Demonetisation

During demonetisation, reduced cash availability affected many customers’ immediate ability to pay and make purchases. Merely raising prices could make the product less affordable and reduce demand and sales further. Option B is incorrect because a rise in price does not necessarily increase demand. Exam tip: identify the cause of lower sales; where cash or payment constraints are the cause, measures such as digital payment facilities or suitable offers may be more appropriate than a price rise.

Environment scanning means monitoring external changes. Government rules and customer behaviour are important signals.

The governing concept is financial discipline through documentation, verification, and authorised control. Daily bank reconciliation compares the firm’s cash-book or accounting records with the bank statement, helping identify omissions, duplicate entries, timing differences, or unauthorised transactions. An approved payment process adds responsibility checks by requiring payments to follow defined authority and evidence. Together, these practices create reliable records and improve control during a period when payment methods and cash availability are changing. Option A therefore strengthens discipline. Options B, C, and D remove evidence, hide transactions, or deny customers proof of payment; they weaken transparency and increase the possibility of error, fraud, tax problems, and disputes.

During demonetisation, employees needed clear instructions about which notes were valid and which alternatives to cash, such as cards or digital payments, could be accepted. This reduced the risk of accepting invalid payments, customer disputes, and disruption in transactions. Communicating the deadline for exchanging old notes could be useful, but payment-acceptance rules were more essential for employees handling daily transactions. Exam tip: choose the communication that most directly affects day-to-day operations and customer transactions.

The governing concept is cash conservation during a sudden economic disruption. When demonetisation creates difficulty in using or receiving cash, a business should first review discretionary expenses, meaning expenses that can be postponed without stopping essential operations. Non-essential promotion can therefore be reduced, delayed or redesigned while the firm protects payments necessary for production and legal compliance. Legal tax payments are statutory obligations, essential wages support employees and operations, and necessary raw material is required to continue production. Thus, option A is correct because it represents a controllable, non-essential outflow rather than an unavoidable operating or legal payment.

Banking system became a key channel during demonetisation. Strong bank relations can help operations.

Demonetisation caused a sudden shortage of available cash. Arranging digital payments, maintaining a contingency plan for alternative payment methods, and regularly reviewing financial records show that the business has prepared for similar future disruptions. Depending only on cash repeats the key vulnerability exposed by the crisis. Exam tip: Learning from a crisis means creating alternatives and stronger controls to reduce risk.

Payment to key suppliers maintains raw material supply. Bank transfer is useful during cash shortage.

Micro enterprises often depend on daily cash. Their operations are quickly affected when cash stops.

The governing concept is the role of confidence in adopting a new business practice or technology. After demonetisation, many customers had to use digital payment systems that involved unfamiliar applications, banks, passwords, mobile networks and electronic records. They were more likely to adopt these methods when they believed that their money, personal information and transaction details were protected and that failed transactions would receive proper support. Option A expresses this requirement directly. The other options are incorrect because customers still need to evaluate products, trust clearly affects payment behaviour, and digital transactions require strong security rather than its absence.

The governing concept is functional coordination during a business disruption. Finance is concerned with liquidity, cash inflows, payment arrangements and the effect of discounts on revenue. Marketing is concerned with retaining customers, making the product easier to buy and sustaining sales. In option A, selecting digital or other payment alternatives addresses the finance problem, while deciding suitable discounts addresses customer demand and sales, which belong to marketing. The two functions must balance convenience with profitability. Counting chairs, changing names and choosing a factory colour do not meaningfully address the cash-and-sales problem, so option A is the only integrated answer.

Demonetisation had multiple objectives but claiming complete result is wrong. Use balanced language in exams.

Secure records improve both rule compliance and customer trust. Security is important in digital transactions.

The governing concept is how an environmental change increases operational workload and the need for employee communication. Demonetisation altered the acceptability of certain notes and caused customers to ask whether they could pay, exchange or receive change in particular forms. Customer-service employees had to explain the rules, handle confusion, guide people towards valid payment methods and sometimes manage complaints. These additional interactions increase pressure, especially when information is changing or queues are long. Option A describes that exact situation. If customers are already satisfied, no payment rules change, or the shop remains closed, the described customer-service workload would not arise in the same way.

The governing concept is control through reliable records, verification and reconciliation. A business can compare the sales recorded in its billing software with the amounts received in its bank account. Differences between the two records create an exception that management can investigate, so unreported or hidden sales become more difficult. This process also improves transparency and supports accurate accounting. Option A is therefore correct. Giving goods without a bill removes evidence, preventing employees from keeping records weakens control, and withholding receipts reduces the customer’s proof of purchase. Those alternatives increase concealment risk rather than reducing it.

Rural customers may need help with digital payments. A help desk increases adoption and trust.

Investors want to see ability to continue operations and sales. Cash position and digital capability are important signals.

After demonetisation, people and businesses need time to understand, access and trust digital or other alternative payment methods. Therefore, a target that encourages phased adoption is realistic. Eliminating all cash transactions in one day is impractical because cash dependence, digital infrastructure and users’ abilities vary. Exam tip: For goals involving major behavioural change, choose the option that is gradual, measurable and feasible.

Accepting demonetised notes and entering the sale under an incorrect date suggests an attempt to conceal the transaction or evade rules. It violates honest accounting and legal compliance, so it represents ethical risk in business. Options B, C and D describe transparent and lawful business practices. Exam tip: Ethical-risk options often involve false records, concealment of information, or deliberate violation of rules.

In the long run strong payment and record systems make business safer. This is the lesson from change.