: a) Contribution
Contribution: As per this principle it is the right of an insurer who has paid claim under an insurance, to call upon other liable insurers to contribute for the loss of payment. It implies, that in case of double insurance, the insurers are to share the losses in proportion to the amount assured by each of them. In case there is a loss, when there is more than one policy on the same property, the insured will have no right tto recover more than the full amountc of his actual loss. If the full amount is recovered from one insurer the right to obtain further payment from the other insurer will cease.
22. Which type of insurance covers ship, cargo, and freight?
a) Life insurance
b) Fire insurance
c) Marine insurance
d) Health insurance
Answer: c) Marine insurance
A marine insurance contract is an agreement whereby the insurer
undertakes to indemnify the insured in the manner and to the extent thereby agreed against marine losses. Marine insurance provides protection against loss by marine perils or perils of the sea.
Marine insurance protects against marine perils and covers ship/hull, cargo, and freight.
23. Which life insurance policy pays the assured amount on death or on attaining a specified age, whichever is earlier?
b) Whole Life Policy
b) Endowment Policy
c) Annuity Policy
d) Joint Life Policy
Answer: b) Endowment Policy
An endowment policy provides payment on death or on attaining the specified age/expiry of the policy, whichever occurs earlier.
24. Which statement is correct about life insurance?
a) It is a contract of indemnity
b) Loss of human life can be measured in money
c) The sum assured is fixed at the time of the contract
d) Insurable interest is never required
Answer: c) The sum assured is fixed at the time of the contract
Life insurance is not a contract of indemnity. The sum assured is fixed when the contract is entered into.
25. What is the role of Communication services in businesses?
a) Manufacture goods
b) Establish links with the outside world
c) Store raw materials
d) Provide loans
Answer: b) Establish links with the outside world
Communication services are helpful to the business for establishing links with the outside world viz., suppliers, customers, competitors etc. Business does not exist in isolation, it has to communicate with others for transmission of ideas and information
26. The postal services in India are broadly classified into:
a) Banking and insurance
b) Financial facilities and mail facilities
c) Cellular and fixed-line services
d) Public and private facilities
Answer: b) Financial facilities and mail facilities
Postal services mainly include financial facilities and mail facilities.
27. Which financial facility is provided through postal services?
a) Speed Post
b) Media Post
c) Public Provident Fund (PPF)
d) Direct Post
Answer: c) Public Provident Fund (PPF)
Financial facilities are provided through the post office’s savings schemes like Public Provident Fund (PPF), Kisan Vikas Patra, and National Saving Certificates in addition to normal retail banking functions of monthly income schemes, recurring deposits,
savings account, time deposits and money order facility.
28. Which postal service is for direct advertising?
a) Greeting Post
b) Direct Post
c) Speed Post
d) e-Bill Post
Answer: b) Direct Post
Direct Post is used for direct advertising and may be addressed or unaddressed.
29. Which telecom service is satellite-based and uses a small dish antenna and set-top box to provide television channels?
a) VSAT
b) Fixed-line service
c) DTH
d) Cellular mobile service
Answer: c) DTH
DTH (Direct to Home) provides media services directly through satellite using a dish antenna and set-top box.
30. VSAT stands for:
a) Very Small Aperture Terminal
b) Very Simple Access Technology
c) Virtual Satellite Access Terminal
d) Variable Satellite Application Technology
Answer: a) Very Small Aperture Terminal
VSAT (Very Small Aperture Terminal) is a satellite-based
communications service. It offers businesses and government
agencies a highly flexible and reliable communication solution in both
urban and rural areas. Compared to land-based services, VSAT offers
the assurance of reliable and uninterrupted service that is equal
to or better than land-based services
31. Which telecom service primarily provides mobile voice, non-voice messages and data services?
a) Cellular mobile service
b) Cable service
c) Fixed-line service
d) DTH service
Answer: a) Cellular mobile service
Cellular mobile services include voice, non-voice messaging and data services.
32. Fixed-line services primarily use which technology for long-distance linkages?
a) Satellite dishes
b) Fibre-optic cables
c) Postal networks
d) Radio paging only
Answer: b) Fibre-optic cables
Fixed services including voice and non-voice messages and
data services to establish linkages for long distance traffic. These utilise any type of network equipment primarily connected through fiber optic cables laid across the length and breadth of the country. The also provide inter connectivity with other types of telecom services.
33. Which telecom service traditionally provides mainly one-way entertainment-related media services within a licensed area?
a) VSAT
b) Fixed-line service
c) Cellular mobile service
d) Cable service
Answer: d) Cable service
Cable services are linkages and switched services within a licensed
area of operation to operate media services, which are essentially oneway entertainment related services. The two-way communication including voice, data and information services through cable network would emerge significantly in the future. Offering services through the cable network would be similar to providing fixed services.
34. Which statement about communication services is correct?
a) They are useful only for personal communication
b) They help businesses exchange ideas and information quickly
c) They eliminate the need for transportation
d) They are concerned only with storage of goods
Answer: b) They help businesses exchange ideas and information quickly
Efficient communication enables businesses to exchange information, establish external links and coordinate activities quickly.
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