BANGALORE SAHODAYA SCHOOLS COMPLEX ASSOCIATION
PRE-BOARD EXAMINATION -1 (2025 − 2026)
GRADE XII
Date: 10.12.2025 Max Marks: 70
Subject: ENTREPRENEURSHIP (066) Time: 3 hours
ANSWER KEY
SECTION-A (Each question carries one mark) (Time:2 min per answer)
1. TechVation Ltd. has a functional prototype robots and it has quite good number of customers. It now
needs significant funds to scale production and increase market reach. Which stage of venture capital
financing is the company most likely in?
Answer :[Link]/Expansion Stage
2. A business has total sales of ₹5,00,000 for a quarter. The cost of goods sold is ₹3,00,[Link] fixed
expenses amount to 1,50,000. Calculate the Gross Profit.
Answer:b. ₹2,00,000
3. Food delivery applications have transformed the restaurant industry by connecting customers with a
wide variety of dining options from the comfort of their homes. This model essentially repackaged the
existing service of ordering takeaway by making it more convenient, reliable, and accessible through
technology. Which idea field does this business innovation primarily originate from?
Answer:d. Existing products or services
4. Under the Companies Act, 2013, a Private Limited Company enjoys several privileges over a Public
Limited Company to provide ease of doing business. Which of the following is a correct privilege
specifically available to a Private Company?
Answer:a. It can commence its business immediately after receiving the certificate of
incorporation.
5. Mohan and Sohan started an unregistered partnership firm, 'QuickDeliver Courier Services,' in Delhi.
After a year of operations, a dispute arose with a client, 'TechCorp Ltd.,' which refused to pay for
services rendered. Additionally, a disagreement over profit-sharing has caused a conflict between
Mohan and Sohan.
Mohan and Sohan started an unregistered partnership firm, 'QuickDeliver Courier Services,' in Delhi.
After a year of operations, a dispute arose with a client, 'TechCorp Ltd.,' which refused to pay for
services rendered. Additionally, a disagreement over profit-sharing has caused a conflict between
Mohan and Sohan.
Page 1 of 10
As per the Indian Partnership Act, 1932, which of the following are legal consequences of their firm not
being registered?
i. The firm cannot file a suit against TechCorp Ltd. to recover the pending payment.
ii. The firm cannot claim a set-off a mutual adjustment of debts in any legal proceeding with TechCorp
Ltd.
iii. Mohan cannot sue Sohan in court to enforce the terms of their partnership agreement.
iv. The partners will lose the right to limited liability.
Answer:b. (i),( ii), and (iii) only
6. Assertion (A): Different products have the same cash conversion cycle irrespective of the type of
operations.
Reason (R): When conversion takes longer between a firm's purchase of inventory and receipt of cash
from debtors, then the operating cycle will be longer.
Answer:d. Assertion A) is false, Reason R) is true
7. The exclusive right to use a brand name or mark legally is known as:
Answer:c. Trademark
8. According to David Aaker, the goal of a marketing strategy is to:
Answer:b. Increase sales and achieve a sustainable competitive advantage
9. Environmental scanning mainly helps an entrepreneur to:
Answer:b. Identify opportunities and threats in the environment
10. As the people of India are moving more towards natural and chemical free products, Blulife started a
whole production unit for natural FMCG products to compete with other companies dealing in the
FMCG products.
Identify the concept.
Answer: c. Competition
11. When total current assets exceed total current liabilities, it refers to gross working capital . The
statement is
Answer: b. False,( its Net WC)
12. Assertion A.: A franchise agreement is the official document.
Reason R.: Franchising opportunities have often evolved from changes in the environment as well as
important social trends.
Page 2 of 10
Answer: c. Assertion A. is true, Reason R. is false . The evolution of franchising is not primarily
dependent on environmental or social trends but rather on business expansion strategies, legal
frameworks, and economic models.
13. Match the business organisations with their characteristics.
Column I Column II
A. Partnership i. one person
B. Sole Proprietorship ii. Minimum 2 members
C. Public Company iii. Minimum 7 members
D. Private Company iv. Two or More
Answer:d. A-iv., B-ii., C-iii., D-ii.
14. Introduction of smart watches have negatively affected the business of normal watches. Which
environment factor is indicated the above?
Answer:a. Technological factor
15. Aladin and Jasmin wants to expand their business from a small Antique shop to a big store. While
moving forward towards their thought, they realise that they need to conceive idea for new product,
market opportunities and unique value propositions.
Which step are they working on in innovation process?
Answer:[Link] germination
16. Statement I ; When the product is very costly, it is best to use a small distribution channel.
Statement II : A manufacturer should choose the longest channel if the goods are durable in nature.
Answer:c. Both statements I and II are correct
17. Ketan wants to start a bag manufacturing factory. In order to pitch his potential investors, he has
prepared an interesting slide show. Instead of detailed written plan he thinks a presentation with a few
Page 3 of 10
graphs to depict the financial trends of the business will be attractive to awaken the interest of potential
investors.
Which format of business plan is used here by Ketan for his business?
Answer:b. Pitch deck with oral narratives
18. Amish started a business of manufacturing laptops. He went to his friend who is a computer technician
and asked him to help him to formulate a plan for his business. He decides to note down the entire
manufacturing process including the procurement of raw material to making it into the finished product.
It will include the material planning, capacity planning and also inventory management. Which plan is
Amish working on?
Answer:[Link] plan
SECTION-B(Each question carries 2 marks)(Time:5 min per answer.)
19. Product. To attract students, she decided to Offer different flavours like mango, mixed fruit and sugar-
free orange in eco-friendly bottles.
Price:Keep the price slightly lower than branded packed juices
Promotion:also offer a “buy 4, get 1 free” deal during exams.
Place/ Channel:Sell mainly through a small outlet just outside the college gate and also tie up with a
nearby café to place her juices there.
20. A. Enlist any two approaches a company uses to promote its product.
(i) Sales Promotion
(ii) Advertising (Other valid options: Personal selling, Public relations, Direct marketing.)
Or.
B. Evaluate any two factors which are related to the quality and nature of product when a
manufacturer selects the channel of distribution.
Answer:1. Unit value of the product.
2. standardised or customised product
3. perishability
4. technical nature( any two with explanation)
Page 4 of 10
21. What is hostile acquisition? How is it different from friendly acquisition?
Hostile Acquisition:
A takeover where one company acquires another against the wishes of the target company’s
management.
Difference(1 Mark)
• Friendly Acquisition: Done with consent and approval of both companies whereas
Hostile Acquisition: Done without consent and often against resistance from the target company.
22. A manufacturer sells 1000 insulated water bottles annually. Demand for the product is uniform.
Purchase cost per bottle is Rs 50. Holding cost per annum is 10% of purchase cost. Ordering cost is Rs.
100 per order. Calculate Economic Order Quantity for bottles.
Formula-0.5 mark
Steps-0,5 mark
Ans:EOQ = 200 bottles(1 mark)
23. State the various reasons why entrepreneurs seek funds from primary market where the resources are
transferred from the savers to entrepreneurs.
Ans:Entrepreneurs seek funds from the primary market because:
1. To raise long-term capital:
Helps finance expansion and growth projects.
2. Access to a large number of investors:
Enables collection of large funds.
3. Lower cost of funds:
Cheaper than loans from banks or financial institutions.
4. No repayment pressure:
Share capital raised does not require repayment.
(Any two points are sufficient.)
24. Aditya Groups is known for its proven method for operating its business. For using the name and
trademark of Aditya Groups, Suraj Ltd. provides a significant amount and enters franchising in starting
and managing the company. In return Aditya Groups pays royalty. Identify and give the meaning of this
type of enterprise growth opportunity.
Answer: Identified Opportunity: Franchising (1 Mark)
Franchising is a growth strategy in which the franchiser (brand owner) allows another business, the
franchisee, to use its brand name, trademark, business system, and operational methods in return for
fees and royalty.(1 Mark)
The franchisee runs the business using the franchiser’s established model.
Page 5 of 10
SECTION-C ( Each question carries 3 marks. Time:10 min per answer)
25. Elaborate on any three types of franchising.
• Product franchise opportunity: The franchisee gets the right to sell the franchisor’s product line,
using the franchisor’s brand name and trademark.
• Manufacturing franchise opportunity: The franchisee is allowed to manufacture the franchisor’s
products and sell them under the franchisor’s brand.
• Business format franchise opportunity: The franchisee adopts the complete business format
including brand name, operating systems, procedures and support services of the franchisor.
(any three)
26. [Link] is Operating Cycle. Also analyse the types of working capital requirements for trading and
manufacturing business. (1+2=3)
Answer:
The operating cycle refers to the time gap between the purchase of raw materials and the collection of
cash from debtors (customers) after the sale of finished goods.
In simple terms, it is the duration a business takes to:
1. Convert raw materials into finished goods, and
2. Convert finished goods into cash through sales.
(b) Analyze the working capital requirement for the type of business
Answer:
A manufacturing business needs high working capital because large funds remain locked in raw
materials, work-in-progress and finished goods throughout the production cycle.
There is also a time gap between sale of goods and collection from debtors, so more Working capital is
required on a continuous basis to finance credit sales.
In a trading business, the operating cycle is the time period between the purchase of goods for resale
and the collection of cash from the sale of those [Link] capital required is lesser than the
manufacturing business.
OR.
B. Explain any three features of Joint stock company.
Any 3 features with explanation: Voluntary Association, Artificial person, Separate legal entity,
Common Seal
Page 6 of 10
27. A successful Indian tech startup, after years of growth as a private company, filed a draft prospectus
with SEBI to launch an Initial Public Offering (IPO), seeking to raise capital from the public to fund
expansion and provide an exit for early investors.
What are two key advantages for an entrepreneur when taking a company public through such an
issue?.
Answer:Two key advantages for an entrepreneur when taking a company public through an Initial
Public Offering (IPO) are:
1. Access to a Large Pool of Capital
Going public enables the company to raise substantial funds from a wide base of public investors.
This equity capital can be used to finance expansion, invest in new projects, reduce debt, or enhance
infrastructure without increasing the burden of loan repayment or interest costs.
2. Exit Opportunity and Liquidity for Early Investors
An IPO provides an exit route for early investors (such as angel investors, venture capitalists, or
founders) by allowing them to sell their shares in the open market. This liquidity rewards their early
risk-taking and helps in attracting future investors.
28. Explain any three components of Financial Plan.
1. Proforma investment decision.
2. proforma financing decision
3. Proforma Income Statement (Profit & Loss Statement)
4. Proforma Cash Flow Statement
5. Proforma Balance Sheet
6. Break-Even Analysis (any 3 with explanation is sufficient)
29. Explain the important factors involved in sensing entrepreneurial opportunities.
Answer:1. Ability to perceive and preserve basic ideas which could be used commercially
2. ability to harness different sources of information
3. vision and creativity( with a brief explanation)
SECTION-D(Each question carries 5 marks)(Time:15 min per answer)
30. Nidhi, Anu and Preeti decided to start their interior design business. They agreed to share their profits
equally. Identify the business that the trio want to start? Also list any two features of the identified
business.
A, Partnership(1 Mark for Identification)
B. Two or more persons, Agreement (or any other 2 valid features with explanation)(1.5 x 2=3)
31. Maria and Sara are partners who have just completed their graduation in fashion designing. Explain
price and its methods used in pricing decisions which would help them to understand pricing.
Meaning of price: (1 Mark)
Price is the amount of money (and/or other considerations) that a buyer gives to obtain a product or
service.
Methods of pricing (any four ):(4 Mark)
• Cost-plus pricing: Price is fixed by adding a standard mark-up for profit to the total cost per unit.
Page 7 of 10
• Variable cost pricing: Price is based mainly on variable cost per unit plus a contribution towards
fixed cost and profit. Different rates extended to different customers.
• Skimming pricing: A high initial price is charged when a new or innovative product is introduced, to
“skim” maximum revenue from customers willing to pay more.
• Penetration pricing: A low initial price is set to enter the market quickly and gain a large market
share.
32. Read the following text and answer the questions based on it.
"Sweet Savouries' was a partnership firm, owned by Suraj and Sushant. Suraj and Sushant were sharing
profits in 1:2 ratios. By 1990, they had set up a shop in Kolkata which sells savouries and sweets. It was
word of mouth that grew the business manifold over the next decade till 'Sweet Savouries' came to
stand for a sweet company that was synonymous with taste, hygiene and innovation. 'Plum Sweets' was
another partnership firm owned by Raj and Akhil. Raj and Akhil were sharing profits in 2:3 ratios. Both
the firms were situated in a famous market of Kolkata and were doing competitive business. Akhil the
partner of 'Plum Sweets' observed that many of their customers were from far off areas and if branches
of 'Plum Sweets' are opened in other parts of the city; the firm may earn huge profits. Similar was the
situation of 'Sweet Savouries'. One day the partners of both the firms met, in a marriage function at a
common friend's house. The partners of both the firms knew that the internal expansion of their
respective firms will be costly. Hence, they decided about the merger of the two firms. For this purpose,
they decided to meet again to finalise the conditions of the merger. Finally, on 1st March 2000, their
respective firms were merged and a new firm 'Plum Sweet Savouries' was formed with all the four
partners Suraj, Sushant, Raj and Akhil. Their new profit-sharing ratio was 1 : 2 : 2 : 3. During the year
ended 31st December 2000, the new firm opened eight new branches in different parts of the city and
earned a profit of 50% on sales.
a. Which of the following type of merger was adopted by the two firms?
Answer:The two firms adopted a Horizontal Merger. (1 Mark)
b. What takes place between two companies that deal in the same product but in separate markets?
Identify and explain the concept.
Answer: The concept is a Market Extension Merger.
Explanation: This is a type of horizontal merger where companies that sell the same products or
services in different geographic markets merge together. The primary goal is to gain access to a larger
market and new customer bases without developing new products. (1+1=2 Marks)
c. Mention two advantages of merger.
Answer:1. Economies of Scale: The combined firm can operate at a larger scale, leading to lower
average costs per unit. This is achieved through bulk purchasing, shared administrative functions, and
better utilization of resources.
Page 8 of 10
2. Increased Market Power and Reduced Competition: The merger eliminates a direct competitor,
leading to greater market share. This enhanced market position can provide more control over pricing
and improve bargaining power with suppliers and customers.(2 Marks)
33. Navya started her herbal beauty product shop in Jaipur with a capital of Rs 9,00,000. She took a loan of
Rs 5,00,000 from State Bank of India at 9% p.a interest. During the year ended 31st march 2016, her
sales were Rs 20,90,000 and the cost of goods sold was Rs 15,30,000. She paid monthly rent of the
shop Rs 11,000 and a monthly salary of Rs 25,000 to the employees. The tax rate is 30%. Calculate the
Return on Equity.
Answer:
Step 1: Identify Owners' Equity
Equity (Capital) = ₹ 9,00,000
Step 2: Calculate Gross Profit
Gross Profit = Sales − Cost of Goods Sold
= ₹ 20,90,000 − ₹ 15,30,000
= ₹ 5,60,000
Step 3: Calculate Annual Expenses
· Rent = ₹ 11,000/month × 12 months = ₹ 1,32,000
· Salary = ₹ 25,000/month × 12 months = ₹ 3,00,000
Total Operating Expenses = ₹ 1,32,000 + ₹ 3,00,000 = ₹ 4,32,000
Step 4: Calculate Earnings Before Interest and Tax (EBIT)
EBIT = Gross Profit − Operating Expenses
= ₹ 5,60,000 − ₹ 4,32,000
= ₹ 1,28,000
Step 5: Calculate Interest on Loan
Interest = 9% of ₹ 5,00,000
= 0.09 × ₹ 5,00,000
= ₹ 45,000
Step 6: Calculate Profit Before Tax (PBT)
PBT = EBIT − Interest
= ₹ 1,28,000 − ₹ 45,000
= ₹ 83,000
Step 7: Calculate Tax
Page 9 of 10
Tax = 30% of PBT
= 0.30 × ₹ 83,000
= ₹ 24,900
Step 8: Calculate Net Profit After Tax
Net Profit After Tax = PBT − Tax
= ₹ 83,000 − ₹ 24,900
= ₹ 58,100
Step 9: Calculate Return on Equity (ROE)
ROE = (Net Profit After Tax ÷ Equity) × 100
= (₹ 58,100 ÷ ₹ 9,00,000) × 100
≈ 6.46%
34. Zomato Acquires Blinkit (2022)
Zomato, a leading Indian food delivery and restaurant discovery platform, acquired Blinkit (formerly
Grofers) in 2022 in an all-stock deal valued at approximately ₹4,447 crore ($568 million).
Blinkit was a quick-commerce (q-commerce) grocery delivery startup, promising delivery of groceries
and essentials within 10–15 minutes through a network of dark stores.
Before the Acquisition: Zomato was a major player in food delivery but faced intense competition from
Swiggy, which had already launched its own quick grocery service, Swiggy Instamart. Blinkit was
struggling with cash burn.
Give reasons for mergers and acquisitions.
Answer:
1. Synergy.
2. acquiring new technology
3. improve profitability
4. acquiring a competency
5. entry into new markets
6. access to funds
7. tax benefits( any five with explanation)
******************************* All the best.************************************
Page 10 of 10