Inter 1st Year

Practicing the Intermediate 1st Year Maths 1B Textbook Solutions Chapter 4 సరళరేఖాయుగ్మాలు Exercise 4(a) will help students to clear their doubts quickly.

AP Inter 1st Year Maths 1B Solutions Chapter 4 సరళరేఖాయుగ్మాలు Exercise 4(a)

అభ్యాసం – 4 (a)

I.

ప్రశ్న 1.
ఈ క్రింద ఇచ్చిన ప్రతీ సరళరేఖాయుగ్మపు మధ్య లఘు కోణాన్ని కనుక్కోండి.
i) x² – 7xy + 12y² = 0
ii) y² – xy – 6x² = 0
iii) (x cos α- y sin α)² = (x² + y²) sin² α
iv) x² + 2xy cot α – y² = 0
సాధన:
i) x² – 7xy + 12y² = 0
a = 1, b = 12, h = –\(\frac{7}{2}\)
tan θ = \(\frac{2 \sqrt{h^2-a b}}{a+b}\)
= \(\frac{2 \sqrt{\frac{49}{4}-12}}{1+12}=\frac{2 \sqrt{\frac{1}{4}}}{13}=\frac{\sqrt{1}}{13}\)
tan θ = \(\frac{1}{13}\) ⇒ θ = tan^-1 \(\left(\frac{1}{13}\right)\)

ii) y² – xy – 6x² = 0
a = – 6, b = 1, h = –\(\frac{1}{2}\)

iii) (x cos α- y sin α)² = (x² + y²) sin² α
x² cos² α + y² sin² α – 2xy cos α sin α = x² sin² α + y² sin²α
.. x² (cos² α – sin² α) – 2xy cos α sin α = 0
x² . cos 2α – xy sin 2α = 0
a = cos 2α, b = 0, 2h = – sin 2α
cos θ = \(\frac{|\cos 2 \alpha+0|}{\sqrt{(\cos 2 \alpha-0)^2+\sin ^2 2 \alpha}}\)
= cos 2α
∴ θ = 2α

iv) x² + 2xy cot α – y² = 0
a + b = 1 – 1 = 0
∴ θ = \(\frac{\pi}{2}\)

II.

ప్రశ్న 1.
క్రింద సరళరేఖాయుగ్మాల జతలు ఇవ్వడమైంది. వాటిలో ప్రతీ జతకి ఒకే కోణీయ సమద్విఖండన రేఖాయుగ్మం ఉంటుందని చూపండి. (అంటే ప్రతి జతలోను ఒకే రేఖా యుగ్మంలోని రేఖలు రెండో రేఖాయుగ్మంలోని రేఖలతో సమాన నిమ్నత కలిగి ఉంటాయి.)
i) 2x² + 6xy + y² = 0,
4x² + 18xy + y² = 0.
ii) a²x² + 2h(a + b) xy + b²y² = 0,
ax² + 2hxy + by² = 0; a + b ≠ 0.
iii) ax² + 2hxy + by² + 2(x² + y²) = 0; (λ ∈ R),
ax² + 2hxy + by² = 0.

సాధన:
i) OA, OB ల ఉమ్మడి సమీకరణము
2x² + 6xy + y² = 0
కోణ సమద్విఖండన రేఖల సమీకరణము
3(x² – y²) = (2 – 1) xy
3(x² – y²) = xy ……………….. (1)
OP, OQ ల ఉమ్మడి సమీకరణము
4x² + 18xy + y² = 0
కోణ సమద్విఖండన రేఖల సమీకరణం
9(x² – y²) = (4 − 1) xy
9(x² – y²) = 3xy
3(x² – y²) = xy ……………….. (2)
(1), (2) ఒక్కటే కనుక
∴ OA, OB లు OP, OQ లు సమాన నిమ్నత కలిగి ఉన్నాయి.

ii) OA, OB ల ఉమ్మడి సమీకరణము
a²x² + 2h(a + b) xy + b²y² = 0
కోణ సమద్విఖండన రేఖల సమీకరణము
h (a + b) (x² – y²) = (a² – b²) xy
h (a + b) (x² – y²) = (a + b)(a – b) xy
i.e., h(x² – y²) = (a – b) xy ……………. (1)
OP, OQ ల ఉమ్మడి సమీకరణము
ax² + 2hxy + by² = 0
కోణ సమద్విఖండన రేఖల సమీకరణము
h (x² – y²) = (a – b) xy ………………. (2)
(1), (2) ఒకటే
∴ OA, OB లు OP, OQ లు సమాన నిమ్నత కలిగి ఉన్నాయి.

iii) OA, OB ల ఉమ్మడి సమీకరణము
ax² + 2hxy + by² + 2 (x² + y²) = 0
(a + λ) x² + 2hxy + (b + 2λ) y² = 0
OA, OB ల కోణ సమద్విఖండన రేఖల సమీకరణము
h (x² – y²) = (a + λ – b – λ)xy
= (a – b) xy ……………… (1)
OP, OQ ల ఉమ్మడి సమీకరణము
ax² + 2hxy + by² = 0
OP, OQ ల సమద్విఖండన రేఖల సమీకరణము
h(x² – y²) = (a – b) xy ……………… (2)
(1), (2) ఒకటే కనుక
∴ OA, OB లు OP, OQ లు సమాన నిమ్నత కలిగి ఉన్నాయి.

ప్రశ్న 2.
6x² + 2hxy + y² = 0 తో సూచించే సరళరేఖల వాలులు 1 : 2 నిష్పత్తిలో ఉంటే h విలువ కనుక్కోండి.
సాధన:
దత్త రేఖల ఉమ్మడి సమీకరణము
6x² + 2hxy + y² = 0
వాటి విడివిడి సమీకరణాలు
y = m₁x మరియు y = m₂x అనుకొనుము.
∴ m₁ + m₂ = \(\frac{-2 h}{6}=-\frac{h}{3}\) , m₁m₂ = \(\frac{1}{6}\)
దత్తాంశం \(\) ⇒ m₂ = 2m₁
3m₁ = –\(\frac{h}{3}\) ; 2m₁² = \(\frac{1}{6}\)
m₁ = –\(\frac{h}{9}\) ; m₁² = \(\frac{1}{12}\)
\(\left(-\frac{\mathrm{h}}{9}\right)^2=\frac{1}{12}\)
\(\frac{h^2}{81}=\frac{1}{12}\)
h² = \(\frac{81}{12}=\frac{27}{4}\)
h = ± \(\sqrt{\frac{27}{4}}=\pm \frac{3 \sqrt{3}}{2}\)

ప్రశ్న 3.
ax² + 2hxy + by² = 0 ఒక రేఖాయుగ్మింలోని రేఖలలో ఒక దాని వాలు రెండో దాని వాలుకు రెట్టింపయితే 8h² = 9ab అని చూపండి
సాధన:
దత్త రేఖలు ఉమ్మడి సమీకరణము
ax² + 2hxy + by² = 0
y = m₁x మరియు y = m₂x లు వాటి విడి విడి సమీకరణాలు అనుకొందాం.
∴ m₁ + m₂ = –\(\frac{2 h}{b}\), m₁m₂ = \(\frac{a}{b}\)
m₂ = 2m₁ కనుక
∴ 3m₁ = –\(\frac{2 h}{b}\) ; 2m₁² = \(\frac{a}{b}\)
m₁ = – \(\frac{2 h}{3}\) ; m₁² = \(\frac{a}{2b}\)
∴ \(\left(-\frac{2 h}{3 b}\right)^2=\frac{a}{2 b}\)
\(\frac{4 h^2}{9 b^2}=\frac{a}{2 b}\)
8h² = 9ab.

ప్రశ్న 4.
మూలబిందువు గుండా పోతూ 3x – y – 1 = 0 అనే సరళరేఖతో 30° కోణం చేసే సరళరేఖాయుగ్మం సమీకరణం 13x² + 12xy – 3y = 0 అని చూపండి.

సాధన:
AB సమీకరణము 3x – y – 1 = 0
OA, OB లు AB తో 30° కోణం చేస్తూ మూలబిందువు గుండా పోతుంది.
OA వాలు m అనుకొందాం.
∴ OA సమీకరణము
y – 0 = m (x − 0) = mx లేదా mx – y = 0
cos ∠OAB = \(\frac{|3 m+1|}{\sqrt{9+1} \sqrt{m^2+1}}\)
cos ∠OAB = cos 30° = \(\frac{\sqrt{3}}{2}\)
∴ \(\frac{\sqrt{3}}{2}=\frac{|3 m+1|}{\sqrt{10} \sqrt{m^2+1}}\)
వర్గీకరించి, అడ్డ గుణకారము చేయగా,
\(\frac{3\left(m^2+1\right)}{4}=\frac{(3 m+1)^2}{10}\)
15(m² + 1) = 2 (3m + 1)²
15m² + 15 = 2 (9m² + 6m + 1)
= 18m² + 12m + 2
3m² + 12m – 13 = 0
m₁, m₂ లు మూలాలనుకుందాం.
m₁ + m₂ = -4, m₁ m₂ = \(\frac{-13}{3}\)
OA, OB ల ఉమ్మడి సమీకరణము
(m₁x – y) (m₁x – y) = 0
m₁m₁ x² – (m₁ + m₂) xy + y² = 0
\(\frac{-13}{3}\) x² + 4xy + y² = 0
-13x² + 12 xy + 3y² = 0 (లేదా)
13x² – 12xy – 3y² = 0

ప్రశ్న 5.
మూలబిందువు గుండాపోతూ x + y + 5 = 0 సరళరేఖతో లఘుకోణం α చేసే సరళరేఖాయుగ్మం సమీకరణం కనుక్కోండి.

సాధన:
AB సమీకరణము x + y + 5 = 0
AB వాలు = -1
OA, OB లు కావలసిన రేఖలు
OA సమీకరణము y = mx ⇒ mx – y = 0
cos α = \(\frac{\left|a_1 a_2+b_1 b_2\right|}{\sqrt{a_1^2+b_1^2} \sqrt{a_2^2+b_2^2}}\)
= \(\frac{|m-1|}{\sqrt{2} \sqrt{m^2+1}}\)
2(m² + 1) cos² α = (m – 1)²
2(m² + 1) = \(\frac{(m-1)^2}{\cos ^2 \alpha}\) = (m – 1)² sec² α.
2m² + 2 = m² sec² α – 2m sec² α + sec² α.
m² (sec² α – 2) – 2m sec² α + (sec² α – 2) = 0
m₁ + m₁ = \(\frac{2 \sec ^2 \alpha}{\sec ^2 \alpha-2}\), m₁m₂ = 1
OA, OB ల ఉమ్మడి సమీకరణము
(y – m₁x) (y – m₂x) = 0
y² – (m₁ + m₂) xy + m₁m₂ x² = 0
y² + \(\frac{2 \sec ^2 \alpha}{\sec ^2 \alpha-2}\) . xy + x² = 0
m₁ + m₂ = \(\frac{2 \sec ^2 \alpha}{\sec ^2 \alpha-2}=\frac{2}{1-2 \cos ^2 \alpha}\)
= \(\frac{-2}{2 \cos ^2 \alpha-1}=\frac{-2}{\cos 2 \alpha}\)
= 2 sec 2 α
OA, OB ల ఉమ్మడి సమీకరణాలు
x² + 2xy sec 2α + y² = 0

ప్రశ్న 6.
(x + 2a)² – 3y² = 0, x = లు సూచించే రేఖలు ఒక సమబాహు త్రిభుజాన్ని ఏర్పరుస్తాయని చూపండి.
సాధన:
OA, OB ల ఉమ్మడి సమీకరణము
(x + 2a)² – 3y² = 0
(x + 2a)² – (\(\sqrt{3}\)y)² = 0
(x + 2a + \(\sqrt{3}\) y) (x + 2a – \(\sqrt{3}\)y) = 0

∴ ∆OAB సమబాహు త్రిభుజం.

ప్రశ్న 7.
(ax + by)² = c(bx – ay)², c > 0 తో సూచించే సరళరేఖల మధ్యకోణాల సమద్విఖండన రేఖలు ax+ by + k= 0 సరళరేఖకు సమాంతరంగాను, లంబంగాను ఉంటాయని చూపండి.
సాధన:
దత్త రేఖల ఉమ్మడి సమీకరణాలు,
(ax + by)² = c (bx – ay)²
a²x² + b²y² + 2ab xy = c (b²x² + a²y² – 2abxy)
= c b²x² +ca²y² – 2cabxy
(a² – cb²)x² + 2ab (1 + c²) xy + (b² – ca²)y² = 0
కోణ సమద్విఖండన రేఖల సమీకరణము
h (x – y²) = (a – h) xy
ab (1 + c) (x² – y²)
= (a² – cb² – b² + ca²) (x² – y²) = 0
= (a² – b²)(1 + c) xy.
i.e., ab (x² – y²) – (a² – b²) xy = 0
(ax + by) (bx – ay) = abx² – a²xy + b²xy – aby²
= ab (x² – y²) – (a² – b²) xy
∴ కోణ సమద్విఖండన రేఖల సమీకరణము
(ax + by) (bx – ay) = 0
సమద్విఖండన రేఖలు ax + by = 0 మరియు bx – ay = 0
ax + by = 0 కు సుమాంతరం ax + by + k = 0
bx – ay = 0 కు సుమాంతరం ax + by + k = 0.

ప్రశ్న 8.
2x² – 5xy + 3y² = 0 అనే సమీకరణం ఒక సమాంతర చతుర్భుజపు రెండు పక్క భుజాలను సూచిస్తుంది. దీని వికర్ణాలలో ఒకదాని సమీకరణం x + y + 2 = 0 అయితే, ఆ సమాంతర చతుర్భుజపు శీర్షాలు, రెండో వికర్ణం సమీకరణం కనుక్కోండి.

సాధన:
OA, OB ల ఉమ్మడి సమీకరణము
2x² – 5xy + 3y² = 0 …………… (1)
AB సమీకరణము x + y + 2 = 0
y = (x + 2)
(1) లో ప్రతిక్షేపించగా
2x² + 5x (x + 2) + 3(x + 2)² = 0
2x² + 5x² + 10x + 3(x² + 4x + 4) = 0
7x² + 10x + 3x² + 12x + 12 = 0
10x² + 22x + 12 = 0
5x² + 11x + 6 = 0
(x + 1) (5x + 6) = 0
x + 1 = 0 లేదా 5x + 6 = 0
x = – 1 లేదా 5x = – 6
x = –\(\frac{6}{4}\)
y = (x + 2)
x = -1 ⇒ y = -(-1 + 2) = -1
⇒ A నిరూపకాలు (−1, -1)
x = –\(\frac{6}{5}\) ⇒ y = -(-\(\frac{6}{5}\) + 2) = –\(\frac{4}{5}\)
⇒ B నిరూపకాలు \(\left(-\frac{6}{5},-\frac{4}{5}\right)\)
కర్ణాలు AB, OC లు ‘O’ వద్ద ఖండించుకొంటాయి.
AB, OC ల మధ్యబిందువు
C నిరూపకాలు (x, y) అనుకుందాము.
OC మధ్యబిందువు = AB మధ్య బిందువు
\(\left(\frac{x}{2}, \frac{y}{2}\right)=\left(\frac{-1-\frac{6}{5}}{2}, \frac{-1-\frac{4}{5}}{2}\right)\)
∴ x = -1 – \(\frac{6}{5}\) = –\(\frac{11}{5}\) ;
y = -1 – \(\frac{4}{5}\) = –\(\frac{9}{5}\)
C నిరూపకాలు \(\left(-\frac{11}{5},-\frac{9}{5}\right)\)
∴ శీర్షాలు O(0, 0), A (-1, -1)
C\(\left(-\frac{11}{5},-\frac{9}{5}\right)\) , B\(\left(-\frac{6}{5},-\frac{4}{5}\right)\)
OC సమీకరణము y – 0 = \(\frac{\frac{-9}{5}}{\frac{-11}{5}}(x-0)\)
y = \(\frac{9}{11}\) ⇒ 11y = 9x
లేదా 9x – 11y = 0

ప్రశ్న 9.
కింది రేఖలతో ఏర్పడే త్రిభుజం కేంద్రభాసం, వైశాల్యం కనుక్కోండి.
i) 2y² – xy – 6x² = 0, x + y + 4 = 0
ii) 3x² – 4xy + y² = 0, 2x – y = 6

సాధన:
i) OA, OB ల ఉమ్మడి సమీకరణాలు
2y² – xy – 6x² = 0 …………….. (1)
AB సమీకరణము x + y + 4 = 0
y = -(x + 4) ……………… (2)
(1) లో ప్రతిక్షేపించగా
2(x + 4)² + x (x + 4) – 6x² = 0
2(x² + 8x + 16) + x² + 4x – 6x² = 0
2x² + 16x + 32 + x² + 4x – 6x² = 0
-3x² + 20x + 32 = 0
3x² – 20x – 32 = 0
(3x + 4) (x – 8) = 0
3x + 4 = 0 లేదా x – 8 = 0
3x = -4 లేదా x = 8
x = –\(\frac{4}{3}\) లేదా 8

సందర్భం (i) : x = –\(\frac{4}{3}\)
y = – (x + 4)
= -(\(\frac{-4}{3}\) + 4) = –\(\frac{8}{3}\)
A నిరూపకాలు \(\left(-\frac{4}{3},-\frac{8}{3}\right)\)

సందర్భం (ii) : x = 8
y = – (x + 4) = – (8 + 4) = -12
B నిరూపకాలు (8, – 12)
∆AOB కేంద్ర భాసము G అనుకుందాం.
G నిరూపకాలు

ii) OA, OB ల ఉమ్మడి సమీకరణము,
3x² – 4xy + y² = 0 ……………. (1)
AB సమీకరణము 2x – y = 6
y = 2x – 6 ……………… (2)
(1) లో ప్రతిక్షేపించగా
3x² – 4x (2x – 6) + (2x – 6)² = 0
3x² – 8x² + 24x + 4x² + 36 – 24x = 0
-x² + 36 = 0
x² – 36 = 0
(x + 6) (x – 6) = 0
x + 6 = 0 లేదా x – 6 = 0
x = 6 లేదా 6
y = 2x – 6
x = 6y ⇒ y = 12 – 6 = 6
A నిరూపకాలు (6, 6)
x = -6y ⇒ u = -12 – 6 = -18
B నిరూపకాలు (-6, 18)
G నిరూపకాలు
\(\left(\frac{0+6-6}{3}, \frac{0+6-18}{3}\right)\) = (0, -4)
∆ OAB = \(\frac{1}{2}\)|x₁y₂ – x₂y₁|
= \(\frac{1}{2}\)|(6 (-18) – (-6) . 6|
= \(\frac{1}{2}\) |-108 + 36
= \(\frac{1}{2}\) . 72 = 36 చ. యూనిట్లు

ప్రశ్న 10.
(2, -1) బిందువు వద్ద ఖండించుకొంటూ 6x² – 13xy – 5y² = 0 సూచించే రేఖాయుగ్మానికి
i) లంబంగా ఉండే రేఖాయుగ్మపు సమీకరణం,
ii) సమాంతరంగా ఉండే రేఖాయుగ్మపు సమీకరణం కనుక్కోండి.
సాధన:
OA, OB ల సమీకరణము 6x² – 13xy – 5y² = 0
i) (x₁, y₁) గుండా పోతూ
ax² + 2hxy + by² = 0 కు లంబంగా ఉండే రేఖా సమీకరణము
b (x – x₁)² – 2h (x – x₁) (y – y₁) + a (y – y₁)² = 0
లంబరేఖల సమీకరణము
-5(x – 2)² + 13(x – 2) (y + 1) + 6(y + 1)² = 0
-5(x² – 4x + 4) + 13 (xy + x – 2y – 2) + 6 (y² + 2y + 1) = 0
-5x² + 20x – 20 + 13xy + 13x – 26y – 26 + 6y² + 12y + 6 = 0
-5x² + 13xy + 6y²+ 33x – 14y – 40 = 0
లేదా 5x² – 13xy – 6y² – 33x + 14y + 40 = 0

ii) (x₁, y₁) గుండాపోతూ ax² + 2hxy + by² = 0
సమాంతరంగా ఉండే రేఖల సమీకరణము
a (x – x₁)² + 2h (x – x₁) (y – y₁) + b(y – y₁)² = 0
సమాంతర రేఖల సమీకరణము
6 (x − 2)² – 13 (x − 2) (y + 1) − 5 (y + 1)² = 0
6 (x² – 4x + 4) – 13 (xy + x – 2y – 2) – 5 (y² + 2y + 1) = 0
6x² – 24x + 24 – 13xy – 13x + 26y + 26 – 5y² – 10y – 5 = 0
6x² – 13xy – 5y² – 37x + 16y + 45 = 0.

ప్రశ్న 11.
3x – 4y + 7 = 0, 12x + 5y – 2 = 0 సరళరేఖల మధ్య లఘుకోణ సమద్విఖండన రేఖ సమీకరణం కనుక్కోండి.
సాధన:
దత్త రేఖలు 3x – 4y + 7 = 0 ……………… (1)
12x + 5y – 2 = 0 ……………….. (2)
(1) & (2) రేఖల కోణ సమద్విఖండన రేఖల సమీకరణము
\(\frac{3 x-4 y+7}{\sqrt{3^2+4^2}} \pm \frac{12 x+5 y-2}{\sqrt{12^2+5^2}}\) = 0
⇒ \(\frac{3 x-4 y+7}{5} \pm \frac{12 x+5 y-2}{13}\) = 0
13 (3x – 4y + 7) ± 5 (12x + 5y – 2) = 0
(39x – 52y + 91) ± (60x + 25y -10) = 0
(i) 39x – 52y + 91 + 60x + 25y – 10 = 0
99x – 27y + 81 = 0 ……………… (3)
లేదా 11x – 3y + 9 = 0

(ii) (39x – 52y + 51) – (60x + 25y – 10) = 0
39x – 52y + 51 – 60x – 25y + 10 = 0
– 21x – 77y + 61 = 0
21x + 77y – 61 = 0 …………….. (4)
(1), (4) రేఖల మధ్య కోణము ‘0’ అయితే
tan θ = + \(\left|\frac{a_1 b_2-a_2 b_1}{a_1 a_2+b_1 b_2}\right|=\left|\frac{231+84}{63-308}\right|\)
= \(\frac{315}{225}\) > 1
∴ (4) గురు కోణ సమద్విఖండన రేఖ (3) సూచించే రెండవది లఘుకోణ సమద్విఖండన రేఖ.
∴ 11x – 3y + 9 = 0 రేఖ లఘుకోణ సమద్విఖండన రేఖ.

ప్రశ్న 12.
x + y – 5 = 0, x – 7y + 7 = 0 అనే సరళరేఖల మధ్య అధిక (గురు) కోణ సమద్విఖండన రేఖ సమీకరణం కనుక్కోండి.
సాధన:
దత్త రేఖలు
x + y – 5 = 0 …………….. (1)
x – 7y + 7 = 0 ………………… (2)
(1), (2) మధ్యకోణ సమద్విఖండన రేఖలు
\(\frac{x+y-5}{\sqrt{1+1}} \pm \frac{x-7 y+7}{\sqrt{1+49}}\) = 0
⇒ \(\frac{x+y-5}{\sqrt{2}} \pm \frac{x-7 y+7}{5 \sqrt{2}}\) = 0
⇒ (5x + 5y – 25) ± (x – 7y + 7) = 0
i) 5x + 5y – 25 + x – 7y + 7 = 0
6x – 2y – 18 = 0
3x – y – 9 = 0 ………………. (3)

ii) (5x + 5y – 25) – (x – 7y + 7) = 0
4x + 12y – 32 = 0
x + 3y – 8 = 0 ………………. (4)
(1), (4) రేఖల మధ్య కోణము ‘θ’ అయితే
tan θ = \(\frac{a_1 b_2-a_2 b_1}{a_1 a_2+b_1 b_2}=\frac{3-1}{1+3}=\frac{2}{4}=\frac{1}{2}\) < 1
∴ (4) లఘుకోణ సమద్విఖండన రేఖ గురుకోణ సమద్విఖండన రేఖ సమీకరణము 3x – y – 9 = 0.

III.

ప్రశ్న 1.
(lx + my)² – 3(mx – ly)² = 0, lx + my + n = 0 అనే సరళరేఖలతో ఏర్పడే త్రిభుజం \(\frac{n^2}{\sqrt{3}\left(l^2+m^2\right)}\) వైశాల్యం గల సమబాహు త్రిభుజం అని నిరూపించండి. [T.S Mar. ’15]
సాధన:
OA, OB ల ఉమ్మడి సమీకరణము
(lx + my)² – 3(mx – ly)² = 0
l²x² + m²y² + 21mxy – 3m²x² – 3l² y² + 6 lmxy = 0
(l² – 3m²) x² + 8lmxy + lm² − 3l²) y² = 0
cos ∠AOB = \(\frac{|a+b|}{\sqrt{(a-b)^2+4 n^2}}\)
= \(\frac{\left|l^2-\mathrm{m}^2+\mathrm{m}^2-3 l^2\right|}{\sqrt{\left(l^2-3 \mathrm{~m}^2-\mathrm{m}^2+3 l\right)^2+a l^2 \mathrm{~m}^2}}\)
= \(\frac{2\left|l^2+m^2\right|}{4 \sqrt{\left(l^2-m^2\right)^2+4 l^2 m^2}}=\frac{2\left|l^2+m^2\right|}{4\left(l^2+m^2\right)}=\frac{1}{2}\)
= cos 60°
∠AOB = 60°
OA, OB ల సమద్విఖండన రేఖ ఉమ్మడి సమీకరణము
h (x² – y²) = (a – b) xy
4 lm (x² – y²) = (x² – 3m² – m² + 3l² xy)
4 lm (x² − y²) = 4(l² – m²)
lmx² – (l² – m²)xy – lmy² = 0
(lx – my) (mx – ly) = 0
lx + my = 0 మరియు mx – ly = 0
∴ సమద్విఖండన రేఖ mx – ly = 0 కు లంబంగా ఉంటే
lx + my + n = 0.
OAB సమద్విబాహు త్రిభుజం ∠AOB = 60°
OAB సమబాహు త్రిభుజం
P = P నుండి AB మీదకు లంబదూరం
= \(\frac{|n|}{\sqrt{l^2+m^2}}\)
ΔΟΑΒ = \(\frac{\mathrm{p}^2}{\sqrt{3}}=\frac{\mathrm{n}^2}{\sqrt{3}\left(l^2+\mathrm{m}^2\right)}\) చ. యూనిట్లు.

ప్రశ్న 2.
3x² + 48xy + 23y² = 0, 3x – 2y + 13 = 0 అనే సరళరేఖలతో ఏర్పడే త్రిభుజం \(\frac{13}{\sqrt{3}}\) చ.యూ. వైశాల్యంగా గల సమబాహు త్రిభుజం అని నిరూపించండి.
సాధన:
OA, OB ల ఉమ్మడి సమీకరణాలు
3x² + 48xy + 23y² = 0 …………………. (1)
AB సమీకరణం 3x – 2y + 13 = 0 …………….. (2)
(1) ని
(9x² – 12xy + 4y²) – 3(4x² + 12xy + 9y²) = 0
ఈ విధంగా రాయగలము.
i.e., (3x – 2y)² – 3(2x + 3y)² = 0
⇒ [(3x – 2y) + \(\sqrt{3}\) (2x + 3y)] [(3x – 2y) – \(\sqrt{3}\) (2x + 3y)] = 0
⇒ [(3 + 2\(\sqrt{3}\))x + (3\(\sqrt{3}\) – 2)y] [(3 – 2\(\sqrt{3}\))x – (3\(\sqrt{3}\) + 2)y] = 0
OA సమీకరణము
(3 + 2 \(\sqrt{3}\))x − (3\(\sqrt{3}\) – 2)y = 0 ……………….. (1)
OB సమీకరణము
(3 – 2\(\sqrt{3}\))x – (3\(\sqrt{3}\) + 2)y = 0 ……………….. (2)

∴ OAB సమబాహు త్రిభుజము

ప్రశ్న 3.
ax² + 2hxy + by² = 0 సూచించే రేఖాయుగ్మపు మధ్యకోణాల సమద్విఖండన రేఖాయుగ్మం మధ్య కోణాలను సమద్విఖండన చేసే రేఖాయుగ్మం సమీకరణం (a – b) (x² – y²) + 4hxy = 0 అని నిరూపించండి.
సాధన:
దత్త రేఖల సమీకరణము
ax² + 2hxy + by² = 0
కోణ సమద్విఖండన రేఖల సమీకరణము
h (x² – y²) = (a – b) xy ………………. (1)
hx² – hy² – (a – b) xy = 0
∴ A = h, B = – h; 2H = – (a – b)
(1) యొక్క సమద్విఖండన రేఖల సమీకరణము
H(x² – y²) = (A – B) xy
– \(\frac{(a-b)}{2}\) (x² – y²) = 2hxy
– (a – b) (x² – y²) = 4hxy
లేదా (a – b) (x² – y²) + 4hxy = 0
∴ ax² + 2hyx + by² = 0 ల సమద్విఖండన రేఖల ‘సమీకరణము
(a – b) (x² – y²) + 4hxy = 0.

ప్రశ్న 4.
ax² + 2hxy + by² = 0 సూచించే సరళరేఖలలో ఒక సరళరేఖ నిరూపకాక్షాల మధ్య కోణాన్ని సమద్విఖండన చేస్తే (a + b)² = 4h² అని నిరూపించండి. [June ’04]
సాధన:
నిరూపకాక్షాల కోణ సమద్విఖండన రేఖల సమీకరణాలు
y = ±x.
సందర్భం (i) :
y = x రేఖ ax² + 2hxy + by² = 0 యొక్క ఒక కోణం సమద్విఖండన రేఖ
x² (a + 2h + b) = 0
a + 2h + b = 0 ………………. (1)

సందర్భం (ii) : y = -x రేఖ
ax² + 2hxy + by² = 0 యొక్క ఒక కోణం సమద్విఖండన రేఖ
x² (a – 2h + b) = 0
a – 2h + b = 0 ………………. (2)
(1), (2) లను గుణించగా
(a + b + 2h). (a + b – 2h) = 0
(a + b)² – 4h²
(a + b)² = 4h²

ప్రశ్న 5.
ax² + 2hxy + by² = 0, lx + my = 1 అనే సరళరేఖలలో ఏర్పడే త్రిభుజం కేంద్రాభాసం (α, β) అయితే \(\frac{\alpha}{\mathrm{b} \boldsymbol{l}-\mathrm{hm}}=\frac{\beta}{\mathrm{am}-\mathrm{hl}}=\frac{2}{3\left(\mathrm{~b} \boldsymbol{l}^2-2 \mathrm{~h} \boldsymbol{l} \mathrm{m}+\mathrm{am}{ }^2\right)}\) అని నిరూపించండి.

సాధన:
OA, OB ల ఉమ్మడి సమీకరణము
ax² + 2hxy + by² = 0 …………….. (1)
AB సమీకరణము lx + my = 1
my = 1 – lx
y = \(\frac{1-l x}{m}\) …………… (2)
(1) లో ప్రతిక్షేపించగా
ax² + 2hx\(\frac{(1-l x)}{m}\) + b\(\frac{(1-l x)^2}{m^2}\) = 0
am²x² + 2hmx (1 – lx) + b (1 + l²x² – 2lx) = 0
am²x² + 2hmx – 2hlmx² + b + b²x² – 2blx = 0
(am² – 2hlm + bl²) x² – 2(bl – hm) x + b = 0
అనుకుందాం.
A నిరూపకాలు (x₁, y₁), మరియు B నిరూపకాలు (x₂, y₂)
x₁ + x₂ = \(\frac{2(\mathrm{~b} l-\mathrm{hm})}{\mathrm{a} \mathrm{m}^2-2 \mathrm{~h} l \mathrm{~m}+\mathrm{b} l^2}\) ……………. (3)
A, B లు lx + my = 1 మధ్యబిందువులు.
lx₁ + my₁ = 1
lx₂ + my₂ = 1
l (x₁ + x₂) + m(y₁ + y₂) = 2
m(y₁ + y₂) = 2 – l(x₁ + x₂)

త్రిభుజ శీర్షాల నిరూపకాలు
O (0, 0), A (x₁, y₁), B(x₂, y₂)
G నిరూపకాలు అనుకుందాం.

ప్రశ్న 6.
\(\frac{x}{\alpha}+\frac{y}{\beta}\) = 1, ax² + 2hxy + by² = 0 సరళరేఖలతో ఏర్పడే త్రిభుజం లంబకేంద్రానికి, మూలబిందువుకు గల మధ్య దూరం (α² + β²)^1/2 \(\left|\frac{(a+b) \alpha \beta}{a \alpha^2-2 h \alpha \beta+b \beta^2}\right|\) అని నిరూపించండి.
సాధన:
ax² + 2hxy + by² = 0 సూచించే రేఖలు
l₁x + m₁y = 0 ………………. (1)
l₂x + m₂y = 0 ………………… (2)
అనుకొందాం.
∴ (l₁x + m₁y) (l₂x + m₂y) = ax² + 2hxy +by²
ఇరువైపులా పోల్చగా
l₁l₂ = a, m₁m₂ = b, l₁m₂ + l₂ m₁ = 2h
దత్త రేఖ lx + my = 1 ………………….. (3)
(1) & (2) ల ఖండన బిందువులు
(1) & (3) ల ఖండన బిందువు A అనుకొందాం.



⇒y (l₁α – m₂β) – αβl₁l₂ = m₂(xl₁α – m₁β) + m₁αβ)
⇒ (l₁α – m₁β) (m₂x – l₂y) = m₁m₂αβ + l₁l₂αβ

ప్రశ్న 7.
ఒక రేఖాయుగ్మంలో px + qy + r = 0 అనేది ఒక సరళరేఖ. ఆ రేఖాయుగ్మపు మధ్యకోణాల సమద్విఖండన రేఖలో ఒకటి lx + my + n = 0 అయితే, ఆ రేఖాయుగ్మంలో రెండో సరళరేఖ సమీకరణం (px + qy + r) (l² + m²) – 2(lp + mq) (lx + my + n) = 0 అని నిరూపించండి.
సాధన:
lx + my + n = 0.కోణ సమద్విఖండన రేఖ (α, β) మీద బిందువు
lα + mβ + n = 0 ……………… (1)
రెండవ రేఖ, దత్త రేఖల ఖండన బిందువు, కోణ సమద్విఖండన రేఖల ఖండన బిందువు గుండా పోతూ p + λq = 0
దాని సమీకరణము
(px + qy + r) + 2(lx + my + n) = 0
px + py + r = 0
(α, β) కోణ సమద్విఖండన రేఖ మీది బిందువులు. దాని నుండి (2), (3) రేఖల లంబ దూరాలు సమానం.
\(\frac{(p \alpha+q \beta+r)+\lambda(l \alpha+m \beta+n)}{\sqrt{\left[(p+l \lambda)^2+(q+m \lambda)^2\right]}}=\pm \frac{p \alpha+q \beta+r}{\sqrt{p^2+q^2}}\)
(1) లో lα + mβ + n = 0 pα+ qβ + r కొట్టివేసి ఇరువైపుల వర్గీకరించగా
(p + lλ)² + (q + mλ)² = p² + q² లేదా
2λ (pl + qm) + λ² (l² + m²) = 0
.. λ = – 2 \(\frac{\mathrm{p} l+\mathrm{qm}}{l^2+\mathrm{m}^2}\)
λ. విలువ (2) లో ప్రతిక్షేపించగా,
(px + qy + r) + \(\left(\frac{-2 p l+q m}{l^2+m^2}\right)\) lx + my + n = 0
⇒ (px + qy + r) (l² + m²) – 2(pl + qm) (lx + my + n ) = 0

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 12th Lesson Emerging Trends in Business Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 12th Lesson Emerging Trends in Business

Essay Answer Questions

Question 1.
Define E – business and explain the scope of E – business.
Answer:
Ther term E-business refers to the integration of business tools based on ICT to improve the functioning of the company. “E-business” refers to the use of an online support for the relationship building between a company and clients. E – business was first used by IBM in 1997. It defined E – business as “the transformation of key business processes through the use of internet technologies”. E – business is defined as the application of information and communication technologies (ICT) which support all the activities and realms of business.

E-Business uses web based technology to improve relationships with customers. Implementing an E-business project necessarily involves the deployment of a network or web – interface connecting company specific services to the client.

Scope of E – Business :
E – business can be divided into following areas.
a) E – business within the organisation

b) Business to business (B2B) :
E – business refers to an exchange of products and services by one business and another.

c) Business to customer (B2C) :
E – business refers to an exchange of products and services from a business to a customer.

d) Customer to customer (C2C) :
E – business refers to C2C transactions are being facilitated by websites like quicker, olx, where customers offer their products online to be bought by other customers.

e) Customer to business (C2B) :
C2B transactions involve provision of project work by customers on internet to the needy companies.

Most of us are aware of buying products online through some sites like Flipkart, Jabong and Amazon. Almost everything from gym equipment to laptops, apparels to Jewelries are available online in this age of E-commerce. Even people are also buying services online. Business consultants, lawyers and doctors are offering their services or advices to their potential clients via internet.

Electronic business is a super set of business cases. E – commerce is one of the aspects of e – business. Some other important aspects of e – business, which are successfully carried through the internet, are e – auctioning, e – banking, e – directories, e – engineering, e – franchising, e – gambling, e – learning, e – mailing, e – marketing e – operational resource management, etc.

i) E-commerce :
Transacting or facilitating business through internet is called e-commerce. E-commerce is short for “Electronic commerce”.

ii) E – auctioning :
The internet enables people to participate in the auction without sacrificing their personal time. In e – auctioning the people who want to participate in the auction, visit the website with a click and go through the details.

iii) E-banking :
Electronic banking is one of the most successful online businesses. E-banking allows customers to access their accounts and execute orders through use of website. Online banking allows the customers to get their money from an ATM.

iv) E-marketing :
Electronic marketing provides a worldwide platform for buying and selling of goods without having any geographical barriers. The internet allows companies to react to individual customer demands immediately without any loss of time. It does not matter where the customer is located.

v) E – trading :
E-trading is also known as “online trading” or e – broking. It is used for buying and selling stocks in stock exchanges.

Question 2.
Explain the benefits of E – business.
Answer:
E-business has many advantages which can be broadly classified into the following categories.
A) Benefits to Customer
B) Benefits to Organisation
C) Benefits to Society

A) Benefits to Customer:
i) Shopping at ease :
E – business enables customers to shop or do other transactions 24 hours a day, round the year from almost any location.

ii) Wide choice :
Customers will have more choices or more alternative products and services.

iii) Price savings :
E – business provides customers with less expensive products and services by allowing them to shop in many places and conduct quick comparisons.

iv) Exchange of information :
Allows customers to interact with other customers and exchange their opinions and experiences on products purchased.

B) Benefits to Organisation :
i) Reach beyond boundaries :
Extends the market place to national and international markets.

ii) Cost savings:
Reduces the cost of creating, processing, distributing, storing, and retrieving information. Allows reduced inventories and overheads.

iii) Competitive benefits :
Reduced processing time allows for customization of products and services for achieving competitive advantages.

iv) Earlier capital collection :
Reduces the time between the outlay of capital and the receipt of products and services.

C) Benefits to Society :
i) Environmental benefits :
Enables more individuals to work at home and to do less travelling for shopping, resulting in less traffic on the roads and lower air pollution.

ii) Public welfare :
Allows some merchandise to be sold at lower prices benefiting the poor ones.

iii) Availability of products :
Enables people in Third World countries and rural areas to enjoy produces and services which otherwise are not available to them.

Question 3.
Explain the opportunities of business enterprises in 21^st century.
Answer:
The following are the opportunities of business enterprises in 21^st century:

i) LPG :
The economic reforms initiated in the form of Liberalization, Privatization, and Globalization (LPG) have brought in structural changes which ultimately created favourable environment for business enterprises in India.

ii) Increase in size and diversification :
The 21^st century business enterprises are characterized with large-sized and highly diversified organisations. Companies are able to reduce their costs and thereby increase in profits.

iii) Increase in per capita income :
India has emerged as the fourth largest economy globally with a high growth rate with its improved per capita income. Per capita income is the measure of living standards of its people in a country. As India’s per capita income is increasing, the business opportunities are also increasing in India.

iv) Market economies:
The Indian economy being one of the largest economies in the world with a population of more than 1.2 billion is flourishing and attracting industrial, trade and service sectors all around the world.

v) E-Commerce – A gate way to global markets :
Business enterprises across the globe are discovering the benefits of electronic commerce.

vi) Technological advancements :
21^st century business enterprises are able to use ultramodern technology. With the advancement of technology, organisations are able to offer services.

vii) Expansion of financial services :
Banking insurance, debt and equity financing, micro finance sectors are helping the people to save money and to get liberal credit for their future needs.

viii) Automation of business processes :
Business Process Automotion (BPA) is the strategy that a business uses to automate processes in order to curtail costs. The objective of BPA is not only to automate business processes,but also to simplify and improve business workflows in terms of achieving greater efficiency, adapting to changing business needs and reducing potentiality human error.

ix) Growing mergers, acquisitions and foreign collaborations :
Mergers and acquisitions is a strategy of modern business enterprises for improving innovation, profitability, market share and stock prices. This helps in generating cost effectiveness.

x) Scope for international enterpreneurship :
In 21^st century, many organizations are globalizing their businesses in terms of manufacturing, service delivery, capital sourcing, or talent acquisition as a defensive strategy. Similarly these are discovering a new business opportunities in more than one country to create new products or services to suit to the diversified needs of the customers.

Question 4.
Explain the challenges of business enterprises in 21^st century.
Answer:
The following are the challenges of business enterprises in 21^st century:
1) Threat of technology :
Business organisations have to adopt themselves in tune with the changing technology and modernize their plant and equipment and processes, if not they will become outdated in the market.

2) Growing consumer awareness:
Growing consumer awareness about the products and services will continue to drive sustainability of business in 21st century. Businesses need to respond to consumer demand to gain customers and avoid losing their market share.

3) Challenges of globalization :
Globalization is leading to strategic challenges of mixed cultures and languages in the business environment.

4) Depleting natural resources:
Most of the manufacturing enterprises depend upon certain natural resources which is a key source of raw materials.

5) Economic recession :
Economic recession took place in the United States and Europe is slowly showing its affects on performance of business enterprises in other countries also.

6) Information challenges :
Information technology supported by a new world infra-structure of data communications and telecommunications i.e. use of internet, wireless, e-commerce as part of management tools and easing of technology transfer has posed a bigger challenge for 21^st century business enterprises.

7) The challenge of the environment :
Environmental degradation is one of the biggest challenges of business organisations facing today. Pollution and global warming are the challenges, which all countries are facing.

8) Corruption and bureaucratic hurdles :
Corruption is a very big hurdle for doing business. It is a barrier to the effective development of the private sector and poses business risks.

9) Changing regulatory frame work:
A changing regulatory environment is always of concern in certain industries. Two key areas of regulatory challenges are taxes and health care. The threat of increased costs due to new carbon taxes and presser to “go green” is another challenge.

10) Transparency and governance :
Corporate governance involves organizing and prioritizing a variety of interests. Modern companies are in surveillance of transparency and governance issues.

11) Corporate social responsibility:
The practical implementation of corporate social responsibility is facing lot of problems. Lack of understanding, inadequate trained personnel, coverage, etc. are a few hurdles of CSR programmes.

12) Foreign exchange risk :
Foreign exchange risk is another factor causing constant instability in the running of business organisation.

13) Security Issues:
Security threat to business has become more pronounced in 21^st century. With the proliferation of Electronic Commerce and the “Virtual Office”, threats are becoming everyday occurrence to business.

14) Human resource challenges:
One of the biggest challenges of 21^st century business is human resources – finding the right staff, training, and retaining them are concerns of the HR function.

Short Answer Questions

Question 1.
Explain the scope of E-business.
Answer:
The scope of E-business can be divided into following areas :
a) E-business within the organisation
b) Business to business (B2B) dealing
c) Business to customer (B2C) transactions
d) Customer to customer (C2C)
e) Customer to business (C2B)

The following a and b category E-business refers to an exchange of production and services by one business and another business from a business to a customer and c and d category E-business refers to transactions are being facilitated by websites where customers offer their products online, to be bought by other customers and provision of project work by customers on internet to the needy companies.

Some other important aspects of e – business, which are successfully carried through the internet, are e – auctioning, e – banking, e – directories, e – trading, etc. In the age of e – commerce almost everything from gym equipment to laptops are available online. Even people are also buying services online. Business consultants, lawyers and doctors are offering their services or advices to their potential clients via internet.

Question 2.
What are the benefits ofE – business to organizations?
Answer:
The following are the benefits of E-business to organizations.
i) Reach beyond boundaries:
Extends the market place to national and international markets.

ii) Cost savings :
Reduces the cost of creating, processing, distributing, storing and retrieving information. Allows reduced inventories and overheads.

iii) Competitive benefits:
Reduced processing time allows for customization of products and services for achieving competitive advantages.

iv) Earlier capital collection :
Reduces the time between the outlay of capital and the receipt of products and services.

Question 3.
What are the benefits ofE – business to customers?
Answer:
The following are the benefits of E – business to customers.
i) Shopping at ease:
E-business enables customers to shop or do other transactions 24 hours a day, round the year from almost any location.

ii) Wide choice :
Customers will have more choices or more alternative products and services.

iii) Price savings :
E-business provides customers with less expensive products and services.

iv) Exchange of information :
Allows customers to interact with other customers and exchange their opinions and experiences on products purchased.

Question 4.
Briefly outline the risks faced while involving in a E-business transaction.
Answer:
The following are the risks faced while involving in a E-business transaction.

1. Risk of the information being unauthorized altered while travelling the internet.
2. Risk related to confidentiality of personal information and banking information.
3. Risk relating to legal enforceability of transactions.
4. Risk of failure of electronic communications.
5. Risk to the management in controlling and clearing the E-commerce transactions.
6. Risks relating to technology like viruses and hacking.

Question 5.
What are the benefits of E-business to society?
Answer:
The following are the benefits of E-business to the society.

i) Environmental benefits:
Enables more individuals to work at home and to do less travelling for shopping, resulting in less traffic on the roads, and lower air pollution.

ii) Public welfare:
Allows some merchandise to be sold at lower prices benefiting the poor ones.

iii) Availability of products:
Enables people in Third World countries and rural areas to enjoy produces and services which otherwise are not available to them.

Very Short Answer Questions

Question 1.
business [May 17-T.S.]
Answer:
The term ‘E-business’ refers to the integration of business tools based on ICT to improve the functioning of the company. The term e-business was first used by IBM in 1997. It defined E-business as “the transformation of key business processes through the use of internet technologies”. E-business uses web based technology to improve relationship with customers.

Question 2.
E-banking [Mar. 2019, 15 -T.S.]
Answer:
Electronic banking is one of the most successful online businesses. E-banking allows customers to access their accounts and execute orders through use of website. Online banking allows the customers to get their money from an Automated Teller Machine (ATM), instead of walking up to the cash desk in the bank, can view their accounts, transfer funds and can pay bills. Eg. Net Banking.

Question 3.
E-marketing
Answer:
Electronic marketing provides a worldwide platform for buying and selling of goods without having any geographical barriers. The internet allows companies to react to individual customer demands immediately without any loss of time. It does not matter where the customer is located by e-mails, etc.

Question 4.
E-commerce
Answer:
Transacting or facilitating business through Internet is called E-commerce. E-commerce is short for “Electronic commerce”. A form of business transactions conducted electronically in E-commerce.

Question 5.
E – auctioning
Answer:
The internet enables people to participate in the auction without sacrificing their personal time. In E – auctioning the people, who want to participate in the auction, visit the website with a click and go through the details of goods offered.

Question 6.
E – trading [Mar. 17 – T.S.]
Answer:
E-trading is also known as “online trading” or E – broking. It is used for buying and selling stocks in stock exchanges.

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 11th Lesson Multi National Corporations (MNCs) Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 11th Lesson Multi National Corporations (MNCs)

Essay Answer Questions

Question 1.
Define MNC and explain its features.
Answer:
The word ‘Multinational’ consists of two words Multi and National. Multi means ‘many’ and national means “country or nation”. Therefore Multinational company means a company that operates in several countries.

Multinational companies are also known as Transnational corporations or International corporations or Global corporations. They conduct business in two or more countries. These corporations possess huge capital resources, latest technology along with world wide goodwill.

Definition :
According to International Labour Organisations (ILO) report –
“An enterprise whose managerial headquarters are located in one country, while it carries out operations in a number of other countries as well.”

According to Neil. H. Jocoby “A multinational corporation owns and manages business in two or more countries.”

David E. Liliental, considering a wider parameter, defines the MNCs as “Corporations which have their home in one country but operate and live under the laws and customs of other countries as well.” For brevity, MNC refers to the business enterprise operating in more than one nation.

The essential feature of a MNC is that headquarters are located in home country and they carry operations in a number of other countries i.e. host countries.

Characteristics of MNCs:
a) Giant size :
The sales and assets of MNCs are quite large. Hence they earn supernormal profits.

b) Global operations :
MNCs carry production and marketing operations in different countries of the world. They possess all the infrastructural facilities.

c) Centralized control :
MNC has its headquarters in the home country. It exercises control over all branches and subsidiaries.

d) Dominant position and status :
MNCs carry on operations in bulk and cover many people. Hence they control the market and enjoy a dominant position and status in all operated countries.

e) Sophisticated technology :
Generally MNCs had advance technology so as to produce quality goods and services to the consumers.

f) Professional management:
MNCs employ professional trained managers to integrate and manage world wide operations to maximize profits.

g) International research and development :
MNCs internationalize their research and development operations in order to caputre the market of the host countries.

h) Easy entry :
MNCs can enter into any country easily with their huge capital, technology, and managerial skills.

i) Higher revenues :
MNCs generate huge revenues with their large size sales and benefits of large scale economies

Question 2.
Define MNC and explain the advantages of MNCs.
Answer:
The word Multinational consists of two words Multi and National. Mutli means many and national means “nations or countries”. Therefore Multinational company means a company that operates in several countries.

Multinational companies are also known as Transnational Corporations or International Corporations-or Global Corporations. They conduct business in two or more countries. These corporations possess huge capital resources, latest technology along with worldwide goodwill.

According to Neil. H. Jocoby “A multinational corporation owns and manages business in two or more countries.”

David E. Liliental, considering a wider parameter, defines the MNCs as.”Corporations which have their home in one country but operate and live under the laws and customs of other countries as well.” For brevity, MNC refers to the business enterprise operating in more than one nation.

The essential feature of a MNC is that headquarters are located in home country and they carry operations in a number of other countries i.e. host countries.

Advantages to Host Countries:
1) Provide Capital :
The MNCs provide required capital for the development of industries in under developing countries. The direct foreign investment is quite useful to the developing countries.

2) Transfer of Technology:
MNCs serve as vehicles for transfer of advanced technology to the developing countries.

3) Generate Employment :
MNCs create employment in various cadres and pay attractive salaries in the host countries.

4) Foreign Exchange :
MNCs enable the host countries to increase their exports and reduce the imports. It improves the position of balance of payments.

5) Managerial Revolution :
MNCs help to professionalise management in host countries. They employ modern management techniques and trained manager.

6) Break Monopoly :
MNCs encourage healthy competition and break domestic monopolies.

7) Growth of Domestic Business Firms:
MNCs encourage domestic suppliers, ancillary units, bankers, and other institutions to expand their activites.

8) Innovation :
MNCs bring out innovation in their production and distribution activities which are required to provide goods and services to needs of the consumers of the host country.

9) Better Standard of Living :
MNCs help to improve standard of living in host countries by providing superior products and services at a reasonable rate.

10) Improves Public Relations among Nations :
They encourage international brotherhood through international business.

Advantages to Home Countries :
1) Availability of resources:
MNCs procure the land, labour, materials at cheap rates and can supply goods and services at reasonable rates.

2) Develop exports :
MNCs encourage the export of several products. This will imporve their foreign exchange earnings.

3) Generate income :
They can earn huge income from dividends, licenising fees, royalty and profits from their operations. This will improve the home country’s income.

4) Provides employment:
MNCs provide employment to the people of home country, as managers, technicians and other staff members.

5) Make use expertise :
The MNCs make use the latest technical knowledge and expertise of managers of different countries to run their business.

Question 3.
Define MNC and explain the limitations of MNCs.
Answer:
The word Multinational consists of two words Multi and National. Mutli means many and national means “nations or countries”. Therefore Multinational company means a company that operates in several countries.

Multinational companies are also known as Transnational Corporations or International Corporations or Globed Corporations. They conduct business in two or more countries. These corporations possess huge capital resources, latest technology along with worldwide goodwill.

According to Neil. H. Jocoby “A multinational corporation owns and manages business in two or more countries.”

David E. Liliental, considering a wider parameter, defines the MNCs as “Corporations which have their home in one country but operate and live under the laws and customs of other countries as well.” For brevity, MNC refers to the business enterprise operating in more than one nation.

The essential feature of a MNC is that headquarters are located in home country and they carry operations in a number of other countries i.e. host countries.

Disadvantages of MNCs:
1) Monopolize the markets :
MNC may join hands with big business units in host country to monopolize the markets. This ultimately leads to concentration of economic power.

2) Disregard host countries’ priorities :
MNCs invest only in porfitable business and ignore priorties set by the host countries. This results in regional backwardness in the host country.

3) Imbalance in the foreign exchange remittances :
MNCs and their subsidiaries collect huge amounts in the form of dividend. This creates an imbalance in the foreign exchange remittances.

4) Transfer of outdated technology :
The MNCs transfer the outdated technology, which is unsuitable and absolute by charging higher rates.

5) Impose restrictions :
MNCs try to impose restrictions with host countries related to non transfer of technical knowlege, determination of price, etc. to discourage the exports.

6) Threat to sovereignty :
MNCs may interfere in the political affairs of the country and try to create internal disturbances.

7) Spread of foreign culture :
MNCs cause damage to the cultural values of the host countries. They spread the foreign culture and change the attitudes, desires and fashions of the people.

8) Depletion of natural resources:
MNCs cause rapid depletion of some of the natural resources in host countries.

9) Retard growth of employment :
MNCs try to provide employment to their own nations. This bias attitude of the MNCs may lead to unemployment in the host country.

10) Business strategies and practices :
MNCs dump harmful products, give deceptive advertisements attract the consumers to purchase outdated and unwanted goods.

Question 4.
What is globalisation and explain the necessity of Globalisation?
Answer:
Globalisation refers to the increasing integration of markets (exchange) and production, to include the mobility of resources (capital, labour, ‘organisation and knowledge’).

The world is moving away from self-contained national economies toward an interdependent, integrated global economic system. Globalisation refers to the shift toward a more integrated and interdependent world economy.

Globalization has two facets :

1. The globalization of markets
2. The globalization of production

1) Globalization of Markets:

• The globalization of markets refers to the merging of historically distinct and separate national markets into one huge global marketplace
• Falling trade barriers make it easier to sell internationally
• The tastes and preferences of consumers are converging on some global norm
• Firms help create the global market by offering the same basic products worldwide

2) Globalization of Production :

• The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantages of national differences in the cost and quality of factors of production like land, labour and capital
• Companies compete more effectively by lowering their overall cost structure or improving the quality or functionality of their product offering

There are two macro factors that underlie the trend toward greater globalization :
1) Low Trade Barriers:
The decline in barriers to the free flow of goods, services and capital. Advanced countries made a commitment to lower barriers to trade and investment.

2) Technological change:
Technological change has made the globalization of markets a reality. Important advances have occurred in microprocessors, telecommunications, Internet and World Wide Web, transportation technology, etc.

Short Answer Questions

Question 1.
Explain the meaning of MNC.
Answer:
The word Multinational consists of two words Multi and National. Mutli means many and national means “nations or countries”. Therefore Multinational company means a company that operates in several countries.

Multinational companies are also known as Transnational Corporations or International Corporations or Global Corporations. They conduct business in two or more countries. These corporations possess huge capital resources, latest technology along with worldwide goodwill.

According to Neil. H. Jocoby “A multinational corporation owns and manages business in two or more countries.”

David E. Liliental, considering a wider parameter, defines the MNCs as “Corporations which have their home in one country but operate and live under the laws and customs of other countries as well.” For brevity, MNC refers to the business enterprise operating in more than one nation.

The essential feature of a MNC is that headquarters are located in home country and they carry operations in a number of other countries i.e. host countries.

Question 2.
List out the features of MNCs. [Mar. 2018 – A.P. & T.S.]
Answer:
a) Giant size :
The sales and assets of MNCs are quite large. Hence they earn supernormal profits.

b) Global operations :
MNCs carfy production and marketing operations in different countries of the world. They possess ail the infrastructural facilities.

c) Centralized control :
MNC has its headquarters in the home country. It exercises control over all branches and subsidiaries.

d) Dominant position and status:
MNCs carry on operations in bulk and cover many people. Hence they control the market and enjoy a .dominant position and status in all operated countries.

e) Sophisticated Technology :
Generally MNCs had advance technology so as to produce quality goods and services to the consumers.

f) Professional Management :
MNCs employs professional trained managers to integrate and manage world wide operations to maximize profits.

g) International research and development:
MNCs internationalize their research and development operations in order to caputre the market of the’host countries.

h) Easy entry :
MNCs can enter into any country easily with their huge capital, technology and managerial skills.

i) Higher revenues :
MNCs generate huge revenues with their large size sales and benefits of large scale economies.

Question 3.
State any four merits of MNCs to host country. [Mar. 2019 – A.P. Mar. 17 – T.S.]
Answer:
MNCs help the host country in the following ways.

1. The investment level, employment level and income level of the host country increases due to the operation of MNCs.
2. The industries of host country get latest technology from foreign countries through MNCs.
3. The host country’s business also gets management expertise from MNCs.
4. The domestic traders and market intermediaries of the host country gets increased business from the operation of MNCs.
5. MNCs break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness.
6. Domestic industries can make use of R & D outcomes of MNCs.
7. The host country can reduce imports and increase exports due to goods produced by MNCs in the host country. This helps to improve balance of payment.
8. Level of industrial and economic development increases due to the growth of MNCs in the host country.

Question 4.
Explain any four merits of MNCs to home country. [Mar. 15 – T.S.]
Answer:
MNCs home country has the following advantages.

1. MNCs create opportunities for marketing the products produced in the home country throughout the world.
2. They create employment opportunities to the people of home country both at home and abroad.
3. It gives a boost to the industrial activities of home country.
4. MNCs help to maintain favourable balance of payment of the home country in the long run.
5. Home country can also get the benefit of foreign culture brought by MNCs.

Question 5.
Explain any four disadvantages to the host country. [Mar. 17, 15 – A.P.]
Answer:

1. MNCs may transfer technology which has become outdated in the home country.
2. As MNCs do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries.
3. MNCs may kill the domestic industry by monopolising the host country’s market.
4. In order to make profit, MNCs may use natural resources of the home country indiscriminately and cause depletion of the resources.

Question 6.
State any four disadvantages to home country.
Answer:

1. MNCs may join hands with big business units in host country to monopolize the markets. This ultimately leads to concentration of economic power.
2. The MNCs transfer the outdated technology, which is unsuitable and absolute by charging higher rates.
3. MNCs may interfere in the political affairs of the country and try to create internal disturbances.
4. MNCs try to provide employment to their own nations. This bias attitude of the MNCs may lead to unemployment in the host country.

Very Short Answer Questions

Question 1.
Define Globalisation.
Answer:
The world is moving away from self contained national economies toward an interdependent integrated global economic system. Globalization refers to the shift toward a more integrated and interdependent world economy.

Globalisation has two facets :

1. The globalization of markets
2. The globalization of production

Question 2.
Define FDI.
Answer:
Foreign Direct Investment (FDI) is the control of production which takes place in one country (host country) by a firm based in another country (home). FDI is the defining feature of the MNC. Foreign direct investment (FDI) occurs when a firm invests resources in business activities outside its home country.

Question 3.
Define MNC. [May, 17 – A.P.]
Answer:
The word ‘Multinational’ consists of two words Multi and National. Multi means ‘many’ and national means “country or nation”. Therefore Multinational company means a company that operates in several countries.

Multinational companies are also known as Transnational corporations or International corporations or Global corporations. They conduct business in two or more countries. These corporations possess huge capital resources, latest technology along with world wide goodwill.

Examples of MNCs are :
Pepsi, Hyundai, Nike, Reebok, LG, Samsung and many more.

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 10th Lesson Micro, Small and Medium Enterprises (MSMEs) Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 10th Lesson Micro, Small and Medium Enterprises (MSMEs)

Essay Answer Questions

Question 1.
Define MSMEs and explain their significance. [Mar. 2019 – T.S.]
Answer:
The term (enterprise) has been defined under section 2(e) so as to mean ‘any industrial undertaking or a business concern or any other establishment, by whatever name called, engaged in the manufacture or production of goods, in any manner pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951 or engaged in providing or rendering of any service or services’.

In accordance with the provision of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two classes. They are

1. Manufacturing enterprises
2. Service enterprises.

1) Manufacturing enterprises :
Manufacturing enterprises are those business enterprises which are engaged in the manufacturing or production of goods or commodities. More specifically, these enterprises involve in converting the raw material into finished products by using plant and machinery for creating value addition to the final products.

• A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh.
• A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.
• A medium enterprise is an enterprise where in the investment in plant and machinery is more than Rs. 5 crore but does not exceed Rs. 10 crore.

2) Service enterprises :
The enterprises involve in providing or rendering services are defined as below.

1. A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh.
2. A small enterprise is an enterprise where the investment in equipment is more than Rs. 10 lakh but does not exceed Rs. 2 crore.
3. A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

Significance of MSMEs:
MSMEs contribute nearly 8% of the country’s GDP, 45% of the manufacturing output and 40% of the exports. They provide the largest share of employment after agriculture. They are the nurseries for entrepreneurship and innovation. The Ministry of MSME has undertaken number of programmes to help and assist entrepreneurs and small businesses. Entrepreneurs who are planning to set up business, may contact National Institute for Entrepreneurship and Small Business Development (National Institute for Micro, Small and Medium Enterprises).

The significance of MSMEs can be understood from the following :
a) 90% of MSMEs in India are unregistered (out of which nearly 80% are sole proprietor firms)
b) 40% of exports in India are through MSME channel
c) 40% of employment opportunity in India is provided by MSME sector
d) MSMEs provide opportunities to the budding entrepreneurs by providing various channels of investment opportunity according to their class of investment.
e) MSMEs provide a good market for foreign companies to start venture capital businesses in India.

Question 2.
Discuss the privileges enjoyed by MSMEs.
Answer:
MSMED Act 2006 provides the following privileges to Micro, Small and Medium Enterprises.

1) Buyer’s Liability to Make Timely Payment for Goods and Service :
Section 15 envisages to ensure timely receipt of payment for their goods and services by micro and small enterprises. It casts an obligation upon the buyer of any goods or services, to make payment to the supplier, by the specified date as follows :
a) When there is an agreement in writing :
On or before the date agreed upon between them in writing. Further, in no case the period so agreed shall exceed 45 days from the day of acceptance.

b) When there is no agreement:
Before the appointed day, which means the day following immediately after the expiry of 15 days from the day of acceptance or day of deemed acceptance.

The terms ‘buyer’, ‘supplier’, day of acceptance’ have been defined in the Act, as under:

• Buyer’ means a person buying any goods or receiving any services from a supplier for consideration.
• Supplier’ means a micro or small enterprise.
• ‘Day of acceptance’ means the day of actual delivery of goods or rendering of services.

2) Interest for Delayed Payment by Buyer :
Where a buyer fails to make payment as required above, he shall be liable to pay interest on the outstanding amount. The interest shall be payable for the period of delay from the date immediately following the agreed date. The interest shall be payable at a rate three times the bank rate and compounded at monthly rests.

3) Reference of Disputes :
Any dispute relating to amount payable for any goods or services, and any interest thereon, may be referred by any party, to the Micro and Small Enterprises Facilitation Council, which shall conduct conciliation in the matter.

Short Answer Questions

Question 1.
Define Manufacturing enterprises as per MSMEs Act, 2006.
Answer:
Manufacturing enterprises are those business enterprises which are engaged in the manufacturing or production of goods or commodities. More specifically, these enterprises involve in converting the raw material into finished products by using plant and machinery for creating value addition to the final products. From the point of view of MSMEs, the manufacturing enterprises are defined in terms of investment made in plant and machinery.

• A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh.
• A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore.
• A medium enterprise is an enterprise where in the investment in plant and machinery is more than Rs. 5 crore but does not exceed Rs. 10 crore.

Question 2.
Define Service enterprises as per MSMEs Act, 2006.
Answer:
These enterprises involve in providing or rendering services. Service sector may be defined in terms of investment made in equipment.

• A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh.
• A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore.
• A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

Question 3.
Briefly explain the registration process of MSMEs. [May 17 – A.P.]
Answer:
The following are the registration requirements under the MSMED Act, 2006. As per the Act any person intending to establish-

• a micro or small enterprise, may, at his discretion.
• a medium enterprise engaged in providing or rendering of services may, at his discretion.
• a medium enterprise engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951, shall file the memorandum of micro, small or, as the case may be, of medium enterprise with authority specified by the State Government or the Central Government.

Very Short Answer Questions

Question 1.
Define Micro Enterprises. [May 17-T.S.]
Answer:
In case of manufacturing enterprises a micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh. In case of service enterprises a micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh.

Question 2.
Define Small Enterprieses. [Mar. 15- A.P.]
Answer:
In case of manufacturing enterprises small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore. In case of service enterprises, a small enterprise is an enterprise where the investment in equipment is more than Rs. 10 lakh but does not exceed Rs. 2 crore.

Question 3.
Define Medium Enterprises. [Mar. 17 – A.P.]
Answer:
In case of manufacturing enterprises a medium enterprise is an enterprise where in the investment in plant and machinery is more than Rs. 5 crore but does not exceed Rs. 10 crore. In case of medium enterprises a medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.

Question 4.
Define Manufacturing Enterprise. [(Mar. 2019 – A.P.) (Mar. 17 – T.S)]
Answer:
Manufacturing Enterprise :

1. Micro – Investment in plant and machinery does not exceed Rs. 25 lakh
2. Small – Investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore
3. Medium – Investment in plant and machinery is more than Rs. 5 crore but does not exceed Rs. 10 crore

Question 5.
Define Service Enterprise. [(Mar. 2019, 15 – T.S.) (Mar. 2018 – A.P. – T.S.)]
Answer:
Micro – Investment in equipment does not exceed Rs. 10 lakh
Small – Investment in equipment is more than Rs. 10 lakh but does not exceed Rs.2 crore
Medium – Investment in equipment is more than Rs. 2 crore but does not exceed Rs.5 crore

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 9th Lesson Sources of Business Finance-II Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 9th Lesson Sources of Business Finance-II

Essay Answer Questions

Question 1.
1. Explain various sources of business finance available to Indian businessmen.
Answer:
A businessman can raise funds from various sources. On the basis of the period, sources of finance can be categorized into three. They are

1. Long-term sources
2. Medium-term sources
3. Short-term sources

1) Long-term sources of finance :
It includes i) Equity shares and preference shares ii) Debentures iii) Retained earnings.

i) Equity Shares :
Equity shares are the most important source of raising long-term capital by a company. Equity shares, also known as ordinary shares and also known as ownership capital or owner’s funds. Equity shareholders do not get a fixed divident but are paid on the basis of earnings by the company. They enjoy the rewards as well as bear the risk of ownership. Their liability, however, is limited to the extent of capital contributed by them in the company.

Preferences shares :
The capital raised by issue of preference shares is called preference share capital’. In other words, as compared to the equity shareholders, the preference shareholders have a preferentail claim over dividend and repayment of capital. Preference shareholders generally do not enjoy any voting rights. A company can issue different types of preference shares by raising capital.

ii) Debentures:
Debentures are an important instrument for raising long-term debt capital. A company can raise funds through issue of debentures. It bears a fixed rate of interest. The debenture issued by a company is an aknowledgement that the company has borrowed a certain amount of money, which it promises to repay on a future date. ‘Debenture holders’ are, therefore, termed as ‘creditors of the company’.

iii) Retained Earnings :
A company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as ‘retained earnings’. It is a source of internal financing or self financing or ‘ploughing back of profits’.

2) Medium-term sources of finance :
It includes i) Public deposits ii) Loans, from banks iii) Lease financing

i) Public deposits:
The deposits that are raised by organisations directly from the public are known as ‘Public deposits’. Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. The organisation in return issues a deposit receipt as acknowledgement of the debt. Public deposits can take care of medium-term financial requirements of a business.

ii) Commercial Banks:
Commercial banks occupy a vital position as they provide funds for different purposes as well as for different time periods. Banks extend loans to firms of all sizes and in may ways, like, cash credits, overdrafts, term loans, purchase/discounting of bills, and issue of letter of credit.

iii) Lease Financing :
A lease is a contractual agreement whereby one party i.e. the owner of an asset grants the other party the right to use the asset in return for a periodic payment. In other words it is a renting of an asset for some specified period. The owner of the assets is called the “lessor” while the party that uses the assets is known as the ’lessee’. Lease finance is an important means for modernisation and diversification in the firm. Such financing is resorted to acquiring assets like computers and electronic equipment.

3) Short-term sources of finace :
It includes i) Bank credit ii) Trade credit iii) Installment credit iv) Advances v) C.P (Commercial Paper)

i) Bank credit :
Commercial banks extend the short-term financial assistance to business firms by means of bank credit. Bank credit may be provided in the following forms i) loans ii) cash credit iii) overdraft.

ii) Trade credit:
Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organisations as a source of short-term financing.

iii) Installment credit:
This is another method by which the assets are purchases and possession of goods is taken immediately but the payment is made in installment over a pre-determined period of time. Generally, interest is charged on the unpaid price.

iv) Advances:
Some business organisations get advances from their customers and agents against orders and this source is short term source of finance for them.

v) Commercial Paper (CP) :
Commercial paper is an unsecured promissory note issued by a firm to raise funds for short period, varying from 90 days to 364 days. It is issued by one firm to other business firms, insurance, companies, pension funds and banks. The amount raised by CP is generally very large. As the debt is totally unsecured, the firms having good credit rating can issue the CP.

Question 2.
Discuss the main sources of finance available to companies for meeting long-term as well as short-term financial requirements.
Answer:
A businessman can raise funds from various sources. On the basis of period, sources of finance can be categorized into three. They are Q

1. Longterm sources
2. Mediumterm sources
3. Short-term sources

Long-term sources of finance :
It includes i) Equity shares and preference shares ii) Debentures iii) Retained earnings.

i) Equity Shares :
Equity shares are the most important source of raising long-term capital by a company. Equity shares, also known as ordinary shares and also known as ownership capital or owner’s funds. Equity shareholders do not get a fixed divident but are paid on the basis of earnings by the company. They enjoy the rewards as well as bear the risk of ownership. Their liability, however, is limited to the extent of capital contributed by them in the company.

Preferences shares :
The capital raised by issue of preference shares is called ‘preference share capital’. In other words, as compared to the equity shareholders, the preference shareholders have a preferentail claim over dividend and repayment of capital. Preference shareholders generally do not enjoy any voting rights. A company can issue different types of preference shares by raising capital.

ii) Debentures:
Debentures are an important instrument for raising long-term debt capital. A company can raise funds through issue of debentures. It bears a fixed rate of interest. The debenture issued by a company is an aknowledgement that the company has borrowed a certain amount of money, which it promises to repay on a future date. ‘Debenture holders’ are, therefore, termed as ‘creditors of the company’.

iii) Retained Earnings :
A company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as ‘retained earnings’. It is a source of internal financing or self financing or ‘ploughing back of profits’.

Short-term sources of finance :
It includes i) Bank credit ii) Trade credit iii) Installment credit iv) Advances v) C.P
(Commercial Paper)

i) Bank credit:
Commercial banks extend the short-term financial assistance to business firms by means of bank credit. Bank credit may be provided in the following forms i) loans ii) cash credit iii) overdraft.

ii) Trade credit:
Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organisations as a source of short-term financing.

iii) Installment credit:
This is another method by which the assets are purchases and possession of goods is taken immediately but the payment is made in installment over a pre-determined period of time. Generally, interest is charged on the unpaid price.

iv) Advances:
Some business organisations get advances from their customers and agents against orders and this source is short term source of finance for them.

v) Commercial Paper (CP) :
Commercial paper is an unsecured promissory note issued by a firm to raise funds for short period, varying from 90 days to 364 days. It is issued by one firm to other business firms, insurance, companies, pension funds, and banks. The amount raised by CP is generally very large. As the debt is totally unsecured, the firms having good credit rating can issue the CP.

Question 3.
Write a comparative evolution of the various methods that are opend to meet the financial requirements of a business firm.
Answer:
A businessman can raise funds from various sources. On the basis of period, sources of finance can be categorized into three. They are

1. Long-term sources
2. Medium-term sources
3. Short-term sources

i) Long-term sources of finance :
It includes i) Equity shares and preference shares ii) Debentures iii) Retained earnings.

i) Equity Shares:
Equity shares are the most important source of raising long-term capital by a company. Equity shares, also known as ordinary shares and also known as ownership capital or owner’s funds. Equity shareholders do not get a fixed divident but are paid on the basis of earnings by the company. They enjoy the rewards as well as bear the risk of ownership. Their liability, however, is limited to the extent of capital contributed by them in the company.

Preferences shares :
The capital raised by issue of preference shares is called ‘preference share capital’. In other words, as compared to the equity shareholders, the preference shareholders have a preferentail claim over dividend and repayment of capital. Preference shareholders generally do not enjoy any voting rights. A company can issue different types of preference shares by raising capital.

ii) Debentures:
Debentures are an important instrument for raising long-term debt capital. A company can raise funds through issue of debentures. It bears a fixed rate of interest. The debenture issued by a company is an aknowledgement that the company has borrowed a certain amount of money, which it promises to repay on a future date. ‘Debenture holders’ are, therefore, termed as ‘creditors of the company’.

iii) Retained Earnings :
A company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as ’retained earnings’. It is a source of internal financing or self financing or ‘ploughing back of profits’.

2) Medium-term sources of finance :
It includes i) Public deposits ii) Loans from banks iii) Lease financing

i) Public deposits :
The deposits that are raised by organisations directly from the public are known as ‘public deposits’. Any person who is interested in depositing money in an organisation can do so by filling up a prescribed form. The organisation in return issues a deposit receipt as acknowledgement of the debt. Public deposits can take care of medium-term financial requirements of a business.

ii) Commercial Banks :
Commercial banks occupy a vital position as they provide funds for different purposes as well as for different time periods. Banks extend loans to firms of all sizes and in may ways, like, cash credits, overdrafts, term loans, purchase/discounting of bills, and issue of letter of credit.

iii) Lease Financing :
A lease is a contractual agreement whereby one party i.e. the owner of an asset grants the other party the right to use the asset in return for a periodic payment. In other words it is a renting of an asset for some specified period. The owner of the assets is called the “lessor” while the party that uses the assets is known as the ‘lessee’. Lease finance is an important means for modernisation and diversification in the firm. Such financing is resorted to acquiring assets like computers and electronic equipment.

3) Short-term sources of finance :
It includes i) Bank credit ii) Trade credit iii) Installment credit iv) Advances v) C.P (Commercial Paper)

i) Bank credit:
Commercial banks extend the short-term financial assistance to business firms by means of bank credit. Bank credit may be provided in the following forms i) loans ii) cash credit iii) overdraft.

ii) Trade credit:
Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organisations as a source of short-term financing.

iii) Installment credit:
This is another method by which the assets are purchases and possession of goods is taken immediately but the payment is made in installment over a pre-determined period of time. Generally, interest is charged on the unpaid price.

iv) Advances:
Some business organisations get advances from their customers and agents against orders and this source is short term source of finance for them.

v) Commercial Paper (CP) :
Commercial paper is an unsecured promissory note issued by a firm to raise funds for short period, varying from 90 days to 364 days. It is issued by one firm to other business firms, insurance, companies, pension funds and banks. The amount raised by CP is generally very large. As the debt is totally unsecured, the firms having good credit rating can issue the CP.

Question 4.
What do you mean by Specialized Financial Institutions? Why are these needed?
Answer:
Specialised financial institutions are the institutions which have been set up to serve the increasing financial needs of commerce and trade in the area of venture capital, credit rating and leasing, etc.

1) IFCI Venture Capital Funds Ltd. (IVCF):
Formerly known as Risk Capital and Technology Finance Corporation Ltd. (RCTC), is a subsidiary of IFCI Ltd. It was promoted with the objective of broadening entrepreneurial base in the country by facilitating funding to ventures involving innovative product or process or. technology.

2) ICICI Venture Funds Ltd :
Formerly known as Technology Development and Information Company of India Limited (TDICI), was founded in 1988 as a joint venture with the UTI. Subsequently, it became a fully owned subsidiary of ICICI. It is a technology venture finance company, set up to sanction project finance for new technology ventures. The industrial units assisted by it are in the fields of computer, chemicals, drugs, diagnostics, engineering, etc.

3) Tourism Finance Corporation of India Ltd (TFCI) :
TFCI is a specialised financial institution set up by the Government of India for promotion and growth of tourist industry in the country. Apart from conventional tourism projects, it provides financial assistance for non-conventional tourism projects like amusement parks, ropeways, car rental services, ferries, etc.

Question 5.
Critically examine the advantages and disadvantages of raising funds by issuing shares of different types.
Answer:
Joint stock companies’ capital is divided into number of equal parts known as shares. A company can issue different types of shares to get funds from the investors to suit their requirement. Under the Companies Act 1956 a company can issue only two types of shares.

1. Preference shares
2. Equity shares.

1) Preference shares :
As compared to the equity shareholders, the preference shareholders have a preferential claim over divided and repayment of capital. Preference shares resemble debentures as they bear fixed rate of return. Preference shares have some characteristics of both equity shares and debentures. Preference shareholders generally do not enjoy any voting rights.

Merits or Advantages:

• Preference shares provide reasonably steady income in the form of fixed rate of return and safety of investment.
• Preference shares are useful for those investors who want to get fixed rate of return with comparatively low risk.
• It is a superior security over equity shares.
• Payment of fixed rate of dividend to preference shares may enable a company to declare higher rates of dividend for the equity shareholders in good times.
• Preference capital does not create any sort of charge against the assets of a company.

Limitations:

• Preference shares are not suitable for those investors who are willing to take risk and are interested in higher returns.
• Preference capital dilutes the claims of equity shareholders over assets of the company.
• The rate of dividend on preference shares in generally higher than the rate of interest on debentures.

2) Equity shares :
Equity shares are the most important source of raising long-term capital by a company. Equity shares, also known as ordinary shares represent the ownership of a company and thus the capital raised by issue of such shares is known as ownership capital or owner’s funds. Equity shareholders do not get a fixed dividend but are paid on the basis of earnings by the company. Their liabilities, however, is limited to the extent of capital contributed by them in the company. They have a right to participate in the management of a company.

Merits:

• Equity shares do not create any obligation to pay a fixed rate of dividend.
• Equity shares can be issued without creating any charge over the assets of the company.
• It s a permanent source of capital and the company need not repay it except under liquidation.
• Equity shareholders are the real owners of the company who have the voting rights.

Limitations:

• Investors who want steady income may not prefer equity shares as equity shares get fluctuating returns.
• The cost of equity shares is generally more as compared to the cost of raising funds through other sources:
• Issue of additional equity shares dilutes the voting power, and earnings of existing equity shareholders.
• More legal formalities and procedural delays are involved while raising funds through issue of equity shares.

Short Answer Questions

Question 1.
What are the sources of Short-term finance?
Answer:
The short-term loans and credits are raised by a firm for meetings its working capital requirements. There are generally for short-period not exceeding accounting period, i.e. one year. The main sources of short-term funds are as follows.
1) Bank credit :
Commercial banks extend the short-term financial assistance to business firms by means of bank credit. Bank credit may be provided in the form of loans and cash credit, overdraft, etc.

2) Trade credit:
Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment. Trade credit is commonly used by business organisations as a source of short-term financing.

3) Installment credit:
This is another method by which the assets are purchases and possession of goods is taken immediately but the payment is made in installment over a pre-determined period of time.

4) Advances :
Some business organisations get advances from their customers and agents against orders and this source is short term source of finance.

5) Commercial paper :
Commercial paper emerged as a source of short term finance in our country in the early nineties. Commercial paper is an unsecured promissory note issued by a firm to raise funds for a short period, varying from 90 days to 364 days. It is issued by one firm to other business firms, insurance companies, pension funds and banks.

Question 2.
What are the sources of Long-term finance?
Answer:
The sources of long-term finance are i) Issue of shares ii) Issue of debentures iii) Retained earnings.

i) Issue of shares:
The capital obtained by issue of shares is known as ‘share capital’. The capital of a company is divided into small units called ‘shares’. Each share has its nominal value. There are two types of shares normally issued by a company. These are ‘equity shares’ and ‘preference shares’. The money raised by issue of equity shares is called ‘equity share capital’ while the money raised by issue of preference share is called ‘preference share capital’. It is important method of raising long-term finance.

ii) Issue of debentures:
Debentures are an important instrument for raising long-term debt capital. A company can raise funds through issue of debentures. It bears a fixed rate of interest. The debenture issued by a company is an acknowledgment that the company has borrowed a certain amount of money, which it promises to repay on a future date. ‘Debenture holders’ are, therefore, termed as ‘creditors of the company’.

iii) Retained Earnings :
A company generally does not distribute all its earnings amongst the shareholders as dividends. A portion of the net earnings may be retained in the business for use in the future. This is known as ‘retained earnings’. It is a source of internal financing or self financing or ‘ploughing back of profits’.

Question 3.
What are the sources of Medium-term finance?
Answer:
The sources of Medium-term finance are

1. Public deposits
2. Loans from Banks
3. Lease Financing

i) Public deposits :
Industries receive deposits from the public. These deposits are called public deposits. The period of public deposits used to be short (i.e for three years). So public deposits have been a very important source for working capital requirements.

ii) Loans from Banks :
Commercial banks occupy a vital position as they provide funds for different purposes and for different periods. They extend loan facility in the form of cash credit, overdraft, term loans and purchasing discounting bill of exchange. The borrower is required to provide some security or to create a charge on the assets of the firm before a loan is sanctioned.

iii) Lease Financing :
A lease is a contractual obligation whereby the lessor or owner grants the lessee the right to use the asset in return for a periodic payment known as lease rent. At the end of the lease period the asset goes back to the lessor. Lease financing is an Important means for modernisation and diversification in the firm. Such R&smcing is resorted to in acquiring assets like computers and electronic equipment.

Question 4.
Discuss the need for specialized financial institutions.
Answer:
Specialised financial institutions are the institutions which have been set up to serve the increasing financial needs of commerce and trade in the area of venture capital, credit rating and leasing, etc.
1) IFCI Venture Capital Funds Ltd. (TVCF) :
Formerly known as Risk Capital and Technology Finance Corporation Ltd. (RCTC), is a subsidiary of IFCI Ltd. It was promoted with the objective of broadening entrepreneurial base in the country by facilitating funding to ventures involving innovative product or process or technology.

2) ICICI Venture Funds Ltd :
Formerly known as Technology Development and Information Company of India Limited (TDICI), was founded in 1988 as a joint venture with the UTI. Subsequently, it became a fully owned subsidiary of ICICI. It is a technology venture finance company, set up to sanction project finance for new technology ventures. The industrial units assisted by it are in the fields of computer, chemicals, drugs, diagnostics, engineering, etc.

3) Tourism Finance Corporation of India Ltd (TFCI) :
TFCI is a specialised financial institution set up by the Government of India for promotion and growth of tourist industry in the country. Apart from conventional tourism projects, it provides financial assistance for non-conventional tourism projects like amusement parks, ropeways, car rental services, ferries, etc.

Question 5.
Explain the advantages and disadvantages of equity source of Finance. [Mar. 2019. 17 – A.P.]
Answer:
Advantages of equity source of Fiance :

1. Equity shares do not create any obligation to pay a fixed rate of dividend.
2. Equity shares can be issued without creating any charge over the assets of the company.
3. It is a permanent source of capital and the company need not repay it except under liquidation.
4. Equity shareholders are the real owners of the company who have the voting rights.
5. In case of profits, equity shareholders are the real gainers by way of increased dividends and appreciation in the value of shares.

Limitations:

• Investors who want steady income may not prefer equity shares as equity shares get fluctuating returns.
• The cost of equity shares is generally more as compared to the cost of raising funds through other sources.
• Issue of additional equity shares dilutes the voting power, and earnings of existing equity shareholders.
• More legal formalities and procedural delays are involved while raising funds through issue of equity shares.

Question 6.
Differentiate between the Equity shares and Preference shares. [Mar. 2019; May 17 -T.S.]
Answer:

Question 7.
Differentiate betwene a Share and a Debenture. [Mar. 2019, 18, 17 – A.P. & T.S.; May 17; Mar. ’15 – A.P.; May 17 – T.S.]
Answer:

Very Short Answer Questions

Question 1.
Business finance
Answer:
The rquirements of funds by business firm to accomplish its various activities is called business finance. Finance is considered as the life blood of any organisation. The success of an industry depends on the availability of adequate finance. Finance is also labeled as capital of a company.

Question 2.
Bank loan
Answer:
A loan is a direct advance made in lumpsum against some security. A specified amount is sanctioned by the bankers to the customer. The loan amount is paid in cash or credited to customers a/c. The customer has to pay interest on the amount from the date of sanctioning the loan.

Question 3.
Debentures
Answer:
Debentures are an important instrument for raising long term debt capital. A company can raise funds through issue of debentures. It bears a fixed rate of interest. The debentures issued by a company is an acknowledgement that the company has borrowed a certain amount of money which it promises to repay on a future date. ‘Debenture holders’ are therefore, termed as ‘creditors of the company’.

Question 4.
Trade credit
Answer:
Trade credit is the credit extended by one trader to another for the purchase of goods and services. Trade credit facilitates the purchase of supplies without immediate payment. Such credit appears in the records of the buyer of goods as ‘sundry creditors’ or ‘accounts payable’.

Question 5.
Equity share [Mar. 2018, 15 -A.P.]
Answer:
According to Companies Act, 1956, shares which are not preference shares are equity shares. Equity shares are earlier known as ordinary shares. These are so called because they do not have any special right in payment of dividend and repayment of capital earlier all equity shareholders had equal voting rights. But the recent amendment in the Companies Act 2000, permits companies to issue equity shares with differential voting rights. Equity capital need not be refunded during the life time of the company. Equity shares facilitate the company to get the benefits of leverage.

Question 6.
Preference share [Mar. 2018 – T.S.; Mar. 17 – A.P. & T.S.]
Answer:
As per Section 85 of the Indian Companies Act 1956, preference shares are those shares which carry special rights in respect of dividends and also repayment of capital at the time of winding up. The rate of dividend on these shares are fixed.

Preference shareholders arerpaid dividends when the company makes profits.

If nothing is mentioned in the Articles of Association, preference means preference as to both the payment of dividend and repayment of capital.

Preference shareholders have no voting rights. Hence they have no voice in the management. Investors who prefer a constant rate of return and less risk purchase preference shares.

Question 7.
Retained earnings [Mar. 15; May, 17 – T.S.]
Answer:
Retained earnings is also known as “Ploughing back of profits”. Retained earnings refers to the reinvestment of undistributed profits. It is a very good source of business finance. A part of profit is transferred to the reserves every year. After a few years, it becomes a large amount which is then employed for modernisaton and expansion of business.

As per Indian Companies Act, 1956, Companies are required to transfer a part of their profits to reserve.

Question 8.
Deferred shares
Answer:
The rights of the deferred shareholders with regard to payment of dividend and repayment of capital are deferred (postponed). Deferred shareholders rank last so far as payment of dividend and return of capital is concerned. These shares are generally small in denomination. These shareholders try to manage the company with economy and efficiency.

These shares are issued to the promoters of the company. So these shares are also called promoters shares or management shares. When the company prospers, the deferred shareholders get dividend.

According to Companies Act 1956, no public company or which is subsidiary of a public company cannot issue deferred shares.

Question 9.
State Financial Corporation
Answer:
The State Financial Corporation was established by the Government of India in 1951 with a view to provide financial assitance to small and medium scale industries which are beyond the scope of Industrial Finance Corporation of India. Its share capital is subscribed by respective state governments, RBI, LIC and commercial banks.

Question 10.
Commercial Banks
Answer:
Commercial banks occupy a vital position as they provide funds f or different purposes as well as for different time periods. Banks extend loans to firms of all size and in many ways, like, cash credits, overdrafts, term loans, purchase/discounting of bills and issue of letter of credit.

Question 11.
Financial Institutions
Answer:
Banks provide funds for different purposes. Another important source of rasing finance is from the finanical institutions like Industrial Finance Corporation of India, Industrial Development Bank of India, Industrial Credit and Investment Corporation of India. Such institutions provide long term and mediun terms on easy installments to big industrial and business houses.

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 8th Lesson Sources of Business Finance-I Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 8th Lesson Sources of Business Finance-I

Essay Answer Questions

Question 1.
What is business finance? Explain its need and significance in business organizations. [Mar. 2018, 17, 15 – A.P. & T.S.; May 17 – A.P. & T.S.]
Answer:
Finance is considered as the life blood of any organisation. The requirements of funds by business firm to accomplish its various activities is called business finance. According to B.O. Wheeler “Finance is that business activity which is concerned with the acquisition and conservation of capital funds in meeting the financial needs and overall objectives of a business enterprise.”

Need and significance in business finance:
1) For the fixed capital requirements of business :
In order to start a business, finance is required to purchase fixed assets like land and buildings, plant and machinery, furniture and fixture, etc.

2) For the working capital requirements of business :
Working capital is utilised for holding current assets such as the purchase of material, payment of wages, transporta¬tion charges, etc.

3) For expansion and growth of business :
Finance is required to increase produc¬tion, to install more machines to set up a R & D centre etc.

4) For diversification :
Business finance is needed to start new activity in business. Entering into new business and new lines of activities is known as diversification.

5) For Survival :
Business finance is required to carry out the various business operations in continuity. Without the required finance, organisations cannot survive for long.

6) For liabilities :
To meet liabilities of business, be it long-term or short, a business requires sufficient finance, e.g. for payment of loan installments, creditors, etc.

7) For payment of expenses :
Business finance is needed for paying salaries, wages, taxes, advertisements and other expenses like rents, etc.

Question 2.
What are the various factors that determine the selection of sources of finance? [Mar. 2019 – T.S. Mar. 17 – A.P.]
Answer:
Financial needs of business are of different types-long term, short term, fixed and fluctuating. Therefore, business firms resort to different types of sources for raising funds.

i) Cost :
The fact of cost is of two types i) cost of procurement of funds ii) cost of utilising funds. These cost factors deciding about the source of funds will be utilised by an organisation.

ii) Financial strength and stability of operations:
In the choice of source of funds for business should be in a sound financial position so as to be able to repay the principal amount and interest on the borrowed amount.

iii) Form of organisation and legal status :
The form of unit organisation and status influences the choice of a source for raising money.
Ex : A partnership firm cannot raise money by issue of equity shares.

iv) Factor of time period :
Business units should plan according to the time period for which the funds are required. Ex : Short term need purposes depend upon by the business unit through trade creditors for long term finance sources such as issue of shares and debentures.

v) Risk profile factor:
Business should evaluate each of the source of finance in terms of the risk involved Ex: Issued equity shares, these are to be repaid only at the time of winding up and dividends are not paid if the profits are not available. There is little risk involved. On the other hand a loan is to be repaid as per schedule and the interest is to be paid whether the firm earns profit or not.

vi) Control:
A particular source of fund may affect the control and power of the owners on the management of a firm. As equity shareholders enjoy voting rights, financial institutions may take control of the assets or impose conditions as part of the loan agreement.

vii) Effect on credit worthiness :
Depending on certain sources of finance may affect the credit worthiness in the market. Ex: Issue of secured debentures may affect the interests of the creditors and they may not be willing to extend further loans to the company.

viii) Flexibility and ease :
Another aspect affecting the choice of a source of finance is the flexibility and ease of obtaining funds. Restrictive provisions, detailed investigation and documentation in case of borrowings from banks and financial institutions for example may be the reason that business organisations may not prefer it, if other options are readily available.

ix) Tax benefits :
Various sources may also be weighed in terms of their tax benefits. Tax is not deducted on dividend of preference shares. Interest paid on loans and debentures is tax deductible. In order to take advantages of tax benefits firms may issue debentures to take loans.

Short Answer Questions

Question 1.
What are the various types of capital required for business enterprises?
Answer:
Nature of Business Fiances :
Whether it be manufacturing or trading concern business finance is required which is called initial capital. The amount of capital required depends upon the nature and size of business. It consists of owner’s contribution and borrowing from different sources.

On the basis of the purpose of financial requirements of a business, business finance may be classified into two types.

1) Fixed capital:
The capital which is used to acquire fixed assets such as land and buildings, plant and machinery, etc. is called the “Fixed Capital”. These assets remain with the business for a long period. Capital required by the business concern to meet its long term needs is known as fixed capital. It is permanently kept in the business. It cannot be easily realised.

2) Working capital:
The capital required by a business organisation to run its day- to¬day operations such as payment of wages, salaries, electricity bills, purchase of raw-material, etc. is called working capital. The capital used in current assets is called working capital.

Current assets are those which can be converted into cash within a period of one year. Therefore it is also called circulating or revolving capital.

The working capital of the business concern depends on the nature of the business, size of business, production policy, etc.

Question 2.
Explain the classification of sources of finance.
Answer:
A brief explanation of classifications and the sources of finance is given below.

1) On the basis of period:
On the basis of period, sources of funds can be categorized into 1) Long term 2) Medium-term finance 3) Short-term finance. The long-term sources fulfil the financial requirements of an enterprise for a period exceeding five years. Such financing is generally required for the acquisition of fixed assets. Where the funds are required for a period more than one year but less than five years, medium-term sources of finance are used. Short term funds are those which are required for short duration i.e. a period not exceeding one year.
Ex : Trade credit, Bank Overdrafts, etc.

2) On the basis of ownership :
On the basis of ownership, the sources can be classified into owner’s funds and borrowed funds. Owner’s funds are those which are provided by the owners which include issue of equity shares and retained earnings. Borrowed funds refer to the funds raised through loans or borrowings. The sources include loans from commercial banks, loans from financial institutions, issue of debentures, public deposits, and trade credit.

3) On the basis of generation :
Sources of finances can be generated from internal or from external sources. Internal sources of funds are those that are generated from within the business. Ex : Retained earnings, depreciation of funds, etc. External sources of funds include those sources that lie outside an organisation. E.g: Shares, debentures, public deposits, etc.

Very Short Answer Questions

Question 1.
Business finance:
Answer:
The term finance means money for funds. Financing means making money available when it is needed. It refers to money required for business purposes. Finance is the life blood of every organisation. The prosperity of a business unit mainly depends upon the availability of finance.

Question 2.
Fixed Capital [Mar. 2019 – A.P. m Mar. 2018, 17 – T.S. ; May 17 – A.P.]
Answer:
The capital which is used to acquire fixed assets such as land and buildings, plant and machinery, etc. is called “Fixed Capital”. These assets remain with the business for a long period. These items are not purchased for sale. In other words, capital required by the business concern to meet its long term needs is known as ‘Fixed capital’. It is permanently kept in the business. It cannot be easily realised.

Question 3.
Working Capital: [Mar. 2019; May 17 – T.S.]
Answer:
The capital required by a business organisation to run its day- to-day operation such as payment of wages, salaries, electricity bills, purchase of raw-material, etc. is called “Working Capital”. The capital used in current assets is also called “Working capital”.

Current assets are those which can be converted into cash within a period of one year. Therefore it is also called circulating or revolving capital.

The working capital of the business concern depends on the naturee of the business, size of the business, production policy, etc.

Question 4.
Long – term finance :
Answer:
The capital required for long period are termed as long term finance. This is usually required for period between 7 years to 20 years. This type of capital is used to acquire fixed assets such as land and buildings, plant and machinery, for working capital and also for expansion and modernization of the business. Long term finance can be raised through issue of shares, issues of debentures, loan from banks and other financial institutions, retained earnings, etc.

Depending upon the need any one of the above sources can be conveniently used to procure long term capital or finance.

Question 5.
Short – term finance :
Answer:
Funds raised for a period not exceeding one year is called short-term capital or short-term finance. This type of finance is used to meet day-to-day operating expenses of business such as purchase of raw materials, wages, salaries, etc. The amount of funds required depends upon nature of business, time gap between order and delivery of stocks, operating cycle and the volume of business.

It can be raised through Trade credit, Bank Credit, Advances from Customers, Bank Loans, Retained earnings and Bills of Exchange.

Question 6.
Internal sources of finance :
Answer:
Internal sources of funds are those which are generated from within the business. E.g.: Ploughing back of profits, retained earnings, collection of receivables disposing of surplus inventories, and depreciation of funds, etc.

Question 7.
External sources of finance :
Answer:
External sources of funds include those sources that lie outside an organisation, such as shares, debentures, public deposits, borrowing from commercial banks and financial institutions, suppliers, lenders, and investors.

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 7th Lesson Formation of a Company Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 7th Lesson Formation of a Company

Essay Answer Questions

Question 1.
Discuss the procedure to form a company.
Answer:
A Joint Stock Company requires a number of legal formalities to be complied with before it is brought into existence. Formation means the establishment of a company by fulfilling all formalities. The important steps to be taken by the company for formation are shown in the following chart.

1) Promotion :
Promotion is the first stage in the formation of a company. It involves identification of business opportunity or idea, detailed investigation, assembling the requirements, and financing proposition. Promotion is the process of organization and planning the finance of business enterprise under the corporate firm.

2) Incorporation or Registration :
A company being an artificial person comes into existence only after its registration with the Registrar of Companies. It is the legal process through which an enterprise obtains recognition as a separate legal entity. Private or public limited companies must file all the necessary documents with the Registrar to obtain the Incorporation Certificate. With this certificate the company gets a separate legal entity. For this purpose a number of steps have to be taken for registration.

3) Capital subscription :
After incorporation of a company the next step will be to raise the capital. A public company cannot commence business unless the minimum subscription as stated in the prospectus is subscribed. If a company does not receive 90 percent of the issue amount from the public as subscription within 120 days, it has to refund the amount to the applicant as per the guidelines of Securities Exchange Board of India (SEBI) guidelines within 10 days.

4) Commencement of business:
A public company has to file the following certificates, to get the certificate of commencement.

• A declaration that a prospectus or statement in lieu of prospectus has been filed
• A declaration that directors have taken up their qualification shares and paid them.
• A declaration that minimum subscription amount has been allotted and collected.
• A statutory declaration by the Secretary of the company or a Director that all the formalities relating to commencement of business are duly complied with.

A scrutiny is made by the Registrar with all the documents and issues a “Certificate of commencement of business”. The process of company formation comes to an end with the issue of this certificate.

Question 2.
Describe various steps involved in promoting a company.
Answer:
Promotion is the first stage in the formation of a company. It involves identification of a business opprotunity or idea, analysis of its prospects, gathering the relevant information and taking steps to implement it. Promotion is considered as putting an idea into practice.

Definition:
“Promotion is the process of organizing and planning the finance of a business enterprise under the corporate form.” – L.H. Haney

“Promotion starts with the conception of the idea from which the business is to evolve and continue down to the point at which the business is fully ready to begin operation as a going concern.” – Guthmann and Dougal

To be successful the idea of business must be exposed and investigation chart given the stages of promotion.

1) Discovery of an idea :
The success of business depends on the selection of a business line. The promoter has to form an idea about the type of business and its prospects. The promoter should analyse the strengths and weaknesses of the proposed idea, and develop the idea with the help of technical experts.

2) Detailed investigation :
At this stage various factors relating to the proposed unit are to be studied from the pratical point of view. To find out the strong and weak points of the idea a detailed investigation is conducted. The promoter shall estimate demand for the product, and then thinks of arranging finance and also considers the availability of workers, plant and machinery, raw materials, and cost of production. For this purpose technical experts, financial consultants, etc. are consulted.

3) Assembling requirements :
After making sure that proposed business is feasible and profitable the promoters make arrangements to assemble the requirements like directors appointment, selecting the place for unit, contacting the suppliers of raw materials purchasing of plant and machinery, etc.

4) Financing proposition :
The promoter decides about the capital structure of the company. In this process, he determines how much share capital will be issued, type of shares and debentures to be issued, and the nature of loans to be borrowed from financial institutions or banks for a long period.

Question 3.
Explain the process involved in Incorporation of a company.
Answer:
A company being an artificial person comes into an existence through incorporation. A Joint Stock Company whether private or public limited must be registered with the Registrar of Companies. It is called incorporation. For that purpose the joint stock companies must file all the necessary documents with the Registrar to obtain the Incorporation Certificate. With this certificate the company gets a status of legal entity.

A number of steps have to be taken up before getting a company registered.

1) Application for approval of name :
For approval, an application is to be submitted to the Registrar of Companies of the state and obtain the approval name. A company may adopt any name which is not prohibited under the Emblems and Names Act, 1950. The Registrar is expected to approve the name within 14 days of the receipt of application.

2) Preparation of Memorandum of Association (MoA) :
MoA is the constitution of company which describes its objects, scope and the relationship with outside world. This main document must be carefully drafted, stamped and signed by seven members in case of a public company and two members in case of a private company. As per the new amendment of the Act, 1950 one member is enough to sign on MoA in case of private company.

3) Preparation of Articles of Association (AoA) :
This is the second document which contains rules and regulations relating to the internal management and also the capital structure of the business. A public limited company may not require to file its own Articles of Association. However, it may adopt model clauses prescribed in Table A, Schedule I of the Act. A private company is required to submit its articles and duly signed by the signatories.

4) Preparation of other documents :
At the time of incorporation of a company the following documents are to be prepared and submitted to the Registrar of Companies.

• Consent of the first directors
• Promoters should execute a power of attorney in favour of one of the promoters or an advocate who is to carry out the formalities required for registration.
• When the location of the registered office is finalized, prior to incorporation, the notice of it is to be filed. If not, within 30 days of its registration it is to be submitted.
• When a company by its Articles appoints any person to act as Director, Manager, Secretary their particulars have to be filed within 30 days along with MoA and AoA of the company.

5) Statutory declaration :
A declaration that all the requirement under, the Companies Act, 1950 have been complied with in Form no. 1 is to be filed with the Registrar.

6) Payment of registration fee :
If the prescribed fees has to be paid towards registration of company.

7) Incorporation certificate :
The Registrar is satisfied with all requirements under the Companies Act, 1950, issues a certificate called “Certificate of Incorporation. With the receipt of this certificate, the company gets its recognition as a corporate body.

Question 4.
What is Memorandum of Association? Explain its clauses.
Answer:
The Memorandum of Association is the most important main document of the company. It is constitution and charter of the company. It provides the foundation on which the company structure is built. It defines the scope of the company’s activities as well as its relation with the outside of the company. The contents of the MoA cannot be altered at the option of directors or even the shareholder. It is to be altered only with Government’s and court approval in many cases. The purpose of the memorandum is to enable the shareholders, creditors, and those who deal with the company to know what is the permitted range of activities of the enterprise.

The memorandum has to be divided into paragraphs consecutively numbered and has to be printed. It should be signed by seven members in case of public company and by two members in case of private company.

Memorandum of association contains the following clauses :

1) Name clause :
The name of the company should be specified in this clause. A company can choose any name it likes, however it should fulfil the following conditions.

• The proposed name should not be identical or similar to the name of existing company.
• The proposed name should not convey any connection or link with a government department or local authority.
• The name of the public company should end with the word ‘Limited’, while that of private company should contain the word ’Private limited1.
• The proposed name should not be objectionable under the provisions of Emblems and Names Act, 1950.

The name of the company must appear on the outside of every office, or place of business, in one of the local languages and on all cheques, bills, letters, notices and other official publications, etc. of the company.

2) Situation Clause :
Every company will have a registered office. This clause should specify the place and the state in which registered office is located. It is necessary to determine the legal jurisdiction and to make correspondence. If the registered office is not confirmed on the date of incorporation, it should communicate the address to the registrar within 30 days of its incorporation. The purpose of stating the registered office is that all communications, notices, circular, etc. are sent to the registered office.

3) Objects Clause:
It is the most important clause in the memorandum of association. It defines powers of the company and the scope of its activites. A company is not authorised to do any business outside the purview of the objects clause. The objects of the company must be legal and very clearly defined. It contains main objects and other objects. Great care should be taken in drafting this clause.

4) Liability Clause :
It contains the nature of liability of its members. It means that the liability of a member is limited to the nominal value of shares held by him. The sharholders are not liable for the debts of the company. A company registered with unlimited liability is not required to give this clause in memorandum.

5) Capital Clause :
It contains the capital structure of the company. The amount of capital required by the company is stated in this clause. This is called Authorised capital or Registered capital. The capital is divided into small units called ‘Shares’. The company must mention the number and kinds of shares issued and the value of each share. Company is not authorised to issue shares over and above authorised capital.

6) Subscription or Association Clause :
This clause contains the names of signatories to the memorandum. The memorandum must be signed by at least seven persons in case of public limited company and by at least two persons in case of a private limited company. Each subscriber must take at least one share in the company. The subscribers declare that they agree to incorporate the company and agree to take the shares stated against their names. The signatures of the subscribers are attested by at least one witness each.

Question 5.
What is Articles of Association and also explain its contents.
Answer:
The Articles of Association of a company are its bye-laws or rules and regulations that govern the internal management of the company and the conduct of the business. It determines the relationship between the company and its members as well as among the members themselves. Articles of Association determine the powers of the directors and officers of the company. It must be printed, divided into paragraphs, numbered consecutively and signed by each subscriber of the memorandum and filed with the Registrar.

The contents of Articles of Association:

The Articles of Association is the document which contains the rules and regulations to be followed for the purpose of internal management of the company. It generally contains the following.

1. Rules and regulations.
2. Rules of preliminary contracts.
3. Provisions regarding use of common seal.
4. Procedure of issuing share capital, number and value of shares, issue of shares, , calls on shares, lien on members’ shares, etc.
5. Procedure for transfer and forfeiture’ of shares.
6. Procedure for issue of debentures and stocks.
7. Procedure for alteration of capital
8. Provisions regarding conducting the general meetings, special meetings, voting, proxies, etc. resolutions.
9. Rules regarding appointment of Directors and their remuneration.
10. Provisions relating dividends and reserves.
11. Preparation of Accounts and Audit, and method of appropriation of profits.
12. Winding-up procedure
13. Maintenance of Bank Accounts.

These bye-laws are very useful in inter management of the company.

Question 6.
What is prospectus? Explain the contents of prospectus.
Answer:
A private company can start its business immediately after receiving the Certificate of Incorporation. Whereas a public company has to raise the necessary capital from the public. In that connection the company have to invite the public to subscribe for shares in their company. This invitation to the public is known as “Prospectus”.

Definition :
As per Section 2(36) of the Companies Act, 1956, a prospectus is defined as “Any document described for issued as propectus and includes any notice, circular, advertisement or other document inviting deposits from the public or inviting offers from the public for purchase of any shares in, or debentures of a body corporate”.

Any advertisement offering shares or debentures of the company for sale to the public is called’Prospectus’.

Contents of Prospectus:
Every prospectus should disclose the matter as specified in Part -1 of Schedule-II to the Compnies Act. Some of the contents which every prospectus must include are

1. Name and full address of the company.
2. The particulars of the signatories to the memorandum of association and the number of shares taken up by them.
3. Name, addresses, and occupations of members of the Board of Directors.
4. The minimum subscription amount fixed by the promoters.
5. The details of property acquired if any.
6. The time of opening of the subscription list.
7. The capital structure of the company, and particulars of issue.
8. The amount payable on application, allotment, and calls.
9. Basis for the issue price
10. The particulars of preferential treatment given to any person for subscribing shares or debentures.
11. The addresses of the underwriters if any.
12. Particulars about reserves and surpluses.
13. The amount of preliminary expenses.
14. The name and address of Auditor.
15. Particulars regarding voting rights at the meetings of the company.
16. Management perception of risk factors.
17. ‘Disclosure of investors’ grievances and redressal system.

Short Answer Questions

Question 1.
What are different types of promoters?
Answer:
The following are different types of promoters.
1) Professional promoters :
The professional promoters are specialized promoters. Specialized promotion is their whole time occupation.

2) Accidental promoters :
They are not specialists in company formation. They promote own firms as entrepreneurs.

3) Financial promoters :
These are the promoters who float new enterprises during favourable conditions in the securities market.

4) Technical promoters :
This type of promoters promote new enterprises on the basis of their specialised knowledge and training in technical fields.

5) Institutional promoters :
These are promoters who provide technical, managerial and financial assistance for the promotion of a company.

Question 2.
Discuss the differences between Memorandum of Association and Articles of Association.
Answer:
Differences between Memorandum of Association and Articles of Association :

Question 3.
Explain the functions of promoters. [May 17 – T.S.]
Answer:
Promoter is the person who assembles the men, money and the materials into a going concern. Promoters are those who take various steps in setting up a business organisation. Promoter is mainly concerned with the promotion of a business venture. Discovery, investigation, assembling and financing, etc. are performed by the promoter.

Functions:

• A promoter conceives an idea for the setting up of a business.
• Promoter makes preliminary investigation and ensures the future prospects of business.
• Promoter brings together various individuals who agree to associate with him and share the business responsiblities.
• He prepares various documents and gets the company incorporated.
• Promoter raises the required finances and gets the company going.

Very Short Answer Questions

Question 1.
Define Promotion.
Answer:
Promotion means undertaking such a step, which would persuade a large number of people to come together for achieving a common goal through the company form of organisation. According to L.H. Haney, “Promotion may be defined as the process of organising and planning the finance of a business enterprise under the corporate form”.

Question 2.
Define MOA.
Answer:
According to Lord Cairns, “Memorandum of Association of a company is charter and defines the limitation of the powers of a company. It contains the fundamental conditions upon which alone the company is allowed to be incorporated”. The Memorandum of Association is the constitution of the company. It is the charter of the company. It provides the foundation on which the company structure is built. It defines the scope of the company’s activities as well as its relation with the outside world.

Question 3.
Minimum Subscription :
Answer:
The minimum amount of capital to be collected by a public limited company before its allotment of shares is known as “minimum subscription”. A public limited company cannot start business unless a minimum subscription as stated in the prospectus has been subscribed. It is fixed by taking into account the following requirements.

• Amount required for the purchase of property.
• Amount required for working capital.
• Amount required for payment of preliminary expenses.
• Amount required for any other expenditure for the formation of company.

Question 4.
Statement in lieu of prospectus :
Answer:
If the public company does not raise its capital by the public issue of shares, then it need not publish a prospectus. In such a company capital may be collected privately and shares may be allotted by the mutal agreement of a few people. Such public company having a share capital, and not issuing prospectus must prepare a statement in lieu of the prospectus and file it with the Registrar of Companies.

Question 5.
Criminal liability for misstatements in Prospectus:
Answer:
In case of Mis-statements or Misrepresentation in Prospectus, it gives rise to impose civil or criminal liability to pay compensation to the persons, who subscribed the shares relying on such false information in the prospectus and also criminal libaility to pay a fine up to Rs. 5000/- or imprisonment up to 2 years or both.

Question 6.
Certificate of commencement of business:
Answer:
A public limited company cannot commence its business unless it received a certificate of business commencement. This certificate is not compulsory for private limited company. It means private company can commence its business without the certificate of business commencement. The Registrar of Companies issues this certificate only when all the legal documents are submitted. Further, the registrar issues this certificate only on the confirmation of collection minimum subscription.

Question 7.
Prsopectus.
Answer:
A prospectus is a document which invites the public to promote funds to the company by way of subscribing to its shares and debentures. The history, nature, and profitability of the company is depicted in the prospectus.

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 6th Lesson Joint Stock Company – Formation Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 6th Lesson Joint Stock Company – Formation

Essay Answer Questions

Question 1.
What is a joint stock company? What are its features of it?
Answer:
Business units may be classified into two types. They are :
1) Non-corporate business units
2) Corporate business units.
The basic demerits of non-corporate business units (i.e., sole proprietorship concerns, partnership firm, joint Hindu undivided family concerns) are limited sources and unlimited liability. To overcome these demerits new business units i.e. corporate business units came into existence.

A Joint Stock Company is one kind of corporate business unit. A joint stock company is a voluntary association of persons formed for undertaking some big business activity. It is established by law and can be dissolved by law. The company has a separate legal entity so that even if its members die, the company remains in existence. The money so contributed constitutes capital of the company. The capital of the company is divided into small units called shares. Since members invest their money by purchasing the shares of the company they are known as shareholders and the capital of the company is known as share capital.

Company – Definition :
“A company is an artificial person created by law, having a separate legal entity with a perpetual succession and a common seal.” – Section 566 of the Companies Act, 1956

“A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.

Features:
1) An artificial person created by law :
A company is an aritficial person created by law and existing only in contemplation of law. It is intangible and invisible legal person having no body and soul. .

2) Seperate legal entity :
A company has an independent existence a part from its members. Its assets and liabilities belong to the company and not to its members. It can own property, have a bank account, take a loan, sue (file a case in court) and be sued in its own name.

3) Formation :
A company comes into existence through the operation of law. So, registration must be under the Companies Act.

4) Common seal as a substitute for signature:
A company cannot sign the documents as it is not a natural person. So, each company has a common seal which is like its signature. When any authorised person puts the seal on any paper or document, it is a legal evidence of an act done by the company.

5) Perpetual existence :
A company is an artificial person created by a process of law. Hence, it enjoys perpetual succession (permanent existences) i.e. it never dies. It is said that “members may come and members may go but the company goes on forever”. A company is not affected by death of a member or a new member coming in place of an old member. A company is wound up by law only. It has to act through its directors and employees.

6) Limited liability of members:
The liability of every shareholder is limited to issue price of the shares allotted to him. If the shares are fully paid up-, he is not subject to any further liability.

7) Transferability of shares:
The members of the company (public company) are free to transfer or dispose the shares held by them to any person as and when they like. They do not need the consent of other shareholders to transfer their shares. But in case of private company some restrictions are imposed for transfering shares.

8) Membership :
To form a joint stock company, a minimum of two members are required in case of private limited company and seven members in case to public limited company. The maximum limit is fifty in case of private limited company. There is no maximum limit on the number of members in case of a public limited company.

9) Democratic management:
Since the number share holders are very large and may be distributed at different geographical locations, it becomes difficult for them to carry on operational management of the company on day-to-day board. This gives rise to the need of separation of the management and ownership.

10) Statutory regulations are to be followed :
A company has to comply with and abide by a number of statutory requirements. A company is governed by the Companies Act and it has to invariably follow the various provisions of the Act. For ‘ instance, such companies should submit a number of returns to the government and also its accounts have to be audited by a Chartered Accountant.

Question 2.
Explain the advantages and disadvantages of a joint stock company.
Answer:
A joint stock company is an artificial person created by law with a fixed capital, divisible into transferable shares, with perpetual succession and common seal. The company has a separate legal entity. It must be compulsorily registered. The capital of a company is divided into small units called shares. Any one who holds or buys share in a company is called shareholder.

Joint Stock Company – Advantages:
1) Limited liability :
The liability of shareholders is limited. The risk of loss is limited to the issue price of theshares.

2) Large financial resources :
Company form of organisation enables to mobilise huge financial resources because of principles of limited liabilities and diffusion of ownership. It collects funds in the form of shares of small denominations so that people with small means can also buy them. Benefits of limited liability and transferability of shares attract investors.

3) Continuity of existence :
A company has perpetual or continuous existence. Members may go or new members may come in, but the company goes on for ever.

4) Benefits of large scale operation :
A joint stock company can undertake business on large scale. As a result it can derive all the advantages of large scale production.

5) Liquidity :
The transferability of shares act as an added incentive to investors. The shares of a public company can be traded easily in the stock exchange. The public can buy shares when they have money. The prospective investors can invest and convert shares into cash whenever they need money.

6) Professional management :
Companies, because of their complex nature of activities and large volume of business, require professional managers at every level of their operation. This leads to efficiency in management of their business affairs.

7) Research and development :
A company generally invests a lot of money on research and development for improved processes of production, designing and innovating new products, improving quality of product, new ways of training its staff, etc.

8) Tax benefits :
Although the companies are required to pay tax at a high rate, in effect, their tax burden is low as they enjoy many tax exemptions under Income Tax Act.

Joint Stock Company – Disadvantages :
1) Too many legal formalities:
Formation of a company is a time – consuming process and also expensive. Many legal formalities have to be observed and several legal documents have to be prepared and filed. Delay in formation may deprive the business the momemtum of an early start.

2) Lack of motivation :
The directors and other officers of a company have little personal involvement in the efficient management of a company. Separation between ownership and control and absence of a direct link between effort and reward may lead to lack of personal interest and incentive. It is difficult to keep peronal touch with all the customers and employees. As a result, efficiency of business operations may be low.

3) Delay in decisions :
Redtapism and bureaucratic hurdles do not permit quick decisions and prompt action in company form of organisation. There is little scope for personal initiative and a sense of responsibility. Paid employees like to play safe and tend to shift responsibility. There is lack of flexibility of operations in a company.

4) Economic oligarchy :
The management of company is supposed to be carried on according to the collective will of its members. But in practice, there is rule by a few (Oligarchy). Often directors try to mislead the members and manipulate voting power to maintain and continue their control.

5) Corrupt management:
In a company, there is often danger of fraud and misuse of property by dishonest management. Fake companies may be formed to deprive the investors of their hard-earned money. Unscrupulous people may manipulate annual accounts to show artificial profits or losses for their personal gain.

6) Excessive government control :
A company has to submit many statements and returns to the government. Excessive government control leads to waste of time for the company.

7) Unhealthy speculation :
A few individuals may corner the shares to gain control over the company.

8) Conflict of interests :
Company is the only form of business wherein a permanent conflict of interests may exist. In a company conflicts may continue between shareholders and board of directors or between shareholders and creditors or between management and workers.

9) Lack of secrecy :
Under the Companies Act, a company is required to disclose and publish a variety of information on its working. Widespread publicity of affairs makes it almost impossible for the company to retain its business secrets. The accounts of a public company are open for inspection to public.

Question 3.
Distinguish between a private company and a public company. [Mar. 2019 – A.P. & T.S. – Mar. 2018 – T.S.]
Answer:
On the basis of number of members or public interest companies may be classified into

1. Public company
2. Private company

1) Public company :
According to Companies Act, Public company means a company which (a) is not a private company; (b) has a minimum paid-up capital of ₹ 5 lakhs or such higher paid-up capital and (c) is a private company which is a subsidiary of a company which is not a private company.

2) Private company:
According to Companies Act, Private company means a company which has a minimum paid up capital of one lakh rupees or such higher paid up capital as may be prescribed and by its articles. Restricts the right of members to transfer its shares. Limits the number of its members to 50. Prohibits any invitation to the public to subscribe to any shares in, or debentures of the company. Prohibits any invitation or acceptance of deposits from persons other than its members, directors, and relatives.

Differences between Private company and Public company

Short Answer Questions

Question 1.
List out and briefly explain different types of companies.
Answer:

1) Chartered Companies:
The companies which are established by the Royal charter or special sanction of the Royal Head of the State are called chartered companies. Such companies are granted special privileges and powers to achieve the defined objectives.
E.g.: East India Company.

2) Statutory Company :
These companies are formed by the enactment of special Act by Parliament or State Assembly. The Reserve Bank of India, the State Bank of India, Life Insurance Corporation of India, etc. are the examples of Statutory Companies.

3) Registered Company:
All those companies that are registered under the Companies Act 2013 are called Registered Companies.

4) Government Company :
Government company means any company in which not less than 51% of the paid up capital is held by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments and includes a company which is a subsidiary of a government company.

5) Private Company :
A private company is a very suitable form for carrying on the business of family and small concerns. It is registered under the Companies Act 2013.

6) Public Company :
According to the section 2 (71) of the Companies Act of 2013 a company is a said to be public company (a) It is not a private company (b) It has a minimum paid up capital of ₹ 5,00,000 and above (c) It is a private company which is subsidiary of any public company.

7) Companies limited by shares :
In these compaines the liability of the members is limited to the extent of the value of shares held by them.

8) Companies limited by guarantee :
In these companies the members’ liability is not only up to the face value of the shares but also extended to the amount guaranteed by them.

9) Unlimited Companies:
In these companies the liability of the members is unlimited. The members are fully liable for all the debts of the company.

10) Holding Company :
Where one company controls the management of another company, the controlling company is called ‘Holding Company’.
E.g.: If.company A holds more than 5,1% of paid1 up share capital of company B, the company A is called holding company.

11) Subsidiary Company :
Where one company controls the management of another company such- company so controlled fs called subsidiary company.
E.g. : If company A holds more than 51% of paid up share capital of company B, the company B is called subsidiaiy company.

12) Indian Company:
A company registered in Indian having place of business in India called Indian company. It may be a private company or a public company.

13) Foreign Company :
A foreign company is one that is incorporated outside India but has business operations in India.

14) National Company:
Such companies confine their operations within the boundaries of the country in which they are registered.

15) Multi-national Company :
Such companies which extend the areas of their operations beyond the country in which they are registered.

Question 2.
What are the features of a public company?
Answer:
A joint stock company is an artifical person created by law with a fixed capital, divisible into transferable shares, with perpetual succession and common seal. The company has a seperate legal entry. It must be compulsorily registered. The capital of the company is divided into small units called shares. Any one who holds or buys share in a company is called shareholder. Thus a company is defined as an association of persons, having a separate legal existence, perpetual sucession and a common seal.

On the basis of public interest company may be classified into two types.

1. Private Limited Company
2. Public Limited Company.

Public Limited Company – Features :
It is suitable form of company for carrying on the business at large scale involving huge amount of capital. According to section 2(71), Public company is one which has the following features.

• The minimum paid up capital is ₹ 5,00,000.
• The minimum number of members is seven.
• The maximum number of members is unlimited. Such a company must use the word “Ltd” as part of its name.

A public company must write public limited or simply limited after its name. Steel Authority of India Limited, Bajaj Auto Limited, Reliance Industries Limited, and Hindustan Lever Limited are the examples of public companies.

Question 3.
What are the features of a private company?
Answer:
Sole proprietorship, Joint Hindu family and partnership form of business organisations could not meet the needs of modern industry and commerce because of their limitations like limited resources, unlimited liability, etc. The need for another form of organisation free of the above limitations was felt thus joint stock type of company came into existence as it can raise large resources with risk of unlimited liability, deploy huge capital, use modern technology, introduce specializations and run with professionalism.

On the basis of public interest company may be classified into two types

1. Private limited company
2. Public limited company.

Private Limited Company – Features :
According to section 2(68) of the Companies Act 2013 private company means company which has a minimum paid up capital of one lakh rupees or such higher paid – up-capital as may be prescribed and by its articles.

1. Restricts the rights of members to transfer its shares.
2. Limits, the number of its member to 50.
3. Prohibit any invitation to the public to subscribe to any shares in, or debentures of the company.
4. Prohibits any invitation or acceptance of deposits from persons other than its members, directors, and relatives.

Very Short Answer Questions

Question 1.
Define company.
Answer:
The word ‘Company’ implies a group of people who voluntarily agree to form a company and derived from the Latin word ‘com’ i.e., with or together and ’panis’ i.e., bread. It refers to an association of persons discussing matters and taking food together. However, in law company is termed as a company which is formed and registered under the Companies Act 2013.

“A Joint Stock Company is a voluntary association of individuals for profit, having a capital divided into transferable shares, the ownership of which is the condition of membership.” -L.H. Haney

Question 2.
What is a Government company? [Mar. 2019 – A.P. & T.S.Q Mar. 2018 – A.P.]
Answer:
Government company means any company in which not less than 51% of the paid up capital is held by the Central Government or by any State Government or Governments or partly by the Central Government and partly by one or more State Governments and includes a company which is a subsidiary of a government company.

Question 3.
What do you mean by a statuatory company?
Answer:
There are companies formed by the enactment of special Act by Parliament or State Assembly. The Reserve Bank of India, the State Bank of India, Life Insurance Corporation of India, etc. are the examples of Statutory Companies.

Question 4.
Chartered Company
Answer:
The companies which are established by the Royal charter or special sanction of the Royal Head of the State are called chartered companies. Such companies are granted special privileges and powers to achieve the defined objectives.
iE.g.: East India Company.

Andhra Pradesh BIEAP AP Inter 1st Year Civics Study Material 12th Lesson Government Textbook Questions and Answers.

AP Inter 1st Year Civics Study Material 12th Lesson Government

Long Answer Questions

Question 1.
What is Parliamentary Government and explain its features?
Answer:
Governments are classified into (1) Parliamentary and (2) Presidential on the basis of the relationship between the legislature and the executive. A Parliamentary system of Government is one in which the executive is a part of the legislature and held accountable to it. It is also called ‘Cabinet’ or ‘Responsible form of Government’. It originated first in Britain and later was adopted by many countries including India.

Definition:
Prof. Garner defined Parliamentary Government as “a system in which the real executive-the cabinet or ministry is (i) Immediately and legally responsible to the legislature for its political policies and acts and (ii) Immediately or ultimately responsible to the electorate.”

The main features of Parliamentary Government are :
1) Two types of executives :
There are two types of executives in the Parliamentary Government. They are 1) Nominal executives and 2) Real executives. The nominal executive is the head of the State and the real executive is the head of the Government. The King of Britain and the President of India are nominal executives. Both enjoy a position of glory without any real power. In both countries, the Prime Minister with his council of ministers is the real executive.

2) Membership of the Parliament:
The ministers in this system are the members of the legislature (Parliament). Ministers who are not members of the legislature must become its members within a stipulated period. Otherwise, they have to leave the cabinet.

3) Political homogeneity :
The ministers in this system belong to the same political party. They have similar political views and ideals. They run the Government as a team. In case no party gets an absolute majority, coalition governments are formed.

4) Collective responsibility:
The council of ministers is collectively held responsible to the lower house of Parliament for its decisions, policies, failures, and success. By collective responsibility, we mean that if the lower house rejects the decisions of the cabinet, it has to resign. In the same way, if the lower house passes ho confidence motion, it has to submit its resignation.

5) Indefinite tenure of the real executive :
The tenure of the council of ministers is not definite in this system. The cabinet remains in office as long as it enjoys the confidence of the lower house of Parliament. The council of ministers resigns when it loses its confidence.

6) Leadership of the Prime Minister :
The Prime Minister is central to the life and death of the cabinet in this system. The council of ministers works under his leadership. He chooses his ministers, distributes portfolios to them, and dismisses them. If he resigns, the whole government resigns.

7) Party discipline :
Party discipline is greatly found in a real Parliamentary Government. Every party in this system imposes discipline on its members by asking them to strictly adhere to its ideology, principles, and programmes. Such a policy makes the members both in the party and government fulfill their respective obligations with honesty, impartiality, and sincerity. It ultimately secures political stability in the State.

Question 2.
Explain the merits and demerits of the Presidential Government.
Answer:
A presidential Government is one in which the executive is net responsible to the legislature for its acts. It is also known as single executive government, fixed tenure government and non-responsible government. Under this system a single person, namely, the President exercises all executive powers. The President as well as the legislators assume their office and continue in power for a prescribed tenure as stipulated in the constitution. The President is directly elected by the people who form into an ’electoral college.’ Further the President or the legislators are not responsible to others in exercise of their powers and functions. This system is based on the theory of separation of powers as proposed by Montesquieu. The United States is a classical example of this system.

Definition :
Prof. Garner defined Presidential Government as “one in which the executive is constitutionally independent of legislature in respect of its duration of tenure and political policies”.

Merits of Presidential Government:
The following merits are claimed for the Presidential system over the Parliamentary system.

1) Ensures stable Government:
This system ensures stability because the President is elected for a fixed term. His tenure is not dependent on the support of the legislature.

2) Efficiency in Administration:
Under this system, the President rales with the help of the secretaries and advisers who are experienced and efficient. They are appointed on the basis of their ability and efficiency but not on political considerations. They do not belong to any political party. They do not bother about the problems of their constituencies. They devote their time to administration. This promotes efficiency in administration.

3) Suitable for Emergencies:
This system is more suitable for emergencies. Since all powers are in the hands of the President, he can take any action and face any situation. He administers the country keeping in view the welfare of the people.

4) Suitable for diverse interests :
This system is best suited for countries which are inhabited by different communities with diverse interests. The President can meet the needs of diverse group of people by taking suitable decisions.

5) Consistent Policies:
The president enjoys fixed term of office. He cannot be removed before the end of his term very easily. This enables him to follow continuous and consistent domestic and foreign policies.

Demerits of Presidential Government:
The above merits are counter balanced by the following defects:

1. Scope for Disputes:
This system is based on the theory of separation of powers. Both the legislative and the executive organs are kept apart. Hus leads to frequent deadlocks and disputes between the two organs.

2. No Flexibility :
This system is very rigid. It is difficult to replace the President before the expiry of his term, even though he is weak, corrupt and inefficient.

3. Irresponsible and Autocratic :
This system provides scope for the President to rule irresponsibly and autocratically. It is so because he is independent of the control of the legislature and not accountable it for his actions. He ignores the criticism of the opposition. This makes him to misuse and abuse his powers.

4. Division of Responsibility :
This system leads to division of responsibility which affects the smooth working of government. When the relations between the legislature and the executive are not cordial, each may try to shift the responsibility on the other. This leads to inefficiency and division of responsibility in administration.

5. Public opinion is not reflected:
This system does not promote political consciousness because there is no significance for the legislature. The President and his secretaries are not the members of the legislature. So, they do not participate in its debates and discussions. As a result, the discussions in the legislature become formal and diy. They do not have much significance and reflect public opinion.

Despite the above defects, the Presidential system has been highly successful in the United States of America. It has become very popular with the Americans. In recent years, there has been a debate in India also on its relevance.

Question 3.
Describe the merits and demerits of Unitary Government. [A.P. Mar. 18. A.P. & T.S. Mar. 15]
Answer:
On the basis of distribution of powers between the Centre and the States, Governments are classified into Unitary and Federal. A Unitary Government is one in which all powers are vested in the Centre. For administrative convenience, the country may be divided into regional units which may be called as States. The units are mere agents of the Centre. They have no autonomy. The Centre transfers some of its powers to the units and they can be withdrawn by the centre at any time. Herman Finer defined Unitaiy Government as “a Government in which all authority and power are lodged in a single centre whose will and agents are legally omnipotent over the whole area”. This type of Government exists in Britain, France, China, Japan, Italy etc.

Meaning:
The word ‘Unitaiy1 consists of two words, namely, ‘Uni’ and Taiy, uni means one and tary means ‘rule’. Unitary Government is a single integrated government with all executive powers. The Constitution vests all powers in the Central Government.

Definitions of Unitary Government:
1. A.V. Dicey :
“Unitaiy Government is one in which one central power habitually exercises the supreme legislative authority”.

2. Herman Finer:
“Unitary Government is one in which all powers and authority are lodged with a centre whose will and agents are legally omnipotent over the whole area”.

3. Prof. J.W. Gamer :
“Unitary Government is one in which the whole power of the Government is conferred by the Constitution upon a single central organ or organs from which the local governments derive their authority”.

Merits of Unitary Government:
Unitary Government has many merits. Some of them may be identified in the following lines as below.

1. Powerful Government:
Unitary Government brings uniformity in administrative and legislative matters. As there is only one central government having single legislature, executive and judicial wings, the central government will remain most powerful in its working. So this government provides stable and integrated rule.

2. Efficient Rule :
In a unitary set up all the regional or Provincial Governments strictly.follow the instructions of the Central Government. The Central Government tackles all issues efficiently and effectively. This is due to the concentration of governmental powers in the Central Government.

3. Less expensive and time saving:
These will be only one Government in a Unitary, System. Provincial units may or may not exist. As a result, the formation and maintenance of Unitary Government requires less amount of finances. There will be no duplication of institutions. As a result public money and time are saved in Unitary System.

4. Administrative Uniformity :
In unitary system the entire country is placed under the direct rule and control of the Central Government. As a result there will be uniform laws, rules and regulations throughout the country. This secures uniformity in law-making and administrative process.

5. Quick decisions possible:
Unitary system comprises one government for the entire State. That Government takes decisions quickly and promptly. As a result Unitary Government will tackle any unforeseen events in times of emergency.

6. Single citizenship :
The citizens in a unitary state will have single citizenship. So, there will be no discrimination between them within the four corners of the country. Ultimately, single citizenship promotes national unity, integraty and solidarity among the people.

7. Useful for small countries:
Unitary Government is suitable to the small countries having limited population and geographical area. Moreover, it embodies the element of homogeneity in respect of culture, language, race, religion etc.

Demerits of Unitary Government:
Unitary Government has several demerits. They may be listed out as follows.

1. Scope for Despotism :
As all the powers are vested with the Central Government in a Unitary System, the persons at the helm of affairs may adopt despotic policies thereby affecting the freedoms of individuals.

2. More burden on Central Government:
There will be no distribution of powers between the Central and State Governments in this system. Only the Central Government carries on all the functions. As a result, there will be a scope for more burden on Central Government leading to negligence and delay.

3. Growth of inefficiency :
The local or regional governments do nqt have much autonomy and independence in this system. So the former depend upon the Central Government. People too lose their political initiative at local levels. This leads to the growth of inefficiency in administration.

4. Not suitable for large countries :
Unitary Government is not suitable to large countries having extensive population, vast territory, diverse cultures and religions. So unity in diversity is difficult to achieve in large countries.

5. Irresponsibility:
The Central Government is not responsible to anybody in a unitary set up. The units cannot dictate terms to the Central Government. So there is a scope for the Central Government to behave irresponsibly.

Question 4.
What are the functions of Legislature? [A.P. Mar, 15]
Answer:
Legislature is the law-making branch of the government. Its functions may be discussed under the following heads :
Functions of Legislature:
1) Legislative functions :
The legislature frames new laws, changes or revises or cancels them as per the circumstances. Law-making is the most important activity of legislature.

2) Deliberative functions:
The legislature discusses various matters of public concern and formulates domestic and foreign policies. It ventilates public grievances and offers solutions to different problems of the people.

3) Executive functions :
In a Parliamentary Government, the legislature exercises control on the Council of Ministers through different resolutions and questions. If necessary, it can pull down the Government through a no-confidence motion.

4) Financial functions :
The legislature controls the national finances. It passes the annual budget and allots the funds for various departments. It suggests the ways and means of raising the revenue and spending it.’

5) Judicial functions :
The legislature, especially, the upper house, performs some judicial functions. In Britain, the House of Lords functions as the highest Court of Justice. In America and India the legislatures try cases of impeachment against the Presidents and the Justices of Supreme Court and High Courts.

6) Constitutional functions:
The legislature amends the constitution as per the needs of the country which change from time to time.

7) Electoral functions:
In some countries, the legislatures perform electoral functions also. Ex: The elected members of the Indian Parliament and the State Legislative Assemblies elect the President of India. In Switzerland, the members of Federal Assembly elect the judges of the Federal Tribunal.

8) Other functions :
Besides the above, the Legislature performs functions like accepting or rejecting the ordinances issued by the Head of the State, electing the Speaker and Deputy Speaker, appointing enquiry committees etc.

Question 5.
Discuss the functions of the Executive.
Answer:
Of the three organs of government, the Executive occupies the most important place. Very often it is referred to as the Government. It refers to that branch of government which executes or enforces the laws of the State. It is used in two senses – narrow sense and broader sense. In its broader sence, it denotes all State officials who are concerned with the execution of laws and administration. In its narrow sense it refers to the heads of departments (ministers) who run the machinery of Government.

The President in America and the Prime Minister and other Ministers in India constitute executive in the narrow sense.

Functions of the Executive :
The functions of the executive differ from country to country depending upon the nature of Government and the ideology of the State. Apart from law – execution, it undertakes a number of functions which can be studied under the following heads :

1) Administrative functions :
The entire administration is carried on in the name of the executive. Its functions in this context include: appointment of highest officials, giving directions to different administrative departments, changing the rules and regulations from time to time, enforcing laws, maintaining order and peace etc.

2) Diplomatic functions :
These include functions like conducting foreign affairs, appointing diplomatic personnel to foreign countries and receiving them from other States, concluding treaties and agreements, sending peace missions for promoting friendly ties with other countries, arranging ceremonial welcome and tour programmes to the Heads of the foreign countries etc.

3) Military functions:
These include protecting the territorial integrity of the Country against external invasion, maintaining armed forces, declaring war or concluding treaty of peace with other countries and acting as the Supreme Commander of the Armed Forces.

4) Legislative functions :
Executive enjoys certain legislative powers also. In Parliamentary Government the executive guides the work of legislature. It summons, prorogues and dissolves the legislature, issues ordinances when the legislature is not session; gives approval to the bills passed by the legislature, vetoes any bill or sends it back to the legislature cannot directly participate in legislation. ‘Even then, it influences legislation by exercising veto power, sending messages to it.

5) Financial functions :
The executive prepares the Budget, raises the revenue and spends it on different items. Maintaining financial stability of the State is the responsibility of the executive. Levy or abolition of taxes, provisions of capital funds, reduction of prices etc., come under the purview of executive functions.

6) Judicial functions :
The executive in all countries under takes some judicial functions like appointing the judges to the highest courts of law, removing them on grounds of proved misbehaviour, granting pardons, reprieves and remissions of punishments, implementing the Judgement Qf the Courts of law etc.

7) Other functions :
Apart from the above, the executive also undertakes functions like framing plans for the development of the country; declaring emergency during war; granting titles and awards, implementing welfare programmes etc.

In view of the above functions, the executive is described .as “a multi – functional . organ”. It is the mainspring of the Government. It makes the wheel go round.

Question 6.
Point out the functions of the Judiciary.
Answer:
The Judiciary is the third organ of the government. It refers to those officers of Government whose function is to apply the existing law to individual cases. It consists of the magistrates and judges charged with the duty of administering justice. In brief, it is that branch of the Government which settles disputes and administers justice.

Functions of the Judiciary:
1. Interpretation of Laws:
The primary function of judiciary is interpretation of laws. Judiciary interprets laws and applies them to specific cases that come before it. It applies the elements of customs, statutes and constitutional provisions to specific cases.

Whenever the existing law is inadequate for delivering justice, it applies the principles of justice, equity and morality. As Gettle remarks, “Constitution and laws are always rigid. Flexibility must be given to them by judges”.

2. Custodian of the Constitution :
Judiciary acts as guardian of the Constitution in federal system. It protects the spirit and sanctity of the constitution. Judiciary, in a federation, is empowered to declare a law as unconstitutional if it is inconsistent with the provisions of the Constitution.

3. Guardian of Civil Liberties :
Judiciary acts as guardian of civil liberties of the people. It protects individual liberties by punishing those who encroach upon it. It also protects the people against the arbitrary actions of the government.

For instance, in the case of India, the Constitution under Articles 32 and 226 empowered the Supreme Court and High Courts to act as the guardians of fundamental rights of the citizens. These courts can issue injunctions to prevent the arbitrary acts of some individuals and organisations. Such injunctions include Habeas Corpus, Mandamus, Prohibition, Quo- warranto and Certiorari.

4. Federal equilibrium :
Judiciary plays a key role in the federal system. It solves disputes between the Centre and the State Governments and also between States. It sees that neither the Central Government nor the State Government exceed the constitutional limitations.

5. Advisory Functions:
Judiciary renders advice on the request of the executive or the legislature. For instance the President of India may seek the advice of. the Supreme Court on any question of Constitutional Law. In England, the practice to request a court to give declaratory judgement is very common. The Crown sometimes asks the judicial committee of the Privy Council to give its advisory opinion upon questions of law.

6. Appellate Jurisdiction :
The highest court of justice hears appeals over the judgements of the lower courts. At times, it ratifies the judgements pronounced by the lower courts. Sometimes, it may reverse some of their judgements.

7. Maintenance of records :
Judiciary maintains all the records of the cases along with their judgements. These records will help the advocates and judges in the trial of similar cases that may occur in future.

8. Acting as Head of the State :
In some countries, under certain conditions, the Chief Justice of the highest Court assumes the powers of the acting head of the State in the absence of President and Vice-President in office.

9. Administrative Functions :
The Supreme Court and High Courts are entrusted with some administrative functions. They make suggestions to the executive head in appointing the judges of the lower courts. The higher courts supervise the functioning of the lower courts. For instance the high courts in India are given the obligation of supervising the activities of the subordinate courts in their jurisdiction.

Short Answer Questions

Question 1.
Discuss the traditional form of Governments.
Answer:
The ancient Greek political philosophers like Aristotle held detailed deliberations on the classification of States. The modem political scientists prefer to call such classification as ‘classification of governments’. On the whole, governments are classified into three types namely monarchy, aristocracy and democracy. Some of the traditional and modern classifications are mentioned below.
Aristotle’s classification of Governments

Aristotle classified Governments on the basis of two elements, namely, (i) Number of persons holding power and (ii) end of the State. He again classified Governments into normal and perverted forms.

He mentioned monarchy, aristocracy and polity as the normal form of governments. Tyranny, Oligarchy and Democracy are the perverted form of Governments. According to him monarchy is a rule by one person, who exercises powers himself. When that person rules the state with good intensions, such government is known as monarchy. Otherwise it will degenerate into tyranny. Aristocracy is a noble form of government in which few persons by virtue of their birth, talents, status, wealth etc., will act as rulers.

When these persons exercise powers with selfish motivations, such a government is known as oligarchy. Polity is a form of government comprising many persons who have noble qualities such as set honesty impartiality, wisdom etc., on the other hand democracy is a perverted form of government in the sense that the rulers always assign priority to their self interests thereby ignoring popular wishes.

Question 2.
What are the features of Unitary Government? [A.P. 19]
Answer:
Definition :
A.V. Dicey “A Unitary Government is the habitat exercise of supreme legislative authority by one central power”.

Features of Unitary Government:
The basic or essential features are as follows :
1. Single government:
A Unitary government consists of a single Central Government for the entire country. It has all the powers. The concentration of all powers in the Central Government is meant for uniformity and efficiency in administration.

2. Provincial government:
In a Unitary Government, the provisional governments are not created by constitution. They are created by the Central Government for the sake of administrative convenience. The Central Government has the power to destroy the provincial governments. The states are the agents of the Central Government.

3. Transfer of powers :
For the sake of administrative convenience, the Central Government may transfer some of its powers to the provincial governments. These powers can also be taken back by the centre at any time.

4. Constitution :
A Unitary Government may have an unwritten constitution. Ex : Britain has an unwritten constitution. However, all the unitary states do not follow the model of Britain. France, a unitary state has a written constitution.

5. Single citizenship:
In a unitary state, all the citizens will have only one citizenship. No citizen will have the citizenship of the state in which he lives.

6. Unicameral legislature :
A unitary state may also function with a unicameral legislature (one house only). It is possible because, in a unitary state, the states need not have representation in the upper chamber. However, all the unicameral states do not opt for it. Ex: Britain, France, China have bicameral legislatures.

Question 3.
Discuss the features of Federal Government. [A.P. 18]
Answer:
Governments are classified into Federal and Unitary on the basis of the distribution of powers between the Centre and the States. A federal system is one in which the powers of the government are distributed constitutionally between the Centre and the State Governments. Ex : America, Switzerland etc.

Meaning:
The term “Federation” is derived from a Latin word “Foedus” which means “Treaty of Agreement”.

Definitions :
1. A.V. Dicey :
“A federal government is a political contrivance intended to reconcile national unity with the maintenance of State’s rights.

2. J.W.‘Garner:
Federal government is a system in which the totality of governmental power is divided and distributed between the Centre and the States by the National Constitution”.

3. Hamilton :
“Federation is an association of states that forms a new one”.

4. K.C. Wheare :
“A federal government is a method of dividing powers so that the regional and Central Government are each within their sphere, co-ordinate and independent.”

Features, of Federal Government:

Federal Government comprises several features. They may be denoted as follows :
1. Written Constitution:
A Federal Government normally has a Written Constitution. Such a Constitution is considered as the supreme law of the land. It defines, decides and devises powers between the Central and State Governments. Hence, it became a practical necessity of Federal Government.

2. Dual Citizenship :
Federal State provides dual citizenship to the citizens. Accordingly, the citizens will have membership in both the Centre and the. States simultaneously. As a result, they participate in the election of representatives to both the national and provisional bodies.

3. Division of Powers:
In a Federation, the Powers of Government are divided between the Centre and the States. The Central Government exercises control over matters of national importance like defence, external affairs, customs, exports and imports etc. On the other hand, certain matters like education, agriculture, health, irrigation etc., having provincial importance are allocated to the State Governments.

4. Bicameralism :
Bicameralism is another important feature of a federation. In a federal state, we observe two chambers in the union legislature and some of the provincial legislative organisations. The first or lower chamber represents the interests of the people. The second chamber or upper house comprises the members representing the States.

5. Rigidity:
Generally, the Constitution of a federation is very rigid. So it cannot be amended easily. The Concurrence of the Centre and States is required for amending some of the important provisions. So, neither the Centre nor the states unilaterally can amend the constitutional provisions.

6. Independent Judiciary :
Independent judiciary is another essential feature of a Federal Government. Such an organisation will settle disputes between the Centre and the States. The Judges in Judiciary constitutionally enjoy independent position. Once appointed, they could not be removed by any body under normal conditions. They will be there to safeguard the fundamental rights of citizens. They can check the misuse of powers by the executive and legislative authorities.

Question 4.
What are the Merits of Parliamentary Government?
Answer:
Merits :
The merits of the Parliamentaiy Government may be explained as follows :
1) Co-ordination between the Legislature and Executive Organs:
Executive is chosen from the Legislature in this system. Hence, there is greater opportunity for good Co-ordination and harmonious relationship between the legislature and executive organs.

2) No scope for despotism :
All the powers of the State will be equally distributed between the Prime Minister and the Council of Ministers. The executive is responsible to the Parliament and it can be removed by ‘no confidence motion’. Hence, there is no scope for the executive to become despotic in this Government.

3) Scope for distribution of powers :
Parliamentary Government stands for the distribution of political power and administrative authority. The constitutional machinery of this system allocates Governmental powers among several persons who have commitment, commonsense, public spirit etc.

4) Easy to form alternative Government:
Parliamentary Govemmentfenables easy formation of Government. Normally, that party or those parties which securejnajority seats in the lower house of the legislature, during general election, will be able to form the Government. Similarly, changes in governmental policies could be initiated op easy lines. Whenever the party in power resigns or is removed from power, the opposition parties will make efforts to form alternative government.

5) Adequate representation :
Parliamentary Government provides adequate representation to the various sections and regions. The executive and legislative branches in this system comprise members representing various walks of life. No one including the minorities is ignored in this system. As a result, it embodies national spirit and unity among the people.

Question 5.
Explain the Theory of Separation of Powers.
Answer:
Montesquieu is the main proponent of this theory. Montesquieu explained this theory in his book “The Spirit of Laws” (1748). He visited England and made a comparative study of the French despotism and the British Parliamentary democracy He came to the conclusion that the Britishers enjoyed greater liberty because of the separation of powers among the three branches of British Government.

Montesquieu stated that concentration of powers in one person or a body of persons would result in despotism and negate individual liberty. He suggested separation of powers among the three organs of government in a balanced manner. Every organ must check the misuse of powers of other organs. Then only individuals enjoy their liberties without fear from the governmental interference. His theory became the basis of American Constitution. It is aptly said that the American Constitution is an essay on the theory of separation of powers propounded by Montesquieu. The constitutions of many countries including India have incorporated the ideas of Montesquieu.

Question 6.
Discuss any three functions of Legislature.
Answer:
Legislature is the law – making branch of the government. Its functions may be discussed under the following heads :
1) Legislative functions :
The legislature frames new laws, changes or revises or cancels them as per the circumstances. Law-making is the most important activity of legislature.

2) Deliberative functions:
The legislature discusses various matters of public concern and formulates domestic and foreign policies. It ventilates public grievances and offers solutions to different problems of the people.

3) Executive functions :
In a Parliamentary Government, the legislature exercises control on the Council of Ministers through different resolutions and questions. If necessaiy, it can pull down the Government through a no-confidence motion.

Very Short Answer Questions

Question 1.
Define Government.
Answer:
Prof. J.W. Gamer defined “Government as the agency or machinery through which common policies are determined and by which common affairs are regulated and common interests are promoted.”

Question 2.
Write about Aristotle’s classification on Government.
Answer:
Aristotle classified governments on the basis of two elements, namely, i) Number of rulers ii) Aims of the State. He again classified Governments into normal and perverted forms. He says monarchy, aristocracy and polity as the normal form of governments. Tyranny, oligarchy and democracy are the perverted form of Governments.

Question 3.
Write the meaning of Aristocracy. [A.P. 19]
Answer:
Aristocracy is a noble form of Government in which few persons by virtue of their birth, talent, status, wealth etc., will act as rulers. When these persons exercise their powers with selfish motivations, such a Government is known as oligarchy.

Question 4.
Define Democracy. [T.S. Mar, 15]
Answer:
i) Aristotle defines “Democracy as a perverted form of Government of many rulers”.
ii) Abraham Lincoln defines “Democracy is a Government of the people, by the people and for the people.”

Question 5.
What is a Unitary Government?
Answer:
Meaning:
The word ‘Unitary’ consists of two words, namely, ‘Uni’ and Tary’, uni means one and tary means ‘rule’. Unitary Government is a single integrated government with all executive powers. The Constitution vests all powers in the Central Government.

Definition :
A.V. Dicey “A Unitary government is the habital exercise of supreme legislative authority by one central power”.

Question 6.
What do you mean by Federal Government? [A.P. 19]
Answer:
Governments are classified into Federal and Unitary on the basis of the distribution of powers between the Centre and the States. A federal system is one in which the powers* of the government are distributed constitutionally between the Centre and the State Governments. Ex : America, Switzerland etc.

Meaning:
The term “Federation” is derived from a Latin word “Foedus” which means ‘Treaty of Agreement”.

Question 7.
Write briefly about the theory of separation of powers.
Answer:
Theory of separation of powers is propounded by Montesquieu in his5 famous book The Spirit of Laws’. The powers among the three organs of the Government In presidential executive will be distributed on the basis of the theory of separation of powers. Its main feature is ‘Checks and Balance’, which means the three organs of the Government possess equal powers and each organ checks the other two organs from crossing their limits.

Question 8.
How many orgam of government are there? Name them.
Answer:
There are three organs of Government.
They are :

1. Legislature,
2. Executive and
3. Judiciary.

Question 9.
What do you understand by Parliamentary Government?
Answer:
Governments are classified into (1) Parliamentary and (2) Presidential on the basis of the relationship between the legislature and the executive. A Parliamentary system of Government is one in which the executive is a part of the legislature and held accountable to it. It is also called ‘Cabinet’ or ‘Responsible form of Government’. It originated first in Britain and later was adopted by many countries including India. ‘

Definition:
Prof. Gamer defined Parliamentary Government as “a system in which the real executive-the cabinet or ministry – is (i) Immediately and legally responsible to the legislature for its political policies and acts and (8) Immediately or ultimately responsible to the electorate.”

Question 10.
What are the other names of Presidential Government?
Answer:
The other names for Presidential Government are :

• Single Executive Government,
• Fixed Tenure Government and
• Non Responsible Government’

Andhra Pradesh BIEAP AP Inter 1st Year Civics Study Material 11th Lesson Constitutions Textbook Questions and Answers.

AP Inter 1st Year Civics Study Material 11th Lesson Constitutions

Long Answer Questions

Question 1.
Define Constitution and explain its features of the Constitution.
Answer:
Introduction :
The age of Democracy led to political civilisation. Nowadays every civilised state possesses a constitution. A Constitution is a condition of modem state. The constitution is a living text of a political system. It represents the political character of the state and its constituents.

The term constitution implies a written document embodying the provisions relating to the powers and functions of the government organs, the rights and duties of the citizens.

Meaning:
The term constitution is an English word. It was derived from the Latin word “Constitution, which means to Establish”.

Definitions:
1) Aristotle :
“Constitution is the arrangement of offices in a state, especially the highest of all”.

2) Lord Bryce:
“Constitution is a set of established rules embodying and enacting the practice of Government”.

3) Stephen Leacock:
“Constitution is the form of Government”.

4) K.C. Wheare :
“Constitution is that body of rules which regulates the ends for which governmental power is exercised”.

Features of the Constitution:
1) Preamble :
Every Constitution will have a preamble. The preamble denotes the aims and aspirations of the Constitution. It is like the soul of the Constitution. Hence, preamble is considered as an important feature of the Constitution.

2) Clarity:
Clarity is another important feature of the Constitution. The Constitution clearly explains about the different policies and methods of governance. It is written in a simple and clear language.

3) Incorporation of Fundamental Rights :
Every Constitution includes some funda-mental rights. These fundamerital rights are meant for safeguarding the freedoms of the citizens. They enable the citizens to realise their personality in various spheres. They help the citizens for leading a happy and honourable life in the state.

4) Brevity :
Brevity is another feature of a Constitution. Brevity avoids confussion among the individuals in understanding and interpreting provisions. Unnecessary elements are not included in the Constitution. It should be precise. It must not contain large number of clauses.

5) Flexibility:
The Constitution must be flexible for adapting the wishes are aspirations of the people from time to time. There must be a scope of amending the provisions of the Constitution if necessary. Frequent changes in the Constitution tend to weaken the spirit of the Constitution. But, at the same time, the Constitution of a modem state should be adaptable to the progressive changes.

6) Permanence:
Permanence is one more feature of the Constitution. The Constitution must have everlasting values for the welfare of the whole nation. It represents the actual structure of the state and its political institutions. It obliges the customs of the people.

7) Mode of Amendment:
The Constitution specifies the mode of amendment. It will be relevant to the contemporary conditions of the state. It contains a special chapter on the constitutional amendment procedures. Usually the constitutional amendments are of three types, namely (i) Rigid (ii) Flexible and (iii) Half rigid and Half flexible. On the whole, the constitution of every state comprises both rigid and flexible elements.

8) Explanatory:
The Constitution is explanatory in nature. It denotes and discusses almost all elements relating to the People, Government and State. It contains separate provisions on the structure, powers and limitations of state activity.

Question 2.
Define Constitution and point out the differences between Flexible and Rigid Constitutions.
Answer:
Definition :
The age of Democracy led to political civilisation. Now-a-days every civilised state possess a Constitution. A constitution is a condition of modem state. The constitution is a living text of a political system. It represents the political character of the state and its constituents.

Flexible Constitution:
Flexible constitution is one whose provisions can be amended easily. It requires no special procedure for changing its provisions. It can be amended by the authorities by adopting the same procedure of ordinary laws. So we do not find differences between ordinary and constitutional laws. Flexible constitutions were prevalent in the ancient period. Ex : British constitution.

Rigid Constitution :
Rigid constitution is one whose provisions cannot be changed easily. In this system the constitutional amendment methods are different from those of ordinary laws. There will be a special procedure for amending the provisions of the rigid constitution. The rigid constitution will have firmness due to its special procedures of amendment. Ex : United States.

Differences between Flexible and Rigid Constitution

Short Answer Questions

Question 1.
Define Constitution. Explain its features. [A.P. 19]
Answer:
Features of the Constitution:
1) Preamble :
Every Constitution will have a preamble. The preamble denotes the aims and aspirations of the Constitution. It is like the soul of the Constitution. Hence, preamble is considered as an important feature of the Constitution.

2) Clarity:
Clarity is another important feature of the Constitution. The Constitution clearly explains about the different policies and methods of governance. It is written in a simple and clear language.

3) Incorporation of Fundamental Rights :
Every Constitution includes some fundamental rights. These fundamental rights are meant for safeguarding the freedoms of the citizens. They enable the citizens to realise their personality in various spheres. They help the citizens for leading a happy and honourable life in the state.

4) Brevity :
Brevity is another feature of a Constitution. Brevity avoids confession among the individuals in understanding and interpreting provisions. Unnecessary elements are not included inf he Constitution. It should be precise. It must not contain large number of clauses.

5) Flexibility:
The Constitution must be flexible for adapting the wishes are aspirations of the people from time to time. There must be a scope of amending the provisions of the Constitution if necessary. Frequent changes in the Constitution tend to weaken the spirit of the Constitution. But, at the same time, the Constitution of a modem state should be adaptable to the progressive changes.

6) Permanence:
Permanence is one more feature of the Constitution. The Constitution must have everlasting values for the welfare of the whole nation. It represents the actual structure of the state and its political institutions. It obliges the customs of the people.

Question 2.
Explain the various bases of classifying constitutions.
Answer:
Political Scientists classified the constitutions into various types on the basis of (i) Evolution (ii) Nature (iii) Amendment. They are mentioned in the following table.

1) Evolution of Constitution:
On the basis of evolution, constitutions are divided into two types, namely (a) Evolved Constitution (b) Enacted Constitution.
a) Evolved Constitution :
Evolved Constitution is also called as Cumulative Constitution. It is the result of evolutionary changes. It may be the product of collected material. It acts as the basis to the political institutions of a country. It is not made as it grows with the roots in the past. Several customs, usages, traditions, principles and judicial decisions etc act as the sources of this consitution. E.g. Britain.

b) Enacted Constitution :
Enacted Constitution is also known as Conventional Constitution. It is consciously made. It is the outcome of the deliberations of the Constituent Assembly specially convened for that purpose. It is promulgated by the sovereign authority – King or Parliament. The provisions of this constitution are incorporated in a document or a series of documents. E.g. United States, India.

2) Nature of Constitution:
Constitutions are classified into two types on the basis of the incorporation of the various provisions. They are
a) Written Constitution and
b) Unwritten Constitution

Question 3.
What are the merits and demerits of a Written Constitution?
Answer:
Written Constitution :
A written constitution is formulated and adopted by a Constituent Assembly or a Convention. It comprises several principles and rules of the Government in a written form or document. The Constitution of India is an example of written constitution. The American Constitution is the first written constitution in the world.

Merits:

1. A written constitution carries more simplicity. It gives no scope for confusion and ambiguity among the people in understanding the structure and organization of various institutions.
2. It protects the fundamental rights of the people.
3. It puts limitations on the powers of the Government.
4. It renders political stability due to its rigid nature.
5. It embodies the aspirations of the people. It cautions the Government about the importance of the accomplishment of popular needs.
6. It maintains equilibrium between the centre and the states by allocating powers in a judicious manner.
7. It safeguards the sanctity and spirit of a federation.

Demerits:

1. A written constitution cannot provide a better Government as it impose some . stipulated conditions on the party in power.
2. It makes the judiciary a predominant one.
3. Its provisions cannot be changed according to the needs and wishes of the people. So, the progress of the nations lags behind.
4. Its rigid nature is not helpful to the development of the state.
5. It gives scope for conflicts among the governmental organs.
6. It may not be conductive to the formation of a welfare state.

Question 4.
Explain the merits and demerits of Unwritten Constitution.
Answer:
Unwritten Constitution: Unwritten constitution is one whose provisions are not written in a single document. It includes several customs and traditions which are manifested in the form of the laws.

The Constitution of Britain is the best example of unwritten constitution.

Merits:

1. An unwritten constitution paves the way for progressive legislation. It has development orientation.
2. It always undergoes the process of evolution as it aims at ‘bettering the best’.
3. It gives no scope for revolutions and such other agitations. It concedes to the popular demands.
4. It can be amended according to the popular needs and aspirations.
5. Its provisions are elastic in nature. So, changes in the constitution are easily made.

Demerits:

1. An unwritten constitution may be changed frequently by the party in power for its political gains. This affects the political stability of the nation.
2. It fails to protect the rights and freedoms of people.
3. It is more informal in nature.
4. It is also not suitable for federal states.
5. An unwritten constitution is considered as a play tool of judges. This may lead to judicial manipulations.
6. It is prone to frequent amendments.
7. It is not suitable to democratic states.

Question 5.
Distinguish between Written and Unwritten Constitution.
Answer:
Written Constitution :
A written constitution is formulated and adopted by a Constituent Assembly or a Convention. It comprises several principles and rules of the Government in a written form or document. The Constitution of India is an example of written constitution. The American Constitution is the first written constitution in the world.

Unwritten Constitution:
Unwritten constitution is one whose provisions are not written in a single document. It includes several customs and traditions which are manifested in the form of the laws. The Constitution of Britain is the best example of unwritten constitution.

Differences between Written and Unwritten Constitutions

Question 6.
Explain the merits and demerits of a Rigid Constitution.
Answer:
Rigid Constitution :
Rigid constitution is one whose provisions cannot be changed easily. In this system the constitutional amendment methods are different from those of ordinary’ laws. There will be a special procedure for amending the provisions of the rigid constitution. The rigid constitution will have firmness due to its special procedures of amendment. The Constitution of the United States is the best example of a rigid constitution.

Merits:

1. Rigid constitution secures political stability.
2. It is a product of political experience.
3. It avoids hasty and ill-considered legislation.
4. It protects the fundamental rights of the citizens.
5. It preserves and enhances the interests of the provinces in a federal state.
6. It is suitable for all kinds of people.

Demerits :

1. Rigid constitution cannot be easily amended to suit the changing needs.
2. It may affect the nation’s progress and growth.
3. It is not suitable for tackling the issues arising during emergencies.

Very Short Answer Questions

Question 1.
What do you mean by Constitution?
Answer:
The term constitution implies a written document embodying the provisions relating to the powers and functions of the Government organs, the rights and duties of the citizens.

Question 2.
What is an Evolved Constitution?
Answer:
Evolved constitution is also called Cumulative constitution. It is the result of evolutionary changes. It may be the product of collected material; It acts as the basis to the political institutions of a country. Several customs, usages, traditions, principles and judicial decisions are the major sources of this Constitution. Ex : British Constitution.

Question 3.
What is an Enacted Constitution?
Answer:
Enacted constitution is also known as Conventional constitution. It is consciously made. It is the outcome of the deliberations of the Constituent Assembly specially constituted for that purpose. It is promulgated by the Sovereign Authority i.e., king or queen or Parliament. Ex: The Constitutions of India and the U.S.A.

Question 4.
Write any three merits and demerits of Flexible Constitution.
Answer:
Merits of Flexible Constitution are :

1. It is elastic and adaptable in nature. Its provisions can be easily amended from time to time.
2. It is responsive and responsible to the popular wishes.
3. It protects the people from the dangers of revolutions.

Demerits of the Flexible Constitution are :

1. It is not suitable to the federal states, having rigid constitution.
2. It is not suitable to democratic states.
3. It is highly unstable.

Question 5.
Mention any two differences between Flexible and Rigid Constitutions.
Answer:
Differences between Flexible and Rigid Constitution

Andhra Pradesh BIEAP AP Inter 1st Year Civics Study Material 10th Lesson Secularism Textbook Questions and Answers.

AP Inter 1st Year Civics Study Material 10th Lesson Secularism

Long Answer Questions

Question 1.
Define Secularism and explain the conceptions of Secularism.
Answer:
Introduction:
Secularism is one of the characteristic feature of a Modem State. Secular State explains the relation between the State and Religion. The concept of secularism was popularised by the state authority to control the religion and religious authority oyer the state affairs.

Meaning:
The term “Secular” in Latin language means “Of this World”. It denotes the meaning “the opposite of Religion”.

Definitions:
1) E.S. Waterhouse :
Secularism is an ideology which provides a theory of life and conduct as against one provided in Religion”.

2) GJ. Holyoake :
“Secularism is an idea of promoting a social order as separate from religion without actively dismissing or criticising religious beliefs”.

Conceptions of Secularism :
Secularism has many conceptions. Some of them may be explained as below:

1. Secularism a humanistic and atheistic philosophy :
Secularism has several personal, cultural, political and social implications. It was humanistic in nature as it seeks the well being of human beings. It assigns importance to the saying that man is the measure of all things. It neither supports nor opposes religion. It allows individuals with the discretion of choosing and following their religion.

2. Political and social dimension :
Secularism has certain political and social dimensions. It stands for the achievement of autonomous political and social order having naturalistic and materialistic perspectives. It allows religious freedom in the matters of family, association and society.

3. Liberty and Secularism:
Secularism serves as a beneficial element of liberty and Secularism. It also acts as the basis of liberal Secularism. It strongly opposes the existence, continuance and survival of authoritarian religious leaders and institutions. It advocated Secularism and decentralisation of governmental powers.

4. Opposition to religion :
Secularism is vehemently opposed to the supporting of religion in public matters. It condemned the presence and domirlance of eclesiastical authorities. It relegated religion to unimportant matters of life. It considered that people could follow their rituals without affecting the peace and order in society. Individuals must carry on their religious activities without causing harm, hatred and ill-will among the followers of other religious denominations. They must consider the noble aims and aspirations of the makers of the constitution.

Question 2.
Describe the meaning and various dimensions of Secularism.
Answer:
Introduction:
Secularism is one of the characteristic feature of a Modem State. Secular State explains the relation between the State and Religion. The concept of secularism was popularised by the state authority to control the religion and religious authority over the state affairs.

Meaning:
The term “Secular” in Latin language means “Of this World”. It denotes the meaning “the opposite of religion”.

Definitions:
1) E.S. Waterhouse :
Secularism is an ideology which provides a theory of life and conduct as against one provided in Religion”.

2) G J. Holyoake :
“Secularism is an idea of promoting a social order as separate from religion without actively dismissing or criticising religious beliefs”.

Dimensions of Secularism: Secularism can be analysed under the following dimensions:
1. Social dimension :
Secularism stands for eschewing or ignoring superstitions in social life. It never allows individuals to think and act in terms of one’s caste, colour, creed etc. It desires individuals to abstain untouchability, bonded labour and other evil practices in their day-to-day activities while dealing with their neighbours. It advises them to treat others on equal and respectable manner. It cautions them against the practice of caste disparities, colour differentiations, racial bigotry etc. At the end, it prescribed harmonious relations between individuals in society.

2. Economic dimension:
Economic dimension of Secularism relates to the freedom of individuals to embrace, practice and propagate an occupation which they like best. It restrains them against the practice of religious discrimination between individuals in utilizing natural, human and economic resources in productive operations. It did not allow the State authorities to observe discretion in sanctioning permits and licenses to the entrepreneurs on religious grounds. It assigns significance to elements like merit, talent, enterprising spirit etc., while allocating industrial licenses and other operations among individuals in the economy.

3. Political dimension:
Secularism has also some political dimensions. It allows the citizens to have complete freedom in political affairs. It believes that politics, administration, legislation and execution of public policies are entirely different from religious matters. Accordingly citizens in a Secular State are conferred several political rights and freedoms in choosing the candidates and exercising their franchise during elections. It gives scope for any citizen to hold any public office within the State irrespective of religious conside¬rations. It will not consider religion as a pre-requisite for granting political rights. It will pave the way for democratic aspirations and freedom of the people. To say in brief political dimension of secularism in synonymous with the democratic functioning of modem state.

Question 3.
What do you. know about the meaning and merits of Secularism?
Answer:
Introduction:
Secularism is one of the characteristic feature of a Modem State. Secular State explains the relation between the State and Religion. The concept of secularism was popularised by the state authority to control the religion and religious authority over the State affairs.

Meaning:
The term “Secular” in Latin language means “Of this World”. It denotes the meaning “the opposite of religion”.

Definitions:
1) E.S. Waterhouse :
Secularism is an ideology which provides a theory of life and conduct as against one provided in Religion”.

2) G.J. Holyoake :
“Secularism is an idea of promoting a social order as separate from religion without actively dismissing or criticising religious beliefs”.

Merits of Secularism :
The following are some of the important merits of secularism.

1. Equality:
Secularism forms as the basis of equalitarian society. It treats the people belonging to all religious denominations as equal. It gives no recognition to the man made inequalities and discriminations based on caste, colour, community, region, religion, language, race etc. People will have a strong favourable impression towards the nation.

2. Religious freedom :
Secularism enables the individuals to enjoy their religious freedom to their full extent. The state will not interfere in the religious affairs of individuals. The Constitution and various laws in a Secular State will provide individuals with complete freedom to embrance, profess, practice and propagate any religion as they like.

3. taw and order:
Now a days one can observe unhappy, miserable and pro-religious movements that are organized by different sections of government, state and other department. The maintenance of communal harmony became a challenging task for the state in pacifying the feelings the people belonging to various religious denominations. Secularism avoids communal clashes and religious bigotry and animosities in the society. This is due to the fact that secularism ultimately promotes religious harmony among the people.

4. Rule of law:
Secularism accords recognition to the concept of Rule of Law. A state following secularism will enact laws and implements them keeping in view the interest of not a particular religious denomination, the people belonging to.all religious denomination. It will not take into account the religious dogmas while making laws. Similarly it makes no discrimination between the people on the ground of religion.

5. Tolerance :
Secularism preaches tolerance and kindness. It believes in universal brotherhood of man and fatherhood of God. It professes, propagates and practices the noble principles of charity, kindness, love, magnanimity, non-violence etc. As a result, Secularism is characterized by the peaceful co-existence of people and smooth working of the polity and social institutions in the state.

6. National integration :
Secularism serves as the best means for fostering national unity and integrity feelings among the people. It is also considered as the best device for achieving unity in diversity. It brings unity among the people of various religious beliefs and practices.

7. Protection to the minorities:
Secularism treats all alike. It makes no discrimination between the people of majority and other sections of society. At the same time it extends special facilities to the minority sections for preserving and promoting their interests against the dominance of majority religious group. It teaches the people about the significance of religious tolerance towards minority sections.

8. Alround progress:
The greatest merit of secularism relates to the achievement of alround progress of the people. This is possible due to the prevalence of rule of law, religious tolerance, neutral attitude of the government etc. Especially the government will make all efforts for the development of the people of all religious denominations in all spheres of welfare, social justice, protecting the interests of disadvantages sections etc.

Question 4.
Define Secular State and elaborate the features and importance of Secular State.
Answer:
Introduction :
A State following secular policy in administrative, educational and employment matters is known as Secular State. The government in Secular State follows a neutral policy in religious matters of the people. Ex: India

Definition :
D.E.Smith defined secular state as “none while guaranteeing individual and corporate freedom of religion, which deals with the individual as a citizen irrespective of his religion”.

Features of Secular State :
Secular State comprises the following features.

1. No place for religion:
Secular States does not assign significance to any particular religion. It will not make laws or implement them on religious grounds.

2. Equal status :
Secular State accords equal status to its people. It makes no differentiation between individuals on the grounds of their caste, colour, community, religion, race, region, language etc. As a result, people will have satisfaction and extend co-operation to the government in the implementation of various policies and programmes. They live together with the fellow members of other religious denominations. ‘

3. No state religion :
Secular state does not recognize any particular religion as the state religion. It adopts neutral policy in religious matters. It implements various laws and social welfare measures without basing on the religious feelings of the people. It will not assign special role to any particular religion in public activities. All public places like educational institutions, government offices and judicial organizations will carry on their activities with out aligning to a particular religion.

Importance of Secular State :
The concept of Secular State became more important in recent years. Factors like spread of democratic spirit, science and technology, development of transport and communication facilities, rational thinking, welfarism etc., led to the growing importance of Secular State. On the whole, importance of Secular State may be explained with the following points.

1. Secular state strengthens the non-religious forces in-different fields in the State.
2. It drives away the social evils and superstitions from the minds of the people.
3. It contributes to social reformation by driving away the communal bigotry and religious fundamentalism.
4. It promotes scientific temper and helps intellectual progress of the people.
5. It gives priority to reason over faith, logic over magic and fact over fiction.
6. It provides security and protection to religious minorities.
7. It accommodates every individual with his personal religious beliefs.

Question 5.
Point out Secularism in Indian context.
Answer:
After independence the Constitution of India provided for Secularism as the basic philosophy underlying the organization and functioning of Indian Republic. Accordingly the constitution of India declared India as a secular state. The governments in India (including tiie union, state, provincial and local authorities) adopt secularism in theory and practice. It should not practice religion in public matters in the matters of legislation, execution and administration of the State. People of India are allowed complete religious freedom for professing, practicing and propagating their respective religious beliefs. The State will be neither irreligious nor anti religious. Instead it adopts a neutral policy in religious matters.

It is not entitled to impose taxes or collect them purely on religious grounds. Admissions into the state or government aided institutions are completely prohibited on religious grounds. Similarly, propagation of religious programmes in public institutions are banned. Hence secularism carries a lot of importance as per the constitutional provisions.

It may be noted that the word ‘Secular’ did not find place at first in the Constitution. The preamble too did not contain any wording of secularism. However, keeping in view the ongoing communal incidents for decades together after independence, the top leaders in the union government felt the need for incorporating the word ‘Secular’ in the Preamble. They wanted to avoid religious tensions and forbid communal clashes between the various religious denominations in India.

The Constitution (Forty Second Amendment) Act, 1976 made a provision for the word Secular’ in the Preamble. Smt. Indira Gandhi, India’s third Prime Minister, at the time of introducing the Constitution (forty second amendment) bill in Parliament stated thus “Secularism is neither favouring nor showing in difference to a religion to religion. It implies equal respect for all religious denominations. There is no future for any nation by adopting mere tolerance. Positive respect by every religious group towards other religious groups is the need of the hour”.

Question 6.
Is India a Secular State? Justify this with some examples.
Answer:
It is asserted that India is a Secular State. The addition of the word Secular’ to our Constitution by 42^nd Amendment in 1976 proves this fact. Even from the beginning of the Constitution, India is a Secular State. Several provisions of the Indian Constitution also prove this fact.

1. Article 15(1) holds that no discrimination shall be observed in the provision of employment opportunities in government. But certain sections of the people may be allowed some special privileges.
2. Article 17 states that practice of untouchability is a crime and illegal.
3. According to Article 25, every Indian citizen enjoys the freedom to profess and propagate the religion of his own choice. It also allows them to donate their properties for the religious purposes.
4. Article 26 guarantees every person to
   1. Establish and maintain religious and charitable institutions.
   2. Manage his/her religious affairs.
   3. Own and acquire moveable and immovable properties and
   4. Maintain such properties in accordance with law.
5. Article 27 states that state shall hot impose any tax upon the individual for the development of religions. It also implies that state shall not impose taxes on the basis of the religious principles of individuals.
6. Article 28 forbids the imparting of religious teachings in the educational institutions which are wholly or partly aided tty the government. No religious prayers or discussions shall be conducted in educational institutions.
7. Articles 28 and 29 mention that no admissions shall be made on religious basis in educational institutions which are financed wholly or partly by the state. No individual on religions grounds shall be denied the right to admission into different academic courses in. educational institutions.
8. The people belonging to minority communities shall be provided with right to protect and promote their language, culture and script by establishing and maintaining their own educational institutions. From the above points, we may say that India is a Secular State.

Question 7.
Suggest measures for making India a Secular State.
Answer:
It is highly essential to wipe out the communal feelings from the minds of people for establishing a real Secular State. In this regard, the following measures have to be adopted by the government, political parties, voluntaiy organizations and people.

1. The ministers and government officers shall not attend to or participate in the meetings held by religious associations. They shall not adopt any religious methods or poojas at the time of laying foundation or inaugurating the public buildings or programmes and give an impression that they do not favour a particular religion.
2. Government shall ban all those religious associations which carry on their activities against national or social interests and the constitution.
3. Government shall not allow the construction of religious structures which may, impede peace and tranquility in a particular locality.
4. Government shall implement land reforms, family welfare, employment generation and other programmes without any religious bias.
5. Government shall ban those political parties which use religion for securing votes. Similarly all parties formed on communal basis shall be banned. Use of religious symbols during elections should be banned.
6. Government shall take steps for publishing text books on secular basis. The text books shall consist of lessons preaching religious tolerance or universal religion.
7. Efforts shall be made for solving the various social and economic problems on rational and scientific basis without reference to religion.
8. The various information and communication agencies shall not disseminate information and incidents on religious grounds. They shall not give undue importance to communal riots which may provoke further unrest between the same groups elsewhere.

Short Answer Questions

Question 1.
Write about the origin of Secularism.
Answer:
The ancient Roman emperors denied recognition to the Christian religion. In the medieval period social and religious reformers like Martin Luther and Calvin Zwingle challenged the spiritual monopoly of religious heads. They advocated that religion and spiritual matters are purely personal and private matters. Their speeches marked a break through in religious matters. In modem period, political thinkers like Machiavelli and Jean Bodin emphasized the need for the separation of religion from politics.

John Locke and other liberal thinkers advised the people to follow religious tolerance. In course of time, the writings of the above thinkers influenced the people who began to treat religion as a private and personal affair. In the United States, President Thomas Jafforson explained the real meaning of Secularism by stating that there exists a wall of separation between the State and the Religion.

Question 2.
List out the factors that led to the spread of Secularism.
Answer:
It is believed that the following factors have led to the spread of Secularism in general in many parts of the world.

• People negative attitude towards superstitions
• Spread of rationed thinking
• Spread of democratic values and institutions
• Advancement in science and technology
• Awareness about the evils of religion
• Impact of social legislation
• Need for secular approach
• Social and economic betterment of individuals
• Influence of secular political leadership
• Importance to international peace and order

The above factors have profoundly influenced secularism in modem period.

Question 3.
Narrate any three conceptions of Secularism.
Answer:
Conceptions of Secularism :
Secularism has many conceptions. Some of them may be explained as below :

1. Secularism a humanistic and atheistic philosophy :
Secularism has several personal, cultural, political and social implications. It was humanistic in nature as it seeks the well being of human beings. It assigns importance to the saying that man is the measure of all things. It neither supports nor opposes religion. It allows individuals with the discretion of choosing and following their religion.

2. Political and social dimension :
Secularism has certain political and social dimensions. It stands for the achievement of autonomous political and social order having naturalistic and materialistic perspectives. It allows religious freedom in the matters of family, association and society.

3. Liberty and Secularism:
Secularism serves as a beneficial element of liberty and Secularism. It also acts as the basis of liberal Secularism. It strongly opposes the existence, continuance and survival of authoritarian religious leaders and institutions. It advocated Secularism and decentralisation of governmental powers.

Question 4.
Briefly analyse the dimensions of Secularism.
Answer:
Dimensions of Secularism: Secularism can be analysed under the following dimensions:

1. Social dimension :
Secularism stands for eschewing or ignoring superstitions in social life. It never allows individuals to think and act in terms of one’s caste, colour, creed etc. It desires individuals to abstain untouchability, bonded labour and other evil practices in their day-to-day activities while dealing with their neighbours. It advises them to treat others on equal and respectable manner. It cautions them against the practice of caste disparities, colour differentiations, racial bigotry etc. At the end, it prescribed harmonious relations between individuals in society.

2. Economic dimension:
Economic dimension of Secularism relates to the freedom of individuals to embrace, practice and propagate an occupation which they like best. It restrains them against the practice of religious discrimination between individuals in utilizing natural, human and economic resources in productive operations. It did not allow the State authorities to observe discretion in sanctioning permits and licenses to the entrepreneurs on religious grounds. It assigns significance to elements like merit, talent, enterprising spirit etc., while allocating industrial licenses and other operations among individuals in the economy.

3. Political dimension :
Secularism has also some political dimensions. It allows the citizens to have complete freedom in political affairs. It believes that politics, administration, legislation and execution of public policies are entirely different from religious matters. Accordingly citizens in a Secular State are conferred several political rights and freedoms in choosing the candidates and exercising their franchise during elections. It gives scope for any citizen to hold any public office within the State irrespective of religious considerations. It will not consider religion as a pre-requisite for granting political rights. It will pave the way for democratic aspirations and freedom of the people. To say in brief political dimension of secularism in synonymous with the democratic functioning of modem state.

Question 5.
What do you mean by Theocracy?
Answer:
Theocracy technically means rule by God. In practice, it implies rule by priests. It originated from the theory that all legitimate powers emanate from God. It found expression in the priestly order having the sole right to interpret laws as was the case in Ancient Judiasm and Hinduism. It is also exhibited in the present day Islam. The state having an official religion is called a Theocratic State. In such states all other religions or religious activities are either prohibited or discouraged or highly regulated Or controlled by the State. All the official and important offices of the State are either appointed or elected only those from the official religion.

State officially participates in the religious affairs and rituals. State provides funds to the religious propagation and to the restoration or construction of the places of worship. Religious co-existence and religious tolerance are said to be minimal in these States. The religious teachers and the religious rituals play a pivotal role in State affairs. Religious personal law is predominant in the enactment of laws and in the way of life of the people. Even in food habits and dress, the importance of religions dictates the public life. States like Pakistan, Saudi Arabia and so many other Islamic states are the best examples of a Theocratic State.

Question 6.
Distinguish between Secular State and Theocratic State.
Answer:
Secular state and theocratic state are not same and identical. Eventhough both arise in human political organizations like State, they completely differ from one another in several aspects. These may be demonstrated with the help of the following table.

Question 7.
Explain any four merits of Secularism.
Answer:
Merits of Secularism:
The following are some of the important merits of secularism.

1. Equality:
Secularism forms as the basis of equalitarian society. It treats the people belonging to all religious denominations as equal. It gives no recognition to the man made inequalities and discriminations based on caste, colour, community, region, religion, language, race etc. People will have a strong favourable impression towards the nation.

2. Religious freedom :
Secularism enables the individuals to enjoy their religious freedom to their full extent. The state will not interfere in the religious affairs of individuals. The Constitution and various laws in a Secular State will provide individuals with complete freedom to embrance, profess, practice and propagate any religion as they like.

3. Law and order:
Now a days one can observe unhappy, miserable and pro-religious movements that are organized by different sections of government, state and other department. The maintenance of communal harmony became a challenging task for the state in pacifying the feelings the people belonging to various religious denominations. Secularism avoids communal clashes and religious bigotry and animosities in the society. This is due to the fact that secularism ultimately promotes religious harmony among the people.

4. Rule of law:
Secularism accords recognition to the concept of Rule of Law. A state following secularism will enact laws and implements them keeping in view the interest of not a particular religious denomination, the people belonging to all religious denomination. It will not take into account the religious dogmas while making laws. Similarly it makes no discrimination between the people on the ground of religion. .

Question 8.
What are the features of Secular State?
Answer:
Features of Secular State :
Secular State comprises the following features.
1. No place for religion:
Secular States does not assign significance to any particular religion. It will not make laws or implement them on religious grounds.

2. Equal status :
Secular State accords equal status to its people. It makes no differentiation between individuals on the grounds of their caste, colour, community, religion, race, region, language etc. As a result, people will have satisfaction and extend co-operation to the government in the implementation of various policies and programmes. They live together with the fellow members of Other religious denominations.

3. No state religion :
Secular state does not recognize any particular religion as the state religion. It adopts neutral policy in religious matters. It implements various laws and social welfare measures without basing on the religious feelings of the people. It will not assign special role to any particular religion in public activities. All public places like educational institutions, government offices and judicial organizations will carry on their activities with out aligning to a particular religion.

Question 9.
Write about the importance of Secular State.
Answer:
Importance of Secular State :
The concept of Secular State became more important in recent years. Factors like spread of democratic spirit, science and technology, development of transport and communication facilities, rational thinking, welfarism etc., led to the growing importance of Scular State. On the whole, importance of Secular State may be explained with the following points.

1. Secular state strengthens the non-religious forces in different fields in the state.
2. It drives away the social evils and superstitions from the minds of the people.
3. It contributes to social reformation by driving away the communal bigotry arid religious fundamentalism.
4. It promotes scientific temper and helps intellectual progress of the people.
5. It gives priority to reason over faith, logic over magic, and fact over fiction.
6. It provides security and protection to religious minorities.
7. It accommodates every individual with his personal religious beliefs.

Very Short Answer Questions

Question 1.
Define Secularism.
Answer:
Meaning:
The term “Secular” in Latin language means “Of this World”. It denotes the meaning “the opposite of Religion”.

Definitions:
1) E.S. Waterhouse :
Secularisrn is an ideology Which provides a theory of life and conduct as against one provided in Religion”.

2) G.J. Holyoake :
“Secularism is ari idea of promoting a social order as separate from religion without actively dismissing or criticising religions beliefs”.

Question 2.
What are the types of Secularism?
Answer:
Secularism is of two types, namely, i) Subjective ii) Objective

Subjective Secularism means the gradual separation Of religious feelings from everyday transactions of the people. Objective Secularism implies the elimination of religious rituals and institutions from public life and government activity.

Question 3.
What is D.E. Smith’s definition of Secularism?
Answer:
D.E. Smith stated three connotations of secularism. They are:
a) Liberty and freedom of religion
b) Citizenship and the right to equality, non-discrimination and neutrality
c) Separation of state from religion.

Question 4.
Write about origin of Secularism.
Answer:
The term ’Secular1 in Latin language means ’of this world’. It implies the meaning ’the opposite of religion’. In modem times, the term was used at first by G.J. Holyoake, a British writer in 1851.

Question 5.
Mention any four factors that led to the spread of Secularism.
Answer:
a) People’s native attitude towards superstitions
b) Spreading rational thinking
c) Spreading democratic values and institutions
d) Advancement in science and technology

Question 6.
Write about any one conception of Secularism.
Answer:
Secularism has several personal, cultural, political, and social implications. It was humanistic in nature as it seeks the well-being of human beings. It assigns importance to the saying that man is the measure of all things. It neither supports nor opposes religion. It allows individuals with the discretion of choosing and following their religion.

Question 7.
What is the Social dimension of Secularism?
Answer:
Secularism stands for eschewing or ignoring superstitions in social life. It never allows individuals to think and act in terms of one’s caste, colour, creed etc. It desires individuals to abstain untouchability, bonded labour and other evil practices in their day to day activities while dealing with their neighbours. It advises them to treat others on equal and respectable manner.

Question 8.
What do you mean by Theocracy? [A.P. 19, 18, 15; T.S. 15]
Answer:
The state having an official religion is called a Theocratic State. In such states all other religions or religious activities are either prohibited or discouraged or highly regulated or controlled by the state. All the official and important offices of the state are either appointed or elected only those from the official religion. State officially participates in the religious affairs and rituals.

Question 9.
List out any two differences between Secular State and Theocratic State.
Answer:

• Secular State is based on elements other than religion, whereas theocratic state is based on religious elements.
• There will be no official religion in a Secular State, whereas there will be a particular religion which is declared as official religion in a theocratic state.

Question 10.
In what way does secularism enable religious freedom to individual?
Answer:
Secularism does not recognize any particular religion as the state religion. Secular state adopts neutral policy in religious matters. It implements various laws and social welfare measures without basing on the religious feelings of the people.

Question 11.
How does rule.of law promotes Secularism?
Answer:
Secularism accords recognition to the concept of Rule of Law. A state following secularism will enact laws and implements them keeping in view the interest of not a particular religious denomination, the people belonging to all religious denominations. It will not take into account the religious dogmas while making laws. Similarly, it makes no discrimination between the people on the grounds of religion in the matters of legislation enforcement and adjudication of laws.

Question 12.
Define Secular State.
Answer:
D.E. Smith defined Secular State as “None while guaranteeing individual and corporate freedom of religion, which deals with the individual as a citizen irrespective of his religion”.

Question 13.
Write about any two features of Secular State. [A.P. Mar, 18]
Answer:
Features of Secular State :
Secular State comprises the following features.

1. No place for religion:
Secular States does not assign significance to any particular religion. It will not make laws or implement them on religious grounds.

2. Equal status :
Secular state accords equal status to its people. It makes no differentiation between individuals on the grounds of their caste, colour, community, religion, race, region, language etc. As a result, people will have satisfaction and extend co-operation to the government in the implementation of various policies and programmes. They live together with the fellow members of other religious denominations.

Question 14.
What is the importance of Secular State?
Answer:
The concept of Secular State became more important in recent years. Factors like spread of democratic spirit, science and technology, development of transport and communication facilities, rational thinking, welfarism etc., led to the growing importance of Secular State.

Question 15.
Mention any two elements that justify India as a Secular State.
Answer:

• The term ‘Secular’ was included in the Indian Constitution in the year 1976 through the 42^nd Constitutional Amendment Act.
• Indian Constitution guarantees six fundamental rights out of which, the most promising right i.e., right to freedom of religion from articles 25 to 28, is enough to justify India as a Secular State.

Andhra Pradesh BIEAP AP Inter 1st Year Civics Study Material 9th Lesson Democracy Textbook Questions and Answers.

AP Inter 1st Year Civics Study Material 9th Lesson Democracy

Long Answer Questions

Question 1.
Define Democracy and explain the essential features of democracy.
Answer:
Definitions:
The term ‘Democracy’ is taken from two Greek words ‘Demos’ and ‘Kratos’. ‘Demos’ means people and ‘Kratos’ means rule or authority. Hence, democracy means the rule of the people or the authority of the people. Democracy is defined by different political scientists in different ways.

Those are –

1. Abraham Lincoln defines “Democracy is a government of the people, by the people and for the people”.
2. Seeley defines “Democracy is a government in which everyone has a share”.

Features of Democracy:
The features of democracy may be explained as follows.

1) Popular government:
Democracy is basically a government by the people. In democracy people act as the rulers and the ruled. While the voters assume ultimate sovereign authority, their representatives are considered as the immediate masters over the rulers in government. Both the voters and their representatives play a decisive role in public affairs of course with some minor degree of variations.

2) Popular control:
In democracy, citizens will have control over the political affairs. Citizens regulate the affairs of government by expressing their opinion on various policies and programmes of the latter. They support the wise, honest and welfare oriented programmes.

3) Individual’s dignity :
In democracy individual’s dignities are honoured by the government. Even the ordinary persons living in distant and remote places are given various opportunities to express their opinions.

4) Elections :
Democracy and elections are closely related. Democracy gives scope for holding elections at regular intervals as per constitutional norms.

5) Public accountability :
Democracy is characterised by public accountability. The various governments functioning in democracy owe accountability immediately to the legislators and ultimately to the voters at large.

6) Fundamental freedoms :
A noble feature of democracy relates to the enjoyments of fundamental freedoms by the people. Democracy gives scope for civil, political economic, cultural and other freedoms.

7) Independent Judiciary :
Independent Judiciary is another essential feature of democracy. In some states like United States and India the judicial organizations enjoy the power of judicial review.

8) Equality :
Democracy is based on the concept of equality. Equality is the basic postulate of democracy. Democracy allows no special privileges to some thereby affecting others rights. It is based on the equal application of laws and equal provision of opportunities.

Question 2.
Explain the merits and demerits of Democracy.
Answer:
Introduction :
Democracy is an important and most significant form of government. In Democracy the people rule themselves either directly or indirectly through their periodically elected epresentatives.

Meaning :
The term Democracy is derived from two greek words namely, “Demos” and “Kratos”. Demos means people and Kratos mean rule (or) authority.

Definitions:
1. Abraham Lincoln :
“Democracy is a government of the people, by the people and for the people”.

2. Lord Bryce:
“Democracy is that form of government in which the ruling power of the state is vested not in a particular class but in the members of the community as a whole”.

3. J.R. Seely:
“Democracy is a government in which every one has a share”.

Merits :
Democracy has the following merits.

a) Efficient government :
Prof. Garner described democracy as an efficient and effective government. The government in democracy carries all its activities efficiently and effectively both in normal times and emergencies.

b) Upholds individual liberties :
Democracy is the only government that upholds individual liberties. It guarantees certain civil rights to the people thereby providing an opportunity for them to become ideal and responsible citizens.

c) Assures equality:
Democracy assures equality of individuals in political and economic spheres. The people living in democratic nation enjoy all,the political. Civil and economic rights and privileges equally without any discrimination.

d) Educates the masses :
Democracy is described as a laboratory for a large scale experiments in public education. The masses in democracy are educated and enlightened through public meetings, election campaigns, distribution of pamphelts, etc.

e) Promotes patriotism :
The people in a democracy think that the country is their own property. When the country is in difficulties, they come forward to protect the interests of the nation. Therefore democracy develops patriotic spirit in the people.

f) Develops sense of responsibility:
J.S. Mill says that “democracy promotes a better and higher form of national character than any other policy whatever”. Since it is a rule by themselves, the people behave with a great sense of responsibility.

g) Training school for citizenship :
De Tocqueville, a French writer said that democracy serves as a training school for citizenship. Democracy promotes intellectual and moral qualities among the people.

h) A rational government :
Democracy is based on the principle that no man is infallible. It adopts a process of discussion and criticism which serves as necessaiy correctives to the abuse of power. Besides, they safeguard the rational nature of the political system.

Demerits :
Democracy has the following demerits.
a) Rule of Ignorance :
Plato criticised democracy as a rule of ignorance. Aristotle called it a perverted form of government. Anybody can become a ruler in this system and no special qualifications are prescribed for voters or rulers.

b) Favourable to rich :
The ruling political party in democracy depends on the rich people for their financial support at the time of elections. Therefore it becomes an obligation to the party in power to make laws Which are favourable to the rich.

c) Quality is ignored:
The votes in democracy are counted not weighted. Everything is decided according to majority opinion. The quality of majority cannot always be correct. Thus quantity is given greater importance them quality.

d) Methods of representation is not correct:
The present method of representation in democracy is known as territorial representation. It is not suitable to the requirements of the modem society.

e) Principle of equality abused:
In the name of equality, everybody is treated as an equal to the other irrespective of his worth. Ex: Right to vote is given to all without knowing their political ability.

f) No moral values :
In democracy, there is great scope for bribery and corruption. Red tapism, party defections and the role of money in elections are thebest examples of its corrupt nature.

g) Expensive one:
Democracy is an expensive government. In the name of elections, political parties and government spend chuge amounts of public money. Even in developing countries like India, crores and crores of rupees are wasted for elections.

Question 3.
Suggest the conditions required for the successful functioning ofDemo-
Answer:
The following conditions are essential for the success of democracy.
1. Sound system of Education:
The success of democracy requires adequate edcation for the citizens. Ignorance, innocence and uneducation prevent them from adopting right attitudes and large-scale reforms. Education sharpens the intellect of individuals. It develops a proper understanding of various things. It makes the citizens vigilant. Besides, this enables them to assess and criticise the policies of government.

2. Enlightened Citizenship:
Enlightened citizens are an asset to the democratic state. They can excise proper vigilance. They can actively participate in public affairs and help their fellow, citizens in the exercise of their rights and discharge of their reponsibilities. They extend co-operation to the government in all its good work.

3. Independent Press:
An independent press is a prerequisite of democracy. It enables the people to receive accurate and unbiased information regarding the activities of the government. It not only keeps the people in touch with government activities but also ventilates their grievances. It strives to promote harmonious relationship between the people and the government.

4. Strong Opposition :
The success of parliamentary democracy depends to a great extent on the strong and effective opposition. Such an opposition will act as a check against the government by pointing out its lapses. In this regard, the role of opposition in some advanced states.

5. Decentralization of powers :
Decentralization of powers and establishment of democratic institutions at the grass roots level is indispensable for the healthy organisation of democratic institutions. The representative bodies at the grass roots level (as known as Panchayat Raj Institutions (PRIs) in India) will act as the mini legislatures. The residents of local areas will be able to know how to exercise their franchise.

6. Absence of economic disparities :
Democracy can not function smoothly when there are economic disparities in a country. When a country comprises a large number of poor people and a few wealthy persons, democracy could not work successfully.

7. Social Equality:
Social equality is another pre-requisite of democracy. Caste, class and racial differences will impede the healthy working of democracy. Such elements encourage of democratic polity. To be successful, democracy must open its doors to everybody on equal basis by providing equal social opportunities to all in social sphere. Social equality must not only be proclaimed but also be practiced.

8. Faith in democracy:
Certain democratic beliefs and values like individual’s worth, need for tolerance of differences, decisions through discussions etc., should be inculcated among the people.

9. Sagacious Leadership :
Sagacious leadership is another essential condition of democracy. Sagacious leaders, by dint’ of their administrative acumen, political propriety, social commitment and economic perspective, will be able to lead the democratic state to greater heights of glory.

10. Honesty and transparency:
Honest persons belonging to various walks life, when entrusted with major responsibilities of the government, will strive for the success of democracy. Similarly transparency in administration also acts as a basic ingredient for the success of democracy.

11. Absence of militarism :
Democracy functions mostly in countries which are relatively free from militarism. In rules out the use of force and believes in the worth of individuals. It provides adequate opportunities to the people basing on worth, ablility and dedication militarism, on the other hand, demands concentration of authority and favours despotism.

Question 4.
What do you mean by Democracy? Write about the direct democratic devices.
Answer:
Meaning :
The term Democracy is derived from two greek words namely, “Demos” and “Kratos”. Demos means people and Kratos mean rule (or) authority.

Definitions:
1. Abraham Lincoln :
“Democracy is a government of the people, by the people and for the people”.

2. Lord Bryce:
“Democracy is that form of government in which the ruling power of the state is vested not in a particular class but in the members of the community as a whole”.

3. J.R. Seely:
“Democracy is a government in which every one has a share”.

Direct Democracy :
Direct Democracy is said to prevail when people themselves directly express their views and participate in the deliberative and administrative affairs of the government. People in direct democracy assume all powers of making laws. They formulate laws at a meeting attended by all the people. Direct Democracy is prevalent in Switzerland. In Switzerland, the citizens living in some small cantons meet together on a Sunday in April or May to elect their representatives and to make laws.

Devices Direct Democracy:
There are four devices prescribed in direct democracies to enable the people to participate directly in the administrative activities of the State. Those are

1. Referendum
2. Initiative
3. Recall and
4. Plebiscite.

These methods may be explained as follows.
1. Referendum:
It is one of the direct democratic devices. Literally it means, “must be referred to the people”. It is a device where by the electorate may veto a proposed legislation or a bill which the legislature has already passed. In other words, bills passed by the legislature are the voters for their approval or disapproval. If majority of the voters approve them, they become acts. But if they vote against them, they will be given up.

Hence, referendum is known as “Popular Veto”. It is of two types – 1) Compulsory referendum: All the constitutional bills must be sent to the people. 2) Optional Referendum : An ordinary bill passed by the legislative may be or may not be sent to the people. However, even that ordinary bill must be sent to the people, if a definite number of people demand it. Ex : In Switzerland 30,000 people or eight cantons (States) can demand referendum on an ordinary bill.

2. Initiative :
It is another device of direct democracy. It is a method by means of which the people propose legislation i.e.; they can ask the legislature to pass a particular law. For instance, in Switzerland, if 50,000 voters request the legislature to pass a law, then the proposal is submitted to the consideration of the people. If majority of the people (30,000) approve it, then it becomes an act. Unlike referendum, initiative provides a chance to the people to start the making of law. It is of two types : (1) Formulative Initiative : People present a bill to the legislature (2) Unformulative Initivative : People present a demand to the legislature as king it to pass a bill.

3. Recall:
It is another device of Direct Democracy. It means “Calling Back”. According to this method a specific number of voters may call back or dismiss an elected officer or a member of the legislature before the expiry of his term, if he is irresponsible. By means of this, the people can remove a representative or an officer from office when he fails to discharge his duties properly.

4. Plebiscite:
The term ‘Plebiscite” is derived from a French word “Plebiscitum”, which means “decree of the people”. It is used to obtain the opinion of the people on an important political issue or when there is a dispute regarding some territory. The question of accession or secession or territory is generally solved by means of plebiscite. It is not concerned with legislation. It is not apart of legal process. It is only a democratic method of ascertaining the opinion of the people on any political issue of public importance.

Short Answer Questions

Question 1.
What are the different aspects of democracy?
Answer:
Aspects of Democracy:
Democracy has there aspects, namely, 1) Social, 2) Economic and 3) Political. Democracy does not exist if any of the aspects are not prevalent in a society.

1. Social aspect of democracy implies the abolition of all discriminations on the grounds of class, colour, caste, creed, religion, nationality etc. All people irrespective of men or women, rich or poor are treated equally. In other words, democracy in its social aspect, means the prevalence of rule of law, equality of treatment, abolition of discrimination and absence of special privileges.

2. The economic aspect of democracy implies the equal distribution of wealth in society and removal of glaring disparities on the basis of wealth. Economic democracy becomes real through the provision Of right to work, leisure, adequate and fair wages. It implies the workers’ participation in the management of the factories or democracy in industry. Economic democracy also involves the provision of adequate opportunities to all people in economic matters.

3. Lastly, the political aspect of democracy means the provision of rights, namely, right to vote, right to contest elections, right to hold public offices and right to criticism. It also implies the provision or right to freedoms of speech, expression, criticism, associations, assembly, residence and movement.

Question 2.
Describe the various types of Democracy. [A.P. Mar, 15]
Answer:
Democracy is mainly classified into two types, Namely 1. Direct or Pure Democracy 2. Indirect or Representative Democract. These two types are explained as below :

1. Direct or Pure Democracy:
Direct Democracy :
Direct Democracy is said to prevail when people themselves directly express their views and participate in the deliberative and administrative affairs of the government. People in direct democracy assume all powers of making laws. They formulate laws at a meeting attended by all the people. Direct Democracy is prevalent in Switzerland. In Switzerland, the citizens living in some small cantons meet together on a Sunday in April or May to elect their representatives and to make laws.

2. Indirect or Representative Democracy :
Indirect democracy is also known as representative democracy. According to J.S. Mill “Representative democracy is one in which the whole people or some numerous portion of them exercise the governing power through deputies periodically elected by themselves”. This type of democracy for the first time, came into vogue in England. Later on, France, Germany, Italy and India adopted this system. At present representative democracy is prevalent in several countries like India, France, Japan, America, Canada, Holland, Sri Lanka etc. Under this System, citizens who attained the age of maturity elect their representatives in times of elections.

These representatives will assume the deliberative and legislative powers of the government on behalf of the people. They formulate different legislative policies in accordance with the wishes and aspirations of the electorate. They are responsible and responsive to the people for their acts. They continue in office only for a definite period of time. They can be removed by the citizens in times of elections when they fail to promote the welfare of the people. Hence in indirect democracy the people rule the country not themselves directly but indirectly through the periodically elected representatives.

Question 3.
Write briefly about Representative Democracy.
Answer:
Indirect democracy is also known as representative democracy. According to J.S. Mill “Representative democracy is one in which the whole people or some numerous portion of them exercise the governing power through deputies periodically elected by themselves”.

This type of democracy for the first time, came into vogue in England. Later on, France, Germany, Italy and India adopted this system. At present representative democracy is prevalent in several countries like India, France, Japan, America, Canada, Holland, Sri Lanka etc. Under this system; Citizens who attained the age of maturity elect their representatives in times of elections. These representatives will assume the deliberative and legislative powers of the government on behalf of the people.

They formulate different legislative policies in accordance with the wishes and aspirations of the electorate. They are responsible and responsive to the people for their acts. They continue in office only for a definite period of time. They can be removed by the citizens in times of elections when they fail to promote the welfare of the people. Hence in indirect democracy the people rule the country not themselves directly but indirectly through the periodically elected representatives.

Respond to public opinion. Indirect or representative democracy is again classified into two types namely. 1. Presidential 2. Parliamentary. In Presidential system all executive powers are exercised by a single executive head. Ex: In USA where there is Presidential system all executive powers are concentrated in the office of the President. On the other hand, in Parliamentary system executive powers are exercised by some ministers under Prime Minister’s leadership and in the name of the President. The ministers along with the Prime Minister are responsible for their acts to the Parliament. Ex : U.K., India, Australia etc.

Question 4.
Briefly and explain about Direct democratic devices.
Answer:
Devices Direct Democracy:
There are four devices prescribed in direct democracies to enable the people to participate directly in the administrative activities of the State. Those are

1. Referendum
2. Initiative
3. Recall and
4. Plebiscite

These methods may be explained as follows.
1. Referendum:
It is one of the direct democratic devices. Literally it means, “must be referred to the people”. It is a device where by the electorate may veto a proposed legislation or a bill which the legislature has already passed. In other words, bills passed by the legislature are the voters for their approval or disapproval. If majority of the voters approve them, they become acts. But if they vote against them, they will be given up.

Hence, referendum is known as “Popular Veto”. It is of two types – 1) Compulsory referendum: All the constitutional bills must be sent to the people. 2) Optional Referendum : An ordinary bill passed by the legislative may be or may not be sent to the people. However, even that ordinary bill must be sent to the people, if a definite number of people demand it. Ex: In Switzerland 30,000 people or eight cantons (States) can demand referendum on an ordinary bill.

2. Initiative :
It is another device of direct democracy. It is a method by means of which the people propose legislation i.e.; they can ask the legislature to pass a particular law. For instance, in Switzerland, if 50,000 voters request the legislature to pass a law, then the proposal is submitted to the consideration of the people. If majority of the people (30,000) approve it, then it becomes an act. Unlike referendum, initiative provides a chance to the people to start the making of law. It is of two types : (1) Formulative Initiative . People present a bill to the legislature (2) Unformulative Initivative : People present a demand to the legislature as king it to pass a bill.

3. Re Call:
It is another device of Direct Democracy. It means “Calling Back”. According to this method a specific number of voters may call back or dismiss an elected officer or a member of the legislature before the expiry of his term, if he is irresponsible. By means of this, the people can remove a representative or an officer from office when he fails to discharge his duties properly.

4. Plebiscite:
The term ’Plebiscite” is derived from a French word “Plebiscitum”, which means “decree of the people”. It is used to obtain the opinion of the people on an important political issue or when there is a dispute regarding some territory. The question of accession or secession or territory is generally solved by means of plebiscite. It is not concerned with legislation. It is not apart of legal process. It is only a democratic method of ascertaining the opinion of the people on any political issue of public importance.

Question 5.
Define Democracy and explain it’s significance.
Answer:
1. Abraham Lincoln:
“Democracy is a government of the people, by the people and for the people”.

2. Lord Bryce:
“Democracy is that form of government in which the ruling power of the state is. vested not in a particular class but in the members of the community as a whole”.

3. J.R. Seely:
“Democracy is a government in which every one has a share”.

Significance of Democracy :
Democracy is important from the following aspects. Democracy is the modem way of life. It is the only system of government where the personal dignity of individuals is ensured. Though democracy has been continuously adopted since the Greek city states, it became popular only after the occurrence of First and Second World Wars. At present, democracy is considered as an important device in the organisation and management of many institutions like state, government and society.

Above all, many view democracy as a moral, ideal and a noble way of life. It is the only system where the rulers as well as the ruled play a key role. Its greatest significance lies in the fact that commonest of common men and poorest of the poor are adored by the supreme rulers and administrators. The political heads, administrative bosses and the legislators at various levels treat the average citizens with great respect and honour.

Democracy is a convenient form of government at all times. Even at the height of political tensions and social compulsions, it offers peaceful and constitutional solutions.

Democracy creates a congenial atmosphere where the diverse socio-political forces interact harmoniously. In this context Lord Bryce aptly observed that people in democracy are friendly, harmonious and adjust with others irrespective of their wealth and social status. To say in a single sentence democracy provides accommodation even to the dissidents and opponents or negative viewers in arriving at decisions through C⁴ i.e., Consulation, Conciliation, Compromise and Consensus.

Question 6.
Explain any three merits and demerits of Democracy. ^QQBDS
Answer:
Merits :
Democracy has the following merits.

a) Efficient government :
Prof. Gamer described democracy as an efficient and effective government. The government in democracy carries all its activities efficiently and effectively both in normal times and1 emergencies.

b) Upholds individual liberties :
Democracy is the only government that upholds individual liberties. It guarantees certain civil rights to the people thereby providing an opportunity for them to become ideal and responsible citizens.

c) Assures equality :
Democracy assures equality of individuals in political and economic spheres. The people living in democratic nation enjoy all the political. Civil and economic rights and privileges equally without any discrimination.

Demerits :
Democracy has the. following demerits.

a) Rule of Ignorance :
Plato criticised democracy as a rule of ignorance. Aristotle called it a perverted form of government. Anybody can become a ruler in this system and no special qualifications are prescribed for voters or rulers.

b) Favourable to rich :
The ruling political party in democracy depends on the rich people for their financial support at the time of elections. Therefore it becomes an obligation to the party in power to make laws which are favourable to the rich.

c) Quality is ignored:
The votes in democracy are counted not weighted. Everything is decided according to majority opinion. The quality of majority cannot always be correct. Thus quantity is given greater importance than quality.

Question 7.
Define Democracy and explain its merits.
Answer:
Definitions:
1. Abraham Lincoln :
“Democracy is a government of the people, by the people and for the people”.

2. Lord Bryce :
“Democracy is that form of government in which the ruling power of the state is vested not in a ‘particular class but in the members of the community as a whole”.

3. J.R. Seely:
“Democracy is a government in which every one has a share”.

Merits :
Democracy has the following merits.

a) Efficient government :
Prof. Gamer described democracy as an efficient and effective government. The government in democracy carries all its activities efficiently and effectively both in normal times and emergencies.

b) Upholds individual liberties :
Democracy is the only government that upholds individual liberties. It guarantees certain civil rights to the people thereby providing an opportunity for them to become ideal and responsible citizens.

c) Assures equality :
Democracy assures equality of individuals in political and economic spheres. The people living in democratic nation enjoy all the political. Civil and economic rights and privileges equally without any discrimination.

d) Educates the masses:
Democracy is described as a laboratory for a large scale ex-periments in public education. The masses in democracy are educated and enlightened through public meetings, election campaigns, distribution of pamphelts, etc.

e) Promotes patriotism :
The pebple in a democracy think that the country is their own property. When the country is in difficulties, they come forward to protect the interests of the nation. Therefore democracy develops patriotic spirit in the people.

f) Develops sense of responsibility:
J.S. Mill says that “democracy promotes a better and higher form of national character than any other policy whatever”. Since it is a rule by themselves, the people behave with a great sense of responsibility.

g) Training school for citizenship :
De Tocqueville, a French writer said that democracy serves as a training school for citizenship. Democracy promotes intellectual and moral qualities among the people.

h) A rational government:
Democracy is based on the principle that no man is infallible. It adopts a process of discussion and criticism which serves as necessary correctives to the abuse of power. Besides, they safeguard the rational nature of the political system.

Very Short Answer Questions

Question 1.
What is meant by Democracy? Write two definitions. [A.P. 19, 18, 15]
Answer:
Democracy is form of government in which the people rule themselves directly or indirectly through their periodically elected representatives

Definitions:
1. Abraham Lincoln:
“Democracy is a government of the people, by the people and for the people”.

2. J.R. Seely:
“Democracy is a government in which eveiy one has a share”.

Question 2.
What do you know about Direct Democracy?
Answer:
Direct democracy is a system of government in which people directly participate in the activities of the State and the Government. The people directly express their views on the government policies. Direct democratic methods are four. They are Referendum, Plebiscite, Initiative and Recall.

Question 3.
What do you understand by Representative Democracy?
Answer:
Indirect democracy is also known as representative democracy. In this type, the people exercise their governing power through their representatives who are periodically elected. The will of the state is expressed through representatives. Indirect democracy was established in Britain in the 17^th century. Now-a-days, it is existing in different countries.

Question 4.
What are the features of Democracy?
Answer:
The features of democracy are
a) Popular government.
b) Significance to ordinary man
c) Regular elections
d) Popular responsibility
e) Fundamental rights ,

Question 5.
Write any four conditions that are essential for the success of Democracy. [A.P. 19, 18]
Answer:

1. Sound system of Education
2. Independent Press
3. Strong Opposition
4. Social Equality

Question 6.
List out the devices of Direct Democracy.
Answer:
The devices of Direct Democracy are :

1. Referendum
2. Initiative
3. Plebiscite
4. Recall

Question 7.
What do you know about Referendum? [A.P. 15]
Answer:
Referendum means ‘Refer to’. This method is used to ascertain the public opinion on important legislation. In some regions, the public opinion is sought on the problems of constitutional law and ordinary law. This is called referendum. Referendum is of two types. They are i) Compulaory referendum ii) Optional referendum.

Question 8.
What is meant by Initiative? [T.S, Mar, 15]
Answer:
Initiative is a request made by the people to the legislature in framing a law on certain national problem or policy as such. After making the law, the same shall be presented for referendum. In this aspect, people in a specified number present a petition in written form to the legislature proposing a legislation. It is also of two kinds. They are i) Formulative initiative ii) Non-formulative initiative.

Question 9.
What do mean by Plebiscite?
Answer:
Plebiscite means ascertaining public opinion on certain important issues. This is not applicable to the latos and the Constitution. People’s verdict is sought on certain public problems and policies of the government. This method was first used in 1804 by Napoleon in France.

Question 10.
What is meant by Recall? [A.P. & T.S. Mar, 15]
Answer:
Recall means To call back. The representatives will be called back by the people in case they are inefficient. Hence, this method helps the representatives in discharging their responsibilities properly for fear of being called back on the grounds of inefficiency.