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CHSE Odisha Elective BSM study materials
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CHSE Odisha Elective BSM practice questions

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Question 1Nature and Scope of Business

In business studies, the term 'business' is best understood as which of the following?

  1. A charitable trust that distributes free goods without any economic activity
  2. A one-time transaction between two individuals for personal use
  3. An organised activity of producing and distributing goods and services to satisfy human wants for profit Correct answer.
  4. A government department that controls the prices of essential commodities

Explanation

Business is an economic activity that is carried on regularly and involves the production or exchange of goods and services with the objective of earning profit by satisfying human wants. It is organised and continuous, not a single isolated transaction. This distinguishes it from charity, personal consumption and state regulation.

Question 2Nature and Scope of Business

Which characteristic of business explains that a trader must keep buying and selling goods repeatedly rather than making one sale and stopping?

  1. Customer satisfaction
  2. Continuity of dealings Correct answer.
  3. Risk bearing
  4. Profit motive

Explanation

Continuity of dealings means business activity is carried on regularly and repeatedly; a single transaction is not treated as business. Regular repetition is what allows an enterprise to earn a sustained income. Profit motive and risk bearing are separate features that do not by themselves explain repetition.

Question 3Nature and Scope of Business

A weaver buys yarn, converts it into cloth and sells the cloth to a wholesaler. Which type of economic activity is the weaver performing?

  1. Non-economic activity
  2. Employment
  3. Profession
  4. Business Correct answer.

Explanation

Business includes the production and exchange of goods and services for profit, and manufacturing cloth for sale falls squarely within it. Profession requires specialised knowledge and a service motive, while employment means working for another person for wages. A non-economic activity is done for sentiment or social purpose, not for earning a livelihood through sale.

Question 4Nature and Scope of Business

Which of the following is an example of an economic activity?

  1. A person donating blood at a voluntary camp
  2. A father teaching his son mathematics at home
  3. A doctor treating patients in a hospital for a fee Correct answer.
  4. A woman cooking dinner for her own family

Explanation

Economic activities are undertaken to earn a living and involve the production or exchange of goods and services for money. A doctor charging a fee for treatment is a classic example of such activity. The other options are performed out of affection, duty or social service and are therefore non-economic.

Question 5Nature and Scope of Business

Which of the following is a primary objective of a business enterprise?

  1. Earning profit Correct answer.
  2. Paying taxes to the government
  3. Providing free education
  4. Conducting social work

Explanation

Profit is the primary objective because it is the reward for risk bearing and the means of survival and growth of the enterprise. Social work, tax payment and free education are obligations or social responsibilities rather than the main purpose of running a business. Without profit an enterprise cannot continue for long.

Question 6Nature and Scope of Business

Which of the following best describes the 'risk bearing' feature of business?

  1. The owner avoids decisions that involve any uncertainty
  2. The owner is certain of earning a fixed return every year
  3. The owner transfers all losses to the government
  4. The owner accepts the possibility of loss because future demand and prices are uncertain Correct answer.

Explanation

Business operates in an uncertain environment where demand, prices, competition and technology can change, so returns are never guaranteed. The person who bears this uncertainty is the entrepreneur, and the chance of loss is the price of the chance of profit. Risk bearing is thus inseparable from ownership.

Question 7Nature and Scope of Business

Which of the following is a feature that distinguishes business from a profession?

  1. Business requires specialised knowledge and formal training
  2. Business is regulated by a professional code of conduct
  3. Business requires a membership certificate from a professional body
  4. Business involves the sale of goods and services for profit Correct answer.

Explanation

Business is mainly concerned with the production and exchange of goods and services for profit, whereas a profession renders specialised personal services based on formal training and a service motive. Codes of conduct and membership certificates are features of professional bodies, not of business generally. Specialised knowledge is also a hallmark of a profession rather than of business as such.

Question 8Nature and Scope of Business

Which of the following is a correct statement about the relationship between business and industry?

  1. Industry is a broader term that includes business
  2. Business and industry are identical terms
  3. Industry is that part of business which is concerned with the production of goods and services Correct answer.
  4. Industry refers only to trading activities of a business

Explanation

Industry and commerce are the two components of business. Industry covers the production of goods and services, including extractive, genetic, manufacturing, construction and service industries, while commerce covers trade and the auxiliaries to trade. Thus industry is a part of business, not a broader term, and trading is part of commerce.

Question 9Nature and Scope of Business

A firm that earns a profit by selling goods of poor quality at high prices will most likely face which consequence?

  1. Automatic exemption from competition
  2. Loss of customer goodwill and eventual decline in sales Correct answer.
  3. Permanent growth in market share
  4. Increase in government subsidy

Explanation

Customer satisfaction is an important objective because repeat purchase and goodwill depend on the quality and value given to buyers. Exploiting customers through poor quality at high prices damages reputation and drives them to competitors. Profit earned this way is short-lived, and no exemption from competition or subsidy follows from it.

Question 10Nature and Scope of Business

Which of the following pairs correctly matches an auxiliary to trade with its function?

  1. Banking - production of raw materials
  2. Insurance - spreading the risk of loss over many policyholders Correct answer.
  3. Transport - manufacturing of finished goods
  4. Warehousing - fixing the price of goods

Explanation

Auxiliaries to trade support trade without themselves buying or selling goods. Insurance is one such auxiliary because it collects premiums from many insured persons and compensates the few who suffer loss, thereby spreading risk. Banking facilitates payments and credit, transport moves goods, and warehousing stores them; none of these produces or manufactures goods or fixes prices.

Question 11Nature and Scope of Business

Which of the following is an example of an extractive industry?

  1. A firm building a road bridge
  2. A coal mine extracting coal from the earth Correct answer.
  3. A poultry farm breeding birds
  4. A sugar mill converting sugarcane into sugar

Explanation

Extractive industries draw raw materials from nature, such as mining, fishing, hunting and quarrying. Manufacturing industries, in contrast, convert raw materials into finished or semi-finished goods, as a sugar mill does. Genetic industries breed plants and animals, and construction industries build structures.

Question 12Nature and Scope of Business

A trader who buys goods in bulk from producers and sells them in small quantities to retailers is performing the function of which type of commerce?

  1. Entrepot trade
  2. Retail trade
  3. Wholesale trade Correct answer.
  4. Foreign trade

Explanation

Wholesale trade involves buying goods in large quantities and selling them in smaller lots to retailers, linking producers with retailers. Retail trade sells directly to final consumers, while foreign trade and entrepot trade involve transactions across national borders. The described function is therefore wholesale trade.

Question 13Nature and Scope of Business

Which of the following statements about the scope of business is most accurate?

  1. Business includes only the production of tangible goods
  2. Business is confined to the activities of manufacturing firms
  3. Business includes the production and exchange of both goods and services Correct answer.
  4. Business includes industry and commerce but excludes services

Explanation

The scope of business extends to both goods and services because modern business includes banking, insurance, transport, tourism, consultancy and other services alongside manufacturing and trade. Industry and commerce together make up business, and services are an important part of it. Restricting business to tangible goods or to manufacturing alone would exclude large sectors of economic activity.

Question 14Nature and Scope of Business

Which of the following is a characteristic that business shares with a profession but not with employment?

  1. Working under an employer for a fixed salary
  2. Absence of any risk
  3. Requirement of specialised knowledge and skill Correct answer.
  4. Guaranteed fixed income

Explanation

Both business and profession require specialised knowledge and skill, although the profession applies it to rendering services while business applies it to producing and exchanging goods and services. Employment is characterised by working under an employer for a fixed salary, and neither business nor profession offers a guaranteed fixed income. Risk is present in business and, to some extent, in profession, but not fixed income.

Question 15Nature and Scope of Business

A company invests heavily in a new product line, but the product fails in the market and the investment is lost. Which feature of business does this illustrate?

  1. Continuity of dealings
  2. Customer satisfaction
  3. Creation of utility
  4. Profit as a reward for risk bearing Correct answer.

Explanation

Profit is the reward for bearing the risk of loss inherent in business decisions. When a venture fails, the loss falls on the owner, which shows why profit must be earned as compensation for uncertainty. Continuity, customer satisfaction and utility creation do not directly explain the loss suffered from an unsuccessful investment.

Question 16Nature and Scope of Business

Which of the following correctly pairs a manufacturing industry with its sub-type?

  1. Oil refinery - synthetic industry Correct answer.
  2. Cotton textile mill - analytical industry
  3. Cement plant - processing industry
  4. Sugar mill - assembling industry

Explanation

A synthetic industry combines several raw materials to produce a new product, and an oil refinery combines crude oil with chemicals to make petroleum products. Analytical industries break a single raw material into several products, assembling industries put together component parts, and processing industries treat raw materials through successive stages.

Question 17Nature and Scope of Business

Which of the following is a reason why profit is considered essential for the survival of a business?

  1. It enables the firm to cover costs, reinvest and attract capital Correct answer.
  2. It removes all uncertainty from future operations
  3. It replaces the need for customer satisfaction
  4. It allows the firm to avoid payment of taxes

Explanation

Profit provides the funds for expansion, modernization and reserves, and it also signals to investors and lenders that the enterprise is viable. Without it a firm cannot sustain operations or attract further capital. Profit does not eliminate uncertainty, replace customer satisfaction or exempt a firm from taxation.

Question 18Nature and Scope of Business

Which of the following describes the economic significance of commerce in the scope of business?

  1. Commerce removes the hindrances of place, time, exchange and risk in the exchange of goods Correct answer.
  2. Commerce replaces industry in the production process
  3. Commerce produces raw materials from nature
  4. Commerce regulates the prices of goods by law

Explanation

Commerce includes trade and the auxiliaries to trade, which remove hindrances of place through transport, of time through warehousing, of exchange through banking and of risk through insurance. It does not produce raw materials, fix prices by law or replace industry. Industry and commerce are complementary parts of business.

Question 19Nature and Scope of Business

A firm that manufactures bicycles earns a reputation for durability and fair pricing. Which objective of business is most directly served by this reputation?

  1. Reduction of the risk of loss to zero
  2. Elimination of competition
  3. Customer satisfaction and goodwill Correct answer.
  4. Avoidance of social responsibility

Explanation

Customer satisfaction is achieved when goods and services meet buyers' expectations of quality and price, and it builds goodwill that supports repeat purchase. Goodwill does not eliminate risk or competition, nor does it relieve a firm of its social responsibilities. It is an intangible asset created by consistent value to customers.

Question 20Nature and Scope of Business

Which of the following statements about the classification of industries is correct?

  1. Genetic industries are concerned with the reproduction and multiplication of plants and animals Correct answer.
  2. Manufacturing industries draw raw materials directly from nature
  3. Construction industries are a type of genetic industry
  4. Extractive industries convert raw materials into finished goods

Explanation

Genetic industries such as nurseries and poultry farms are engaged in breeding and multiplying plants and animals. Extractive industries draw materials from nature, manufacturing industries convert raw materials into other products, and construction industries build structures. Each type has a distinct function within industry.

Question 21Nature and Scope of Business

An entrepreneur sets up a firm that buys goods from producers and sells them to consumers through retail outlets. Which combination of business components is represented?

  1. Industry and commerce together, with commerce dominating the trading function Correct answer.
  2. Only industry, because goods are bought and sold
  3. Only a profession, because the entrepreneur provides a service
  4. Only employment, because the entrepreneur works for the firm

Explanation

Business comprises industry and commerce, and a trading firm performs commercial functions such as trade, transport, storage and finance while relying on industry for the goods it sells. The entrepreneur is the owner bearing risk, not an employee, and trading for profit is business rather than profession. Thus both components are present, with commerce prominent in the trading activity.

Question 22Nature and Scope of Business

Which of the following best explains why business is described as an 'economic activity' rather than a 'non-economic activity'?

  1. It is undertaken to earn a livelihood through the production or exchange of goods and services Correct answer.
  2. It is performed out of love and affection for family members
  3. It involves the distribution of free gifts to the poor
  4. It is carried out only by government agencies

Explanation

Economic activities are those undertaken to earn a living by producing or exchanging goods and services, and business falls in this category because it aims at profit and livelihood. Activities driven by love, affection, charity or duty are non-economic. Government agencies may run enterprises, but the economic character comes from the production and exchange for livelihood, not from the ownership.

Question 23Nature and Scope of Business

A firm sells machinery to buyers and also provides after-sales service and technical advice for a fee. Which statement about the scope of business is best supported by this example?

  1. Business includes both the sale of goods and the rendering of services Correct answer.
  2. After-sales service is a non-economic activity
  3. Service activities fall outside the scope of commerce
  4. Business excludes services because machinery is a tangible good

Explanation

Modern business covers goods as well as services, and after-sales service and technical advice provided for a fee are service activities within commerce. Commerce includes trade and auxiliaries to trade, and services such as repair, banking and insurance are part of it. Therefore business is not confined to tangible goods.

Question 24Nature and Scope of Business

Which of the following statements correctly distinguishes between the objectives and the features of business?

  1. Features refer only to the social responsibilities of business
  2. Objectives and features are the same thing expressed differently
  3. Objectives describe the nature of business, while features state what it seeks to achieve
  4. Objectives state what a business seeks to achieve, while features describe the nature of business activity Correct answer.

Explanation

Objectives are the goals a business pursues, such as profit, customer satisfaction, market share and social responsibility. Features describe the inherent nature of business, such as continuity, risk bearing, profit motive and exchange of goods and services. The two are related but conceptually different, so they cannot be treated as identical or interchanged.

Question 25Forms of Business Organisation

Which form of business organisation is created by a special statute of the legislature and is governed by that Act rather than by the Indian Companies Act?

  1. A partnership firm
  2. A statutory corporation Correct answer.
  3. A joint stock company
  4. A sole proprietorship

Explanation

A statutory corporation comes into existence through a special Act of Parliament or a State Legislature, and its powers, objects and functioning are laid down in that Act itself. Its rules therefore differ from those of companies registered under the Companies Act.

Question 26Forms of Business Organisation

In a sole proprietorship, which of the following statements about the owner's liability is correct?

  1. The owner is liable only up to twice the capital invested
  2. The owner has unlimited liability for the debts of the business Correct answer.
  3. The owner's liability is limited to the capital contributed
  4. The owner's liability is limited to the value of business assets

Explanation

A sole proprietorship has no separate legal personality, so the proprietor and the business are one and the same in law. Creditors can therefore proceed against the proprietor's personal assets for business debts, which is unlimited liability.

Question 27Forms of Business Organisation

Which document of a company contains the objects for which the company is formed and defines the scope of its activities?

  1. The certificate of incorporation
  2. The Articles of Association
  3. The Memorandum of Association Correct answer.
  4. The prospectus

Explanation

The Memorandum of Association is the charter of the company and its objects clause sets out the purposes for which the company is established. Acts beyond these objects are ultra vires and cannot bind the company.

Question 28Forms of Business Organisation

The liability of a partner in a firm registered under the Indian Partnership Act, 1932 is best described as:

  1. Limited to the partner's share of profits
  2. Limited to the value of the firm's assets
  3. Joint and several, and unlimited Correct answer.
  4. Limited to the partner's capital contribution

Explanation

Partners are jointly and severally liable for the acts of the firm, and their liability is unlimited because the firm has no separate legal personality. A creditor may recover the whole debt from any one partner, who then settles with the others.

Question 29Forms of Business Organisation

Which of the following is a defining characteristic of a cooperative society?

  1. Service motive with one member having one vote Correct answer.
  2. Management by a board elected by debenture holders
  3. Capital raised mainly through public issue of equity shares
  4. Profit maximisation with voting rights proportionate to shares held

Explanation

A cooperative society is formed to render service to members rather than to earn profit, and it follows the principle of one member, one vote regardless of the capital contributed. This equality of voting control distinguishes it from a company.

Question 30Forms of Business Organisation

A company is described as an artificial person because:

  1. It enjoys perpetual succession
  2. It is created by law and acts only through its agents Correct answer.
  3. Its shareholders are artificial persons
  4. Its shares are freely transferable

Explanation

A company exists only in the eyes of the law; it is created by registration and can act only through natural persons such as directors and authorised officers. Hence it is called an artificial person, though it is a legal person distinct from its members.

Question 31Forms of Business Organisation

In a Hindu Undivided Family business governed by Hindu law, which person is the head who manages the business?

  1. The coparcener
  2. The trustee
  3. The Karta Correct answer.
  4. The managing director

Explanation

The Karta is the senior-most member who manages the joint family property and business, and other members have no right to interfere in management. The Karta's position is acquired by birth in the family, not by election.

Question 32Forms of Business Organisation

A partner who lends his name and reputation to a firm without contributing capital or taking part in management is known as:

  1. A secret partner
  2. A partner by estoppel
  3. A nominal partner Correct answer.
  4. A sleeping partner

Explanation

A nominal partner is one who merely lends his name to the firm and neither invests capital nor shares in management, yet is liable to outsiders as a partner. His presence lends credit to the firm.

Question 33Forms of Business Organisation

A public company is required to have a minimum of how many directors and members respectively at the time of incorporation under the Companies Act, 2013?

  1. Three directors and two members
  2. Three directors and seven members Correct answer.
  3. Two directors and seven members
  4. Two directors and two members

Explanation

A public company must have at least three directors and a minimum of seven members, whereas a private company needs two directors and two members. These minimums reflect the wider public participation expected in a public company.

Question 34Forms of Business Organisation

Which of the following best explains why a company enjoys perpetual succession?

  1. Its directors hold office for life
  2. The company continues to exist despite the death or insolvency of its members Correct answer.
  3. Its shares are transferable only with the consent of the board
  4. Its objects clause cannot be altered after incorporation

Explanation

Because the company is a legal person separate from its members, the death, insolvency or exit of members does not affect its existence. It continues until it is wound up according to law, which is what perpetual succession means.

Question 35Forms of Business Organisation

A firm has partners A, B and C, and C is a minor admitted only to the benefits of partnership. Which statement is correct?

  1. C shares in the profits but his liability is limited to his share in the firm Correct answer.
  2. C is personally liable for all the debts of the firm like an adult partner
  3. C can be made to bear the losses of the firm beyond his share
  4. C has the right to take part in the management of the firm

Explanation

A minor admitted to the benefits of partnership shares in the profits and property of the firm, but his personal liability is confined to his share in the firm. He cannot be held personally liable for the firm's debts beyond that share.

Question 36Forms of Business Organisation

Which of the following statements about the liability of members of a company limited by guarantee is correct?

  1. Members have unlimited personal liability for company debts
  2. Members undertake to contribute a fixed amount only on winding up Correct answer.
  3. Members are liable only for the amount of dividend received
  4. Members are liable for the full unpaid value of their shares

Explanation

In a company limited by guarantee, each member guarantees a fixed sum stated in the memorandum, payable only if the company is wound up. There is usually no share capital, so the guarantee amount defines the limit of liability.

Question 37Forms of Business Organisation

A cooperative society that purchases goods in bulk and supplies them to members at reasonable prices is known as:

  1. A credit cooperative society
  2. A producers' cooperative society
  3. A consumers' cooperative society Correct answer.
  4. A marketing cooperative society

Explanation

A consumers' cooperative society is formed by consumers to buy goods in bulk and distribute them to members, thereby eliminating middlemen's margins. Producers', credit and marketing societies serve different functions.

Question 38Forms of Business Organisation

A private company wishes to convert itself into a public company. Which step is legally required?

  1. Obtain only the consent of the existing directors
  2. Alter the articles to remove restrictive provisions and obtain a special resolution Correct answer.
  3. Apply to the Registrar without altering the articles
  4. Simply issue a prospectus to the public without any resolution

Explanation

Conversion to a public company requires amendment of the articles to delete the private company restrictions and the passing of a special resolution, after which the Registrar issues a fresh certificate of incorporation. Mere public issue without these steps is not valid.

Question 39Forms of Business Organisation

Which of the following is a disadvantage specific to a partnership when compared with a company?

  1. The firm faces extensive legal formalities for incorporation
  2. The firm's accounts must be audited by a chartered accountant every year
  3. The firm cannot raise capital from more than two persons
  4. The firm lacks perpetual succession and may dissolve on a partner's death Correct answer.

Explanation

A partnership has no separate legal personality, so the death, retirement or insolvency of a partner may dissolve the firm unless the deed provides otherwise. A company, by contrast, continues regardless of changes in membership.

Question 40Forms of Business Organisation

A company issued a prospectus inviting the public to subscribe to its shares. Which statement about the legal effect of the prospectus is correct?

  1. It is a contract between the company and each allottee
  2. It is the internal rule book of the company
  3. It is the charter that defines the company's objects
  4. It is a document that invites offers from the public and binds the company to statements made in it Correct answer.

Explanation

A prospectus is an invitation to the public to offer to subscribe for securities, and the company becomes liable for any misleading statements in it. It is not itself a contract with subscribers, nor does it govern internal management or objects.

Question 41Forms of Business Organisation

A sole proprietor wants to expand by admitting a partner but wishes to keep the firm's affairs confidential from the public. Which arrangement best suits this objective?

  1. Form a public limited company
  2. Form an unregistered partnership with a written deed Correct answer.
  3. Form a cooperative society
  4. Form a statutory corporation

Explanation

An unregistered partnership keeps affairs private because there is no public register of members or public disclosure of accounts. Companies, cooperatives and statutory corporations all involve public registration and disclosure.

Question 42Forms of Business Organisation

Which of the following correctly states the doctrine of separate legal personality as applied to companies?

  1. The company's property belongs to the shareholders collectively
  2. The company is distinct from its members and owns property in its own name Correct answer.
  3. The company's debts are always the personal debts of directors
  4. The company is an agent of its shareholders in all transactions

Explanation

Once incorporated, a company becomes a legal person separate from its shareholders, owning property and incurring debts in its own name. Members cannot claim the company's property as their own, nor are they liable for its debts beyond their contribution.

Question 43Forms of Business Organisation

A partner retires from a firm without giving public notice and continues to be held liable to third parties for subsequent debts of the firm. Which principle explains this?

  1. A retiring partner's liability ends on the date recorded in the deed alone
  2. A retiring partner remains liable to outsiders until public notice of retirement is given Correct answer.
  3. A retiring partner is always liable for all future debts of the firm
  4. A retiring partner is liable only if he was a sleeping partner

Explanation

Under the Partnership Act, a retiring partner continues to be liable to third parties for acts of the firm done before retirement and, in the absence of public notice, may be held liable even afterwards. Public notice protects him from liability for subsequent acts.

Question 44Forms of Business Organisation

A company limited by shares has 5,000 equity shares of Rs 10 each, of which Rs 6 per share has been called up and paid. A member holding 100 shares is asked to meet the company's debts on winding up. What is the maximum amount he can be called upon to pay?

  1. Rs 1,000
  2. Rs 600
  3. Rs 5,000
  4. Rs 400 Correct answer.

Explanation

A member's liability is limited to the unpaid amount on his shares. Here the unpaid amount is Rs 4 per share (Rs 10 minus Rs 6), so for 100 shares the maximum call is Rs 400.

Question 45Forms of Business Organisation

A person who is not a partner but who, by his words or conduct, allows himself to be represented as a partner is held liable as a partner. This is known as:

  1. Partnership at will
  2. Dormant partnership
  3. Partnership by holding out Correct answer.
  4. Particular partnership

Explanation

The doctrine of holding out makes a person who represents himself as a partner liable to those who extend credit to the firm on the faith of that representation. Liability arises from the representation, even though he is not a real partner.

Question 46Forms of Business Organisation

Compare a company and a cooperative society on the basis of voting rights. Which statement is accurate?

  1. In a company each member has one vote, while in a cooperative votes depend on shares held
  2. In both, voting rights depend on the amount of capital contributed
  3. In a company votes are generally proportionate to shareholding, while in a cooperative each member has one vote Correct answer.
  4. Both give one vote to each member irrespective of capital

Explanation

Company law ties voting power to the number of shares held, so majority shareholders control decisions. Cooperative societies follow democratic control with one vote per member, which prevents control by larger contributors.

Question 47Forms of Business Organisation

A company's articles provide that disputes between the company and members shall be referred to arbitration, and a member sues the company in court ignoring this clause. Which statement is most accurate?

  1. The articles are a private arrangement that cannot bind members at all
  2. The articles bind the member as a contract with the company, so the company may rely on the arbitration clause Correct answer.
  3. The arbitration clause is void because articles cannot deal with dispute resolution
  4. The member may ignore the clause because articles bind only directors

Explanation

The articles constitute a contract between the company and its members, so provisions such as an arbitration clause can be enforced by the company against a member. The member is bound by the terms of the articles as if he had signed them.

Question 48Forms of Business Organisation

A statutory corporation is created by a special Act. Which statement about its accountability is correct?

  1. It is accountable only to the Registrar of Companies
  2. It is accountable to the legislature that created it and must submit reports as the Act requires Correct answer.
  3. It is accountable only to its shareholders in general meeting
  4. It is not accountable to any authority because it is a public body

Explanation

Because a statutory corporation owes its existence to a statute, its powers and duties are defined by that Act and it reports to the legislature as the Act prescribes. It has no shareholders in the company sense and is not registered with the Registrar of Companies.

Question 49Management: Concept, Functions and Principles

In management theory, which statement best defines management as a process?

  1. The personal charisma of an owner that motivates workers
  2. The ongoing coordination of human and material resources to achieve stated goals Correct answer.
  3. A legal contract between employer and employee
  4. A single event of hiring staff for a new branch

Explanation

Management is treated as a continuous process because it involves a series of interrelated functions such as planning, organising, staffing, directing and controlling performed to reach organisational goals. It is not a one-time act or a personal quality.

Question 50Management: Concept, Functions and Principles

Which pair correctly lists two management functions that belong to the traditional POSDCORB framework?

  1. Marketing and financing
  2. Auditing and budgeting
  3. Planning and controlling Correct answer.
  4. Recruiting and training

Explanation

Planning and controlling are core managerial functions recognised in the classical description of management duties. The other pairs describe specialised activities or sub-parts of staffing and finance rather than the general functions.