Business Services - Solutions

 CBSE Class 11 Business Studies

NCERT Solutions
Business Services


1. Define services and goods.

Ans. A good is a physical product capable of being delivered to a purchaser and involves the transfer of ownership from the seller to the customer.

Services are those intangible activities that provides satisfaction of wants and are not necessary linked to the sale of a product or another service.

2. What is e-banking? What are the advantages of e-banking?

Ans. E-banking means any user with a PC and a browser can get connected to the banks website to perform any of the virtual banking functions and avail of any of the banks services. There is no human operator to respond to the needs of the customer.


1. E-banking provides services 24 hours, 365 days a year to the customers of the bank.

2. Customers can make some of the permitted transactions from office or house or while travelling via mobile phones.

3. It develops a sense of financial discipline by recording each and every transaction.

4. Greater customer satisfaction by offering unlimited access to the bank, not limited by the walls of the branch and less risk as well as greater security to the customer as they can avoid travelling with cash.  

3. Write a note on various telecom services available for enhancing business.

Ans. Telephone is a very common and versatile method of communication. Today, it is the most widely used communication device. Telecom services are available at national level (local and STD) and at international level (ISD). Earlier, in telecom services there was complete monopoly of government telecom system. Now a days, many private telecom companies have entered in the Indian Market. As a result, the efficiency of telecom services is increasing day by day.

4. Explain briefly the principles of insurance with suitable examples.

Ans. The principles of insurance are explained below:

1. Principle of Utmost Good Faith : Under this insurance, contract both the parties should have faith over each other. As a client it is the duty of the insured to disclose all the facts to the insurance company. Any fraud or misrepresentation of facts can result into cancellation of the contract.

2. Principle of Insurable interest : Under this principle of insurance, the insured must have interest in the subject matter of the insurance. Absence of insurance makes the contract null and void. If there is no insurable interest, an insurance company will not issue a policy.

An insurable interest must exist at the time of the purchase of the insurance. For example, a creditor has an insurable interest in the life of a debtor, A person is considered to have an unlimited interest in the life of their spouse etc.

3. Principle of Indemnity : Indemnity means security or compensation against loss or damage. The principle of indemnity is such a principle of insurance stating that an insured person may not be compensated by the insurance company in an amount exceeding the insured's economic loss.

In this type of insurance the insured would be provided compensation with the amount equivalent to the actual loss and not the amount exceeding the loss.

This is a regulatory principle. This principle is observed more strictly in property insurance than in life insurance.

The purpose of this principle is to set back the insured to the same financial position that existed before the loss or damage occurred.

4. Principle of Subrogation : The principle of subrogation enables the insured to claim the amount from the third party responsible for the loss. It allows the insurer to pursue legal methods to recover the amount of loss. For example, if you get injured in a road accident, due to reckless driving of a third party, the insurance company will compensate your loss and will also sue the third party to recover the money paid as claim.

5. Principle of Contribution : If the same subject matter, except life is insured by more than one insurers, then the actual loss will be shared by all the insurers.

6. Principle of Mitigation : If means that the insured should try to minimise the loss of the subject matter of the insurer even if it is insured.

7. Principle of Proximate Cause : Proximate cause literally means the 'nearest cause' or 'direct cause'. This principle is applicable when the loss is the result of two or more causes. The proximate cause means; the most dominant and most effective cause of loss is considered. This principle is applicable when there are series of causes of damage or loss.

5. Explain warehousing and its functions.

Ans. Warehousing refers to holding or keeping of goods from the time of their production or purchase until they are sold or consumed. It removes time gap between production and consumption and thereby creates time utility. In addition to providing services of storage, warehouse also provides logistical service in a cost-effective manner.

Functions of Warehouses

(a) Consolidation: There are certain goods which are produced in small quantities but are sold to consumers in bulk quantity. Such goods need consolidation. Warehouses receive goods in small quantities from different producers and dispatch them to consumers in bulk.

(b) Break the Bulk: This function is just opposite of consolidation. Under it, the warehouse receives the quantity in bulk from the producers and sells them in small quantities to consumer. These small quantities are then sold to customers according to their requirements.

(c) Stock Piling: Usually there is a time gap between production and consumption of goods. Warehouse fills this gap. It stores those goods which are in surplus i.e., whose supply is more than their demand. When demand exceeds supply, it makes goods available from its own stock.

(d) Value Added Services: Warehouses also provide some value added services like transit mixing, packaging and labelling.

(e) Price Stabilization: Warehouses help to equalize demand and supply and thereby stabilize the prices.

(e) Financing: Warehouse owners advance money to owners of goods on the security of these goods and they also provide these goods on credit to customers.