Demonetisation

The governing concept is the effect of a large policy change on service capacity and operational workload. When specified currency notes lost or were scheduled to lose legal-tender status, people visited banks to deposit them into accounts or exchange them under the applicable rules. Bank employees consequently had to handle unusually large queues, identity checks, account entries, cash sorting, note counting, withdrawals, and customer queries. This sudden increase in transactions placed pressure on branches, systems, and staff. Therefore, option A is correct. School examinations, product packaging, and weather information are unrelated to the banking workload described and cannot explain the sudden rise in deposits and exchanges.

Organised records strengthen rule compliance. Compliance culture is based on transparent transactions.

The governing concept is cost management: identifying, analysing, and controlling expenses that affect the operation and profitability of a business. Digital payment charges are transaction-related costs. A business may compare providers, calculate the charge per transaction, estimate the monthly total, and decide whether the service remains economical after considering its convenience and security. That analysis belongs to cost management, so option A is correct. The question is not asking about a festival, office decoration, or a physical measurement of employees. Those activities do not evaluate an expense arising from payment processing and therefore cannot represent the relevant business decision area.

Government policy is part of external environment. A business has less direct control over external shocks.

Receipt and payment proof verify the transaction. This increases both consumer protection and trust.

The governing concept is that demonetisation can encourage businesses to adapt their payment arrangements when ordinary cash transactions become difficult. By accepting bank transfers, the wholesaler gives retailers an alternative method of settling their accounts. This changes the terms or means of payment without ending the demand for goods, so option B is correct: flexibility in payment policy. Option A is incorrect because demand extinction means demand has disappeared. Option C is incorrect because a wholesaler cannot create legal tender. Option D has no connection with the payment arrangement described.

Demonetisation can affect business sales payments and costs. In incorrect statement questions notice words like always.

The sales ratio by payment mode shows how much customers use cash, debit/credit cards, UPI, or other digital methods. After demonetisation, a rise in the share of digital payments is a direct indicator of changing customer payment behaviour. Average product value may indicate spending patterns, but it does not identify the payment method used. Exam tip: For questions on payment behaviour, select sales or transaction data classified by payment mode.

An economic decision increased demand for technological payment solutions. This shows interdependence of environment components.

Consumers give higher priority to essential goods. Non-essential spending is postponed first during cash shortage.

If employees understand payment processes service becomes faster and safer. Training helps implement change.

Invalidating old notes attempted to control fake currency. It was a stated objective of demonetisation.

Online and recorded payment model adapts faster to changing environment. Flexibility reduces risk.

Clear information to customers is necessary during crisis. Weak communication harms trust and relationships.

Valid payment and proper bill follow both law and ethics. In such questions identify compliance.

One objective of demonetisation was to increase recorded and formal transactions. Link it with structural economic change.

Daily reconciliation keeps cash control and records correct. During cash crisis even small errors can become major issues.

The governing idea is that a wider tax base results when more income and business activity becomes visible to tax authorities. If transactions pass through banks or digital systems, they leave identifiable records such as account entries, invoices, and payment trails. These records can help authorities compare reported income with actual activity and bring previously unregistered taxpayers into the tax system. Therefore option A is correct. Removing bills would reduce evidence, while hiding cash and making unidentified deposits would make income less traceable, so options B, C, and D work against the stated objective.

During demonetisation, specified currency notes cease to be legal tender, which can temporarily disrupt the availability and use of cash. A business that accepts only cash and has no digital or other alternative payment arrangement may lose sales and customer transactions; hence, this is a threat. In option B, alternative payment modes reduce the risk. Exam tip: Treat an external change as a threat when it can adversely affect a firm’s sales, operations, or profitability.

Digital knowledge and connectivity could be limited in rural areas. Therefore adoption speed differed.