Demonetisation

Correct answer: A. Lack of customer communication

The direct answer is A: lack of customer communication. During a crisis such as demonetisation, customers need timely information about delays, payment difficulties, stock, or cancelled orders. If a business cancels an order without telling the customer, the customer cannot plan or make another arrangement. The reasoning is: an order changes; the business does not inform the customer; uncertainty and mistrust arise; therefore communication management is weak. A is correct. B is wrong because cancelling an order does not show excessive product innovation. C is wrong because the action gives no evidence of strong tax compliance. D is wrong because order communication does not prove banking efficiency. A good manager explains the reason, gives an alternative where possible, and updates the customer. Memory cue: unexpected action plus no explanation means communication failure.

Correct answer: B. Taking valid payment mode and issuing proper bill

The direct answer is B: take a valid payment method and issue a proper bill. Demonetisation changes which notes can legally be used, so a business must follow official payment rules and keep truthful records. Ethical conduct means being honest with the customer; legal conduct means accepting permitted money, recording the sale, and giving the bill. A is wrong because accepting invalid notes without a record hides the transaction and may violate rules. B is correct because it combines lawful payment, transparency, and proof of sale. C is wrong because a false discount deceives the customer. D is wrong because hiding sales is tax evasion, even if the money is later deposited in a bank. Remember: valid payment plus correct bill equals compliance.

Correct answer: A. Shift from informal cash transactions to recorded formal transactions

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

Correct answer: A. To reduce confusion in cash receipts payments and deposits

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

Correct answer: A. The business accepts only cash and has no alternative payment arrangement

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.

Correct answer: A. Lack of digital literacy and internet facility

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

Correct answer: A. One that offers cash card UPI and receipt

When payment conditions change suddenly, customers prefer businesses that make payment easy and reliable. A business accepting cash, cards, and UPI gives customers several practical choices. Providing a receipt also improves confidence and creates a clear transaction record. Convenience can influence where a customer shops, especially when cash availability or payment habits are changing.

Option A is correct because it combines different payment options with proper documentation. The other choices create inconvenience or legal and trust problems: invalid notes cannot normally be accepted, refusing bills reduces transparency, and hiding payment information confuses customers. The competitive advantage comes from responding to customer needs, not from ignoring changed payment conditions.

Correct answer: A. They were no longer acceptable as normal payment

The direct answer is A: the old notes were no longer acceptable as normal payment. Legal tender is money that the law permits people to use for settling ordinary payments. When demonetisation removes a note’s legal status, a shop normally cannot accept it as payment under the earlier rules; customers must use an authorised alternative, subject to any officially announced exceptions. A correctly describes the business meaning. B is impossible because a paper note does not automatically become gold. C is wrong because a note does not turn into a share certificate, which represents ownership in a company. D is wrong because a note is not a tax receipt; a tax receipt is evidence of tax payment. Exam cue: losing legal status means losing ordinary payment validity, not changing into another asset.

Correct answer: A. Contingency planning for payment collection and cash flow

After demonetisation, cash availability and collection of payments from customers were disrupted. Businesses therefore needed contingency plans to maintain cash flow, use alternative payment methods, and manage delayed collections. Long-term production expansion is also a managerial decision, but it does not directly address an immediate cash crunch. Exam tip: Link demonetisation with cash transactions, payment systems, and working-capital needs.

Correct answer: A. Because it is recorded safe and transparent

Payment through bank account creates a clear record. It increases both transparency and employee security.

Correct answer: C. Considering both short-term difficulties and long-term objectives

Demonetisation had effects like cash shortage and objectives like transparency. A balanced answer includes both sides.

Correct answer: A. Matching bank deposits with sales bills

Matching bank deposits with sales bills can show validity of income. Record-based answers are more accurate.

Correct answer: A. When demand is weak and digital payment is available

Discounts can attract customers during weak demand. Sales can be completed when digital payment is available.

Correct answer: A. One policy affected banking consumer behaviour technology and sales together

Impact of one policy on many areas shows complexity. Business environment should be understood through many factors.

Correct answer: B. Ask for a valid payment mode and explain the rule

After demonetisation, notes declared invalid could not be accepted as payment in ordinary business transactions. A business should request payment through valid currency, card, digital payment, or another permitted mode and explain the rule politely. Giving goods without a bill or keeping invalid notes does not follow the required procedure. Exam tip: In such questions, choose the option that shows legal compliance and transparent customer dealing.

Correct answer: A. Contingency preparation is needed in payment system cash budget and records

Demonetisation showed the possibility of sudden payment crisis. Future preparation needs alternative payments and proper records.

Correct answer: B. Payment innovation

The correct answer is payment innovation. Demonetisation reduced the immediate availability or convenience of cash for many customers, so a business that introduced payment links changed its payment method to keep transactions moving. This is an adaptive use of digital technology and shows how a business responds to a changing economic and legal environment. It is not price control, because the business has not fixed or regulated prices. It is not production closure, since operations continue, and it is not market abandonment, because customers are still being served. Therefore, option B best describes the strategic response.

Correct answer: A. Its transactions were verifiable and transparent

Strong banking records provide clear evidence of a business’s transactions, income and payments. During demonetisation, such businesses could more easily deposit money through banks, make digital or cheque payments, and establish the legitimacy of their transactions. Dependence only on cash was not safer; it increased difficulty during the cash shortage. Exam tip: Link demonetisation with transparency, formal banking and digital payments.

Correct answer: A. One whose major receipts were in cash

When cash receipts are affected collection policy must change. Alternative payment modes become necessary.

Correct answer: B. Selecting customer payment facilities

The correct answer is selecting customer payment facilities. Separating cash and digital sales produces relevant business information: it can show the proportion of customers using each mode, transaction patterns, and changes in preference after demonetisation. Managers can use this evidence to decide whether to provide more payment links, QR-code facilities, card machines or other digital options, while still retaining suitable cash arrangements. The data has no meaningful connection with curtain colour, employee height or hiding a brand name. Hence, option B is the only decision that logically follows from analysing payment-mode sales.

Correct answer: A. Because digital and banking transactions create records

The correct answer is that digital and banking transactions create records. A recorded payment usually leaves an audit trail through bank statements, electronic receipts, account entries or transaction platforms. These records can help tax authorities compare reported sales and income with actual financial activity, making under-reporting and concealment more difficult. This does not mean that every transaction automatically becomes fully compliant, but greater traceability creates scope for improved verification and formalisation. Tax laws did not end, income did not become hidden, and billing remained important. Therefore, option A correctly explains the link between reduced cash use and tax compliance.

Correct answer: A. Government policy changed and the company changed its payment system.

The governing concept is the interrelationship between the external and internal business environment. Demonetisation was an external governmental and economic change because it altered the status and availability of certain currency notes. The business then had to make an internal operational change, such as introducing digital payments, changing cash-handling procedures, or modifying billing systems. Thus, option A presents a logical cause-and-response chain: an external policy change influences an internal business decision. Options B, C, and D do not show a meaningful environmental relationship; they connect unrelated events, and some statements are irrational or factually unsuitable. Therefore, A is the only coherent answer.

Correct answer: B. A daily cash-payment plan.

The governing concept is business planning under a changing economic environment. A plan for daily cash payments depends directly on the availability of physical currency. If banks impose withdrawal limits, the firm may not be able to withdraw enough cash to pay workers, small suppliers, transporters, or other routine vendors on schedule. Managers would therefore need to revise payment priorities, use bank transfers, or negotiate revised timing. Option B is correct because the restriction directly affects the resources required for that plan. The other options concern photographs, decoration, or slogans; these activities may be postponed, but they are not directly dependent on daily cash withdrawal in the way a cash-payment plan is.

Correct answer: A. Risk of excessive dependence on a single payment mode

During demonetisation, the availability of cash fell suddenly, affecting businesses that depended only on cash payments. Therefore, the correct answer is the risk of excessive dependence on a single payment mode. Raw-material price risk and foreign-exchange risk are different business risks and were not directly exposed by demonetisation. Exam tip: Link demonetisation with cash transactions, digital payments, and business sales.

Correct answer: A. Ensuring customer convenience and continuity of sales

After demonetisation, some old notes ceased to be valid, so customers needed guidance about digital and other valid payment options. Explaining these options improves customer convenience and reduces loss of sales caused by payment difficulties. Increasing dependence on cash would work in the opposite direction. Exam tip: During changes in the business environment, link customer communication with convenience, trust and continuity of sales.