Business, Trade and Commerce — 25 Target Practice MCQs

According to NCERT Chapter 1 (Page 3-4), Hundi and Chitti were indigenous credit instruments used in ancient India. The word 'Hundi' is derived from the Sanskrit word meaning 'to collect'. It was a contract warranting payment of money, capable of being negotiated by endorsement.

NCERT Table 1.1 (Page 5) classifies 'Jokhmi Hundi' as a Muddati Hundi drawn against dispatched goods. If goods were lost in transit, the drawer/holder absorbed the financial loss, effectively acting as an indigenous marine insurance contract.

NCERT Chapter 1 (Page 5) notes that in western India and major trading towns, the merchant corporations were led by an influential community chief designated as 'Nagarseth' who dealt directly with state kings and tax collectors.

According to NCERT Chapter 1 (Page 6), Peshawar was an important commercial centre for the export of fine wool and the import of horses. It had a massive share in transactions between India, China, and Rome in the 1st century A.D.

NCERT Page 7 explains that the British used Indian revenues to purchase raw materials and spices, shifting India from an exporter of processed manufactured goods into an exporter of raw materials and an open consumer market for British manufactured goods.

NCERT Chapter 1 (Page 8) highlights 'Make in India', launched in September 2014, as a major flagship initiative designed to encourage investment, foster innovation, build best-in-class manufacturing infrastructure, and make India a global manufacturing powerhouse.

NCERT Page 9 defines economic activities as those by which we can earn our livelihood (e.g., a worker in a factory, a doctor in a clinic, a manager in an enterprise). Non-economic activities are motivated by love, sympathy, patriotism, etc.

NCERT Page 10 emphasizes 'Regularity in Dealings': Business involves dealings in goods or services on a recurring, regular basis. A single isolated transaction of sale or purchase (e.g., selling one's personal vehicle or furniture) is not a business.

NCERT Page 11 states that 'Uncertainty of return' refers to the lack of certainty regarding how much profit the business will make. There is always the possibility of losses being incurred despite the best managerial efforts.

NCERT Table 1.1 (Page 12) points out that in a business, transfer of interest is possible with some formalities (e.g., transferring company shares or selling ownership). In a profession or employment, transfer of personal qualification or employment contract is not possible.

NCERT Table 1.1 (Page 12) states that professionals (such as doctors, lawyers, and chartered accountants) must strictly follow a prescribed ethical code of conduct established by their statutory regulatory bodies.

NCERT Page 13 explicitly defines 'Genetic Industries' as those engaged in breeding plants and animals for their use in further reproduction. Examples include nurseries, cattle farms, poultry farms, and fish hatcheries.

NCERT Page 13 notes that 'Extractive Industries' extract or draw products from natural sources like soil, air, or water (e.g., farming, mining, hunting, and fishing operations).

NCERT Page 14 defines an 'Analytical Industry' as one which separates and analyzes different basic elements from the same raw material, as in the case of an oil refinery.

NCERT Page 14 defines an 'Assembling Industry' as one that assembles various finished component parts to produce a new finished product (e.g., cars, TVs, computers). Synthetical industries combine ingredients like chemicals to make cement.

NCERT Page 15 states that Commerce includes two broad types of activities: (1) Trade (actual buying and selling) and (2) Auxiliaries to Trade (support activities assisting the trade process).

NCERT Page 16 explains that 'Transport' moves goods from the place of production to the point of consumption, thereby removing the hindrance of place.

NCERT Page 16-17 states that 'Warehousing' provides storage facilities, preserving goods securely until demand arises and thereby overcoming the hindrance of time.

NCERT Page 17 explains that 'Insurance' provides protection against risks of loss or damage to goods during storage or transit upon payment of a nominal premium, removing the hindrance of risk.

NCERT Page 18 lists multiple justifications for profit: livelihood for the entrepreneur, reward for risk-taking, source of internal finance for expansion, and an index of performance and prestige.

NCERT Page 19 highlights 'Innovation' as an essential business objective: developing new products or introducing novel methods in production, marketing, and distribution to maintain competitive advantage.

NCERT Page 20 explains that 'Speculative risks' involve both the possibility of gain as well as loss (e.g., changes in prices, fashion, or competition). Pure risks (fire, theft, strike) involve only the possibility of loss or no loss.

NCERT Page 21 categorizes business risks into Natural, Human, Economic, and Other causes. 'Human causes' arise from human behavior, such as employee dishonesty, carelessness, riots, or strikes.

NCERT Page 22 states that the first decision is the 'Selection of line of business': deciding the nature and type of goods and services to produce or trade based on market demand, technical know-how, and profit prospects.

NCERT Page 23 defines 'Plant layout' as the drawing or physical arrangement showing the layout of machines, equipment, and workstations to ensure the smoothest flow of materials and maximum operational efficiency.