NIOS Class 10 Business Studies Chapter 12 Purchase and Sale

NIOS Class 10 Business Studies Chapter 12 Purchase and Sale Solutions to each chapter is provided in the list so that you can easily browse throughout different chapters NIOS Class 10 Business Studies Chapter 12 Purchase and Sale Notes and select need one. NIOS Class 10 Business Studies Chapter 12 Purchase and Sale Question Answers Download PDF. NIOS Study Material of Class 10 Business Studies Notes Paper 215.

NIOS Class 10 Business Studies Chapter 12 Purchase and Sale

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Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 10 Business Studies Chapter 12 Purchase and Sale Solutions, NIOS Secondary Course Business Studies Solutions for All Chapter, You can practice these here.

Purchase and Sale

Chapter: 12

NIOS TEXTBOOK QUESTIONS ANSWERS

Intext Questions 12. 1

Fill in the blanks with appropriate words chosen from those given within brackets: 

(i) Sale and ____________ always go together. (market, purchase, a shop) 

Ans:- Purchase.

(ii) In every sale and purchase, the ________________ pays money to the seller. (shopkeeper, buyer producer) 

Ans:- Buyer.

(iii) Businessmen earn _______ because people buy goods and services for a price. (profit, money, surplus) 

Ans:- Profit.

(iv) Offering goods at a price which customers can afford to pay is a part of _______ function. (selling, marketing, distributing) 

Ans:- Marketing.

(v) All activities directed towards the flow of goods and services from the producer to the consumer are part of ____. (distribution, transportation, selling)

Ans:- Selling.

Intext Question 12. 2

Which of the following statements are true and which are false? 

(i) In auction sales, goods are always sold to the highest bidder even when there is a reserve price. 

Ans:- False.

(ii) Sale on hire-purchase permits the buyer to return the goods at any stage. 

Ans:- True.

(iii) Goods delivered to the buyer ‘on approval’ basis are always paid for in advance. 

Ans:-  False.

(iv) Earnest money payable by tenderers ensures their seriousness about the tender.

Ans:- True.

(v) Wash sales refer to sale of goods at a discount just after a rainy reason.

Ans:-  False.

Intext Questions 12.3

I. Match the columns:

Ans:- 

II. Which of the following statements are ‘right’ and which are ‘wrong’? 

(i) A customer’s account mainly keeps a record of payments made by the customer. 

Ans:- Wrong.

(ii) A ‘dispatch note’ is also known as ‘Letter of Advice’. 

Ans:- Right.

(iii) The buyer must make a claim for damages immediately from the transport authority if he finds goods were damaged in transit. 

Ans:- Right.

(iv) A credit note is intended by the seller to rectify error of excess credit given to the buyer. 

Ans:- Wrong.

(v) A debit note issued by the seller informs the buyer that his account has been debited with a certain amount. 

Ans:- Right.

III. 

(i) When a person wants to buy goods in bulk, the best mode of purchase for him will be. 

(a) Purchase by Inspection. 

(b) Purchase by Sample. 

(c) Purchase by Description. 

(d) Purchase from the nearest retailers. 

Ans:- (b) Purchase by Sample.

(ii) Purchase means: 

(a) Transfer of ownership of goods by a seller in favour of a buyer. 

(b) Physical possession of goods by a person from another person. 

(c) Taking articles from a friend for use for some time period. 

(d) Taking goods/articles on rent/hire from the owner. 

Ans:- (a) Transfer of ownership of goods by a seller in favour of a buyer.

(iii) Which factor should not be considered by a buyer before purchase? 

(a) Identification of buyers used. 

(b) Attributes of the goods/commodity. 

(c) Price affordability. 

(d) Attributes of the Commodity possessed by the neighbour. 

Ans:- (d) Attributes of the Commodity possessed by the neighbour. 

(iv) Which of the following is not a method of sale? 

(a) Sale on cash basis. 

(b) Sale on Hire Purchase basis. 

(c) Sale on Credit basis. 

(d) Sale under Instalment system. 

Ans:- (b) Sale on Hire Purchase basis.

(v) Which of the following is not a step in the Selling Procedure? 

(a) Enquiry by the intending buyer. 

(b) Receipt of order from the buyer. 

(c) Dispatch of goods to the buyer. 

(d) Preparation of Credit Note by the seller.

Ans:- (d) Preparation of Credit Note by the seller.

1. What is meant by ‘purchase’?

Ans:- Purchase is a process through which a person gets the ownership of some goods or properties transferred in his name from another, on payment of money. 

2. State the activities involved in selling a product.

Ans:- Some of the activities involved in selling a product are as follows:

(a) It is important to identify and determine the requirements of the people and design the product or service accordingly. 

(b) The customers must always derive satisfaction from what they buy and therefore continuous improvement of the product or service is required. 

(c) It must be ensured that the product or service is easily available to the customers. 

(d) The price of the product or service should be such that the customers can afford it. 

(e) The customers should be made aware about the product or service and its related benefits both before and after sale.

3. What is meant by ‘Auction Sale’?

Ans:- An auction sale refers to the sale of certain goods openly on a specific date and time so that people may bid for the goods. The goods are sold to the highest bidder. In auction sale, the goods are displayed and there is a reserve price below which goods are not to be sold. 

4. Explain ‘deferred instalment plan’ as a mode of payment.

Ans:- Deferred instalment plans are known as  ‘buy now – pay later’ plan, under this method the buyer pays a nominal amount to the seller at the time of purchase and takes possession of the goods. The balance is paid by him in instalments over a period of time. The instalment is a fixed amount payable monthly or quarterly to the seller and the total payment is equal to the unpaid amount and the interest charged on it.

5. Describe how errors in sending goods and preparing invoices may be rectified?

Ans:- Even though the seller is very careful while sending goods and preparing invoices, there might be certain errors. These errors can be rectified by preparing Credit notes or Debit notes .

Credit Note: A document, which informs the buyer that his account has been credited with a particular amount. 

Debit Note: A document, which informs the buyer that his account has been debited with a particular amount.

6. Differentiate between deferred instalment and hire purchase methods of sale.

Ans:-  

7. What are the various modes one may adopt to make payment for purchase of a product? Explain.

Ans:- The various modes one may adopt to make payment for purchase of a product are:

(i) Immediate payment: In case of immediate payment, the buyer makes full payment to the seller in cash. Of course he can make payment by cheque or draft or credit card or debit card, provided the seller agrees to it. Actually a seller is not bound to accept payment by cheque unless there is an express or implied agreement to that effect.

(ii) Deferred Instalment plan: Mostly known as the ‘buy now – pay later’ plan, under this method the buyer pays a nominal amount to the seller at the time of purchase and takes possession of the goods. The balance is paid by him in instalments over a period of time. The instalment is a fixed amount payable monthly or quarterly to the seller and the total payment is equal to the unpaid amount and the interest charged on it.

(iii) Deferred payment at the end of credit period: When goods are sold on credit, payment is required to be made by the buyer at the end of the agreed period of credit (say) three months. If payment is made by him earlier, the seller allows a special discount which is indicated in the invoice as the net amount payable on prompt payment before the due date.

8. Explain the procedure of sale through tenders.

Ans:- This method of sale is normally found in the case of purchases made by big organisations or government agencies where the quantity of goods required and the amount involved are very large. A tender is an undertaking to supply materials/goods indicating the terms and conditions of sale therein. This method of sale involves responses to tenders invited by intending purchasers with a view to selecting the supplier who offers the most competitive and favourable terms. The advertisement or notice inviting tenders are usually published in one or more newspapers and contains details regarding the goods to be purchased. Particulars and forms for submitting tenders are sometimes made available to the interested parties on applying in response to the advertisement. Tenderers are usually required to deposit earnest money along with the tender. 

9. Describe the different modes for purchase of a product.

Ans:- The different modes for purchase of a product: 

(i) Immediate payment: In case of immediate payment, the buyer makes full payment to the seller in cash. Of course he can make payment by cheque or draft or credit card or debit card, provided the seller agrees to it. Actually a seller is not bound to accept payment by cheque unless there is an express or implied agreement to that effect.

(ii) Deferred Instalment plan: Mostly known as ‘buy now – pay later’ plan, under this method the buyer pays a nominal amount to the seller at the time of purchase and takes possession of the goods. The balance is paid by him in instalments over a period of time. The instalment is a fixed amount payable monthly or quarterly to the seller and the total payment is equal to the unpaid amount and the interest charged on it.

(iii) Deferred payment at the end of credit period: When goods are sold on credit, payment is required to be made by the buyer at the end of the agreed period of credit (say) three months. If payment is made by him earlier, the seller allows a special discount which is indicated in the invoice as the net amount payable on prompt payment before the due date.

10. Explain the various methods that may be adopted to sell a product.

Ans:- The various methods that may be adopted to sell a products are as follows:

(i) Hire Purchase basis: Sale on hire-purchase basis provides for payment of purchase price in instalments. However, the goods are regarded as being on hire until all instalments are paid.

(ii) Sale through Instalment Payment System: When goods are sold and payment is agreed to be made in instalments, it is known as deferred instalment plan of sale. In this case, if there is default in the payment of any instalment by the buyer, the seller cannot ask for the goods to be returned as the ownership rights pass to the buyer when goods are sold and initial payment is made.

(iii) Sale on approval basis: A sale on approval is basically a conditional sale. In this type of sale, goods are delivered to the buyer on payment with the understanding that the buyer can return the goods (the whole lot or even a part of it) to the seller and claim a refund within a specified period, if the goods do not meet his requirements. 

(iv) Sale through tender: This method of sale is normally found in the case of purchases made by big organisations or government agencies where the quantity of goods required and the amount involved are very large. A tender is an undertaking to supply materials/goods indicating the terms and conditions of sale therein. 

(v) Auction sale: An auction sale refers to the sale of certain goods openly on a specific date and time so that people may bid for the goods. The goods are sold to the highest bidder. In auction sale, the goods are displayed and there is a reserve price below which goods are not to be sold. 

(vi) Wash sales: You might have seen advertisements mentioning ‘Grand Clearance Sale – Discounts up to 70%’ or ‘Summer Sale’ or ‘Annual Sale’ etc. These sales are generally conducted to clear surplus or old stocks. Some sellers periodically arrange such sales to dispose off stock. Mostly these sellers offer heavy discounts.

11. State the procedure required to sell a product. 

Ans:- Here is a general outline of the steps involved in selling a product:

(i) Market research: It allows a company to define its target market and get opinions and other feedback from consumers about their interest in a product or service.

(ii) Product development: The product development process encompasses all steps needed to take a product from concept to market availability. This includes identifying a market need, researching the competitive landscape, conceptualising a solution, developing a product roadmap, building a minimum viable product, etc.

(iii) Setting prices: The next two steps involve looking externally at what its target market wants and what competitors are charging. Then, the business is ready to choose a pricing objective, select a pricing strategy and, finally, set a price.

(iv) Marketing and process: A sales promotion is a marketing strategy in which a business uses a temporary campaign or offer to increase interest or demand in its product or service. 

(iv) Customer services: Customer service is the support you offer your customers — both before and after they buy and use your products or services — that helps them have an easy and enjoyable experience with you. 

(v) Legal compliance: Companies generally need to consider certain essential aspects to ensure compliance when offering products or services. Consumer protection laws are an important framework for ensuring fair and transparent treatment of consumers.

12. What steps are required after an order is executed, as part of the Routine Selling?

Ans:- The usual procedure for selling goods, known as Selling Routine, involves the following steps:

(i) Enquiry from the intending buyer: The process of sale starts with an inquiry by the intending buyer from the best available seller in terms of supply, price and quality of goods. This enquiry can be made from secondary sources like advertisements, in newspapers, market reports, catalogues, price lists, etc.

(ii)  Providing quotation to the intending buyers: On receipt of an enquiry from the prospective buyer, the seller provides the required information known as quotation.

(iii) Receipt of order from the buyer: When the prospective buyer is satisfied with the terms and conditions of sale mentioned in the quotation, he issues a formal order to the seller for supply of goods. Order forms are sometimes printed by the buyer.

(iv) Execution of the order: On receiving the order, the seller usually acknowledges it and confirms its acceptance. If the order is executed at once then no confirmation is required. The order is then stamped with date of receipt, assigned a reference number and entered into the Order Received Register.

(v) Invoicing: An invoice contains details of the transaction and the amount to be received by the seller from the buyer. The seller sends the invoice along with the supply of goods to the buyer. 

(vi) Opening Customer’s Account: When the copy of invoice is received by the accounts department, an account is opened in the ledger in the name of the customer. This account keeps a record of the invoice price of goods sold, credit allowed to the customers and payments made by him.

(vii) Dispatch of the goods: For release of the goods the godown or the production department requires a copy of the invoice or a delivery note from the accounts department, or both. Goods released are taken over by the packaging department where there is a final check that all goods are in accordance with the order.

(viii) Delivery of goods to the buyer: After receiving the railway receipt or transport receipt from the seller, the buyer takes delivery of goods from the railway or transport authority. While taking delivery the buyer or his agent must check the goods thoroughly.

(ix) Receipt of payment and settlement of accounts: The last step in the process is the receipt of the payment for goods sold. Payment is made according to the conditions agreed upon earlier. Remittances received are duly acknowledged and sometimes the sellers also issue periodic statements of account. 

It shows the following items: 

(a) The date of sale. 

(b) The amount of goods sold. 

(c) Payment received from the buyer. 

(d) Balance due from the buyer.

(x) Rectification of errors: You have studied so far that the business transaction begins with the buyer’s enquiry about the goods to be purchased and completes when he finally settles his account with the seller. Even though the seller is very careful while sending goods and preparing invoices, there might be certain errors.