Practice important Business Studies Class 12 MCQ Test 1 with answer key and explanations. Chapter-wise multiple choice questions perfect for CUET, CBSE & commerce exams.

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Business Studies Class 12 MCQ Test 1 | Chapter-wise Objective Questions with Answers

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  1. Successful organizations do not achieve goals by chance but by following a deliberate process known as:
    • A. Planning
    • B. Co-ordination
    • C. Controlling
    • D. Management
    Answer: D. Management
    Explanation: Management involves a systematic, deliberate process to plan, direct, and achieve organizational objectives effectively.
  2. The primary function of management is:
    • A. Planning
    • B. Co-ordination
    • C. Controlling
    • D. Management
    Answer: A. Planning
    Explanation: Planning is the first and foremost function of management, setting the foundation for all other managerial activities.
  3. Which is not a function of management of the following?
    • A. Planning
    • B. Co-ordination
    • C. Co-operating
    • D. Staffing
    Answer: C. Co-operating
    Explanation: The universally recognized functions of management include Planning, Organizing, Staffing, Directing, and Controlling—“Co-operating” is not typically listed as one.
  4. Management is the process of:
    • A. Managing the activities of the organization
    • B. Controlling affairs of the organization
    • C. Administering the departments of the organization
    • D. All of the above
    Answer: D. All of the above
    Explanation: Management encompasses various tasks including overseeing activities, controlling operations, and administering departments effectively.
  5. Management ensures:
    • A. Providing employment opportunities
    • B. Maintaining profit
    • C. Maximum utilisation of resources
    • D. Control on cost
    Answer: C. Maximum utilisation of resources
    Explanation: A key role of management is to optimize the usage of resources (human, financial, and material) to achieve desired objectives efficiently.
  6. Which of the following statements is true with reference to principles of management?
    • A. The principles of management have evolved.
    • B. The principles of management are in the continuous process of evolution.
    • C. None of the above.
    Answer: A. The principles of management have evolved.
    Explanation: Management principles are developed over time through observation and experience.
  7. Principles of management are not:
    • A. Behavioural
    • B. Absolute
    • C. Universal
    • D. Flexible
    Answer: B. Absolute
    Explanation: Management principles are general guidelines, not rigid rules, hence not absolute.
  8. Which one is not the Henry Fayol’s principle of management?
    • A. Division of work
    • B. Differential wages
    • C. Scalar chain
    • D. Equity
    Answer: B. Differential wages
    Explanation: Differential wages are related to Taylor’s scientific management, not Fayol's principles.
  9. Who is considered as the father of Scientific Management?
    • A. Henry Fayol
    • B. F. W. Taylor
    • C. Gibberth
    • D. Harold Koontz
    Answer: B. F. W. Taylor
    Explanation: F.W. Taylor is regarded as the father of Scientific Management for introducing time studies and work standardization.
  10. Principles of management provide ________.
    • A. Readymade solutions to problems
    • B. General guidelines
    • C. Methods and procedures
    • D. Rules and regulations
    Answer: B. General guidelines
    Explanation: Principles of management are flexible and provide general direction for managerial decision-making.
  11. Which of the following is not a part of the business environment of business?
    • A. Customers
    • B. Suppliers
    • C. Competitors
    • D. None of the above
    Answer: D. None of the above
    Explanation: All listed elements—customers, suppliers, and competitors—are integral parts of the business environment.
  12. Which of the following is not the component of Specific Forces of business environment?
    • A. Technology
    • B. Customers
    • C. Investors
    • D. Employees
    Answer: B. Customers
    Explanation: Customers are considered a general force rather than a specific force in the business environment.
  13. Which one of the following is not a feature of business environment?
    • A. Uncertainty
    • B. Interdependence
    • C. Complexity
    • D. Stability
    Answer: D. Stability
    Explanation: Business environments are dynamic and ever-changing, not stable.
  14. Which of the following best indicates the importance of business environment?
    • A. Identification
    • B. Improvement in performance
    • C. Coping with rapid changes
    • D. All of them
    Answer: D. All of them
    Explanation: Business environment helps in identifying opportunities, improving performance, and adapting to changes.
  15. Which of the following is not a feature of Business environment?
    • A. Interrelated Elements
    • B. Dynamics
    • C. Complexity
    • D. Continuous
    Answer: D. Continuous
    Explanation: While business environment is dynamic, “continuous” is not considered a standard feature in textbooks.
  16. Which of the following is not an impact of Government policy changes on business and industry?
    • A. Increasing competition
    • B. More demanding customers
    • C. Market orientation
    • D. Stability in demand
    Answer: D. Stability in demand
    Explanation: Demand is often affected by dynamic factors, and government policy changes tend to create uncertainty, not stability.
  17. Business environment does not include:
    • A. Customers
    • B. Competitors
    • C. Suppliers
    • D. None of the above
    Answer: D. None of the above
    Explanation: All of the listed entities are core components of a business environment.
  18. Liberalisation means:
    • A. Reduced role of public sector
    • B. Reduced control of the government
    • C. Freedom of doing business
    • D. All of the above
    Answer: D. All of the above
    Explanation: Liberalisation refers to relaxing government restrictions to promote free-market business practices.
  19. Liberalisation, Privatisation and Globalisation were introduced in India in:
    • A. 1990
    • B. 1991
    • C. 1992
    • D. 1993
    Answer: C. 1992
    Explanation: Although the LPG reforms were announced in 1991, major implementation phases rolled out by 1992.
  20. Removal of licensing requirement in most industries except a short list is known as:
    • A. Disinvestment
    • B. Liberalisation
    • C. Globalisation
    • D. Privatisation
    Answer: B. Liberalisation
    Explanation: Liberalisation includes deregulation such as eliminating industrial licensing to encourage business growth.
  21. Selling of a public sector undertaking to a private sector is known as:
    • A. Globalisation
    • B. Privatisation
    • C. Liberalisation
    • D. None of these
    Answer: B. Privatisation
    Explanation: Privatisation refers to the transfer of ownership or management of public sector enterprises to the private sector.
  22. Which of the following is not a feature of planning?
    • A. Planning focuses on achieving objectives
    • B. Planning is a primary function of management
    • C. Planning does not lead to rigidity
    • D. Planning is pervasive
    Answer: C. Planning does not lead to rigidity
    Explanation: One of the criticisms of planning is that it can lead to rigidity in decision-making.
  23. Planning is:
    • A. Decision making
    • B. Selecting the best alternative
    • C. Setting objectives
    • D. All of the above
    Answer: D. All of the above
    Explanation: Planning includes setting goals, evaluating alternatives, and selecting the most suitable one.
  24. Which of the following is the first step of planning process?
    • A. Setting objectives
    • B. Developing premises
    • C. Identifying alternatives
    • D. Evaluating alternatives
    Answer: A. Setting objectives
    Explanation: Planning begins with clearly defining goals or desired outcomes the organization wants to achieve.
  25. The last step of the planning process is:
    • A. Follow up action
    • B. Evaluating alternatives
    • C. Selecting an alternative
    • D. Implement the plan
    Answer: D. Implement the plan
    Explanation: Once a plan is developed and finalized, it must be implemented to achieve the intended objectives.
  26. Selling of a public sector undertaking to a private sector is known as:
    • A. Globalisation
    • B. Privatisation
    • C. Liberalisation
    • D. None of these
    Answer: B. Privatisation
    Explanation: Privatisation refers to the transfer of ownership or management of public sector enterprises to the private sector.
  27. Which of the following is not a feature of planning?
    • A. Planning focuses on achieving objectives
    • B. Planning is a primary function of management
    • C. Planning does not lead to rigidity
    • D. Planning is pervasive
    Answer: C. Planning does not lead to rigidity
    Explanation: One of the criticisms of planning is that it can lead to rigidity in decision-making.
  28. Planning is:
    • A. Decision making
    • B. Selecting the best alternative
    • C. Setting objectives
    • D. All of the above
    Answer: D. All of the above
    Explanation: Planning includes setting goals, evaluating alternatives, and selecting the most suitable one.
  29. Which of the following is the first step of planning process?
    • A. Setting objectives
    • B. Developing premises
    • C. Identifying alternatives
    • D. Evaluating alternatives
    Answer: A. Setting objectives
    Explanation: Planning begins with clearly defining goals or desired outcomes the organization wants to achieve.
  30. The last step of the planning process is:
    • A. Follow up action
    • B. Evaluating alternatives
    • C. Selecting an alternative
    • D. Implement the plan
    Answer: D. Implement the plan
    Explanation: Once a plan is developed and finalized, it must be implemented to achieve the intended objectives.
  31. Planning is not:
    • A. Goal-oriented
    • B. A mental exercise
    • C. Futuristic
    • D. Continuous
    Answer: B. A mental exercise
    Explanation: Although planning involves thinking, it is primarily a practical activity with structured steps and execution—not just a mental exercise.
  32. Which of the following is not a limitation of planning?
    • A. Planning reduces creativity
    • B. Planning does not work in dynamic environment
    • C. Planning helps in achieving objectives
    • D. Planning leads to rigidity
    Answer: D. Planning leads to rigidity
    Explanation: “Helps in achieving objectives” is actually an advantage, not a limitation, of planning.
  33. The primary objective of planning is to:
    • A. Increase profits
    • B. Ensure policies
    • C. Achieve objectives
    • D. Maintain discipline
    Answer: C. Achieve objectives
    Explanation: Planning is focused on setting and achieving specific goals in an organized manner.
  34. The step in planning process in which assumptions are made about the future is:
    • A. Developing premises
    • B. Setting objectives
    • C. Identifying alternatives
    • D. Evaluating alternatives
    Answer: A. Developing premises
    Explanation: This step involves forecasting conditions and trends that affect planning.
  35. Which of the following is not a step in planning process?
    • A. Setting objectives
    • B. Identifying alternatives
    • C. Recruitment
    • D. Selecting an alternative
    Answer: C. Recruitment
    Explanation: Recruitment is a part of staffing, not the planning process.
  36. Which is not a feature of organising?
    • A. Division of work
    • B. Improves teamwork
    • C. Clarifies authority
    • D. Establishes relationships
    Answer: B. Improves teamwork
    Explanation: While teamwork may improve as a result, it is not considered a defining feature of organising.
  37. The function of management which coordinates the physical, financial and human resources and establishes productive relations among them for achievement of specific goals is:
    • A. Planning
    • B. Organising
    • C. Staffing
    • D. Controlling
    Answer: B. Organising
    Explanation: Organising brings together all resources and aligns them to achieve defined objectives.
  38. Which of the following is the first step in the process of organising?
    • A. Identification and division of work
    • B. Departmentalisation
    • C. Assignment of duties
    • D. Establishing reporting relationships
    Answer: A. Identification and division of work
    Explanation: Organising begins with dividing the total workload into manageable activities.
  39. Grouping of jobs of similar nature under functions and arranging these functions into departments is called:
    • A. Organisation structure
    • B. Departmentalisation
    • C. Delegation
    • D. Decentralisation
    Answer: B. Departmentalisation
    Explanation: Departmentalisation groups similar activities to create efficiency and accountability in organizational functions.
  40. The network of job positions, responsibilities and authorities at different levels is called:
    • A. Organisation design
    • B. Organisation planning
    • C. Organisation structure
    • D. Organisation chart
    Answer: C. Organisation structure
    Explanation: Organisation structure defines how job tasks are formally divided, grouped, and coordinated.
  41. Which of the following is not an element of delegation?
    • A. Responsibility
    • B. Authority
    • C. Informal organisation
    • D. Accountability
    Answer: C. Informal organisation
    Explanation: Delegation consists of responsibility, authority, and accountability. Informal organisation is a separate concept.
  42. The scalar chain is a concept related to:
    • A. Planning
    • B. Organising
    • C. Staffing
    • D. Directing
    Answer: B. Organising
    Explanation: Scalar chain refers to the formal line of authority which moves from top to bottom in an organisation.
  43. Which of the following is an advantage of formal organisation?
    • A. It clarifies authority and responsibility
    • B. It facilitates discipline
    • C. It avoids duplication of work
    • D. All of the above
    Answer: D. All of the above
    Explanation: Formal organisation ensures a clear structure, defined roles, and accountability, leading to improved efficiency and discipline.
  44. Which of the following statements is true?
    • A. Authority can be delegated
    • B. Responsibility can be delegated
    • C. Accountability can be delegated
    • D. Only authority can be delegated
    Answer: D. Only authority can be delegated
    Explanation: Authority may be passed down to subordinates, but responsibility and accountability ultimately remain with the superior.
  45. Decentralisation is concerned with:
    • A. Delegation of authority
    • B. Concentration of authority
    • C. Centralisation of authority
    • D. Systematic delegation of authority at all levels
    Answer: D. Systematic delegation of authority at all levels
    Explanation: Decentralisation involves distributing decision-making power to lower levels in the organisational hierarchy.
  46. Which of the following is not a principle of delegation?
    • A. Authority level principle
    • B. Principle of parity of authority and responsibility
    • C. Principle of unity of direction
    • D. Scalar principle
    Answer: C. Principle of unity of direction
    Explanation: Unity of direction is a general management principle by Fayol, not specifically related to delegation.
  47. The process of finding and appointing the best person for the job is called:
    • A. Organising
    • B. Staffing
    • C. Recruitment
    • D. Supervision
    Answer: B. Staffing
    Explanation: Staffing includes recruitment, selection, training, and development to fill organizational roles effectively.
  48. Which one of the following is not a function of staffing?
    • A. Recruitment
    • B. Selection
    • C. Training
    • D. Directing
    Answer: D. Directing
    Explanation: Directing is a separate managerial function that involves guiding and supervising rather than hiring and developing.
  49. Recruitment is the process of:
    • A. Selecting the most suitable candidate
    • B. Searching for prospective candidates
    • C. Interviewing the candidate
    • D. Giving training to candidate
    Answer: B. Searching for prospective candidates
    Explanation: Recruitment involves attracting and identifying potential candidates for employment.
  50. Which of the following is not an internal source of recruitment?
    • A. Transfer
    • B. Promotion
    • C. Campus recruitment
    • D. Present employees
    Answer: C. Campus recruitment
    Explanation: Campus recruitment is an external source where candidates are hired directly from educational institutions.
  51. The staffing function of management includes:
    • A. Training and development
    • B. Recruitment
    • C. Performance appraisal
    • D. All of the above
    Answer: D. All of the above
    Explanation: Staffing covers all human resource functions including hiring, training, and evaluating performance.
  52. Training improves:
    • A. Job knowledge
    • B. Skills
    • C. Attitude and behavior
    • D. All of the above
    Answer: D. All of the above
    Explanation: Training is a comprehensive development tool that enhances knowledge, skills, and behavior.
  53. Which one of the following is an off-the-job training method?
    • A. Job rotation
    • B. Apprenticeship
    • C. Classroom lecture
    • D. Internship
    Answer: C. Classroom lecture
    Explanation: Off-the-job training methods occur away from the actual work environment, such as in classrooms.
  54. Which of the following is not a part of staffing process?
    • A. Recruitment
    • B. Selection
    • C. Co-ordination
    • D. Training
    Answer: C. Co-ordination
    Explanation: Coordination is a broader managerial function, not specifically part of the staffing process.
  55. Promotion is a method of:
    • A. External source of recruitment
    • B. Internal source of recruitment
    • C. Training
    • D. Transfer
    Answer: B. Internal source of recruitment
    Explanation: Promotion fills higher-level vacancies by advancing current employees within the organization.

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