Chapter 2 Forms of Business Organization
Here are some important questions related to Forms of Business Organization for Class 11 Business Studies:
Short Answer Type Questions:
- What is a sole proprietorship? What are its main characteristics?
- Explain the merits and demerits of a sole proprietorship.
- What is a partnership firm? How is it formed?
- Explain the meaning of a partnership deed. What are its essential elements?
- Differentiate between sole proprietorship and partnership.
- What is the difference between active and sleeping partners?
- What is a Hindu Undivided Family (HUF) business? Who is a Karta in HUF?
- List out the features of a cooperative society.
- What are the advantages of a cooperative society?
- Differentiate between partnership and joint-stock companies.
Long Answer Type Questions:
- What are the different forms of business organization? Explain them with suitable examples.
- Discuss the characteristics, advantages, and limitations of a joint-stock company.
- Explain the various types of cooperative societies.
- What are the different types of partners in a partnership firm? Describe each.
- Discuss the differences between a private limited company and a public limited company.
Application-Based Questions:
- Ram and Shyam are planning to start a partnership business. What points should they keep in mind while forming the partnership?
- Explain how a cooperative society is different from other forms of business organizations.
- If a sole proprietorship business suffers a huge loss, what will happen to the personal assets of the proprietor? Explain.
- A joint-stock company enjoys the benefit of limited liability. Explain with an example.
These questions will help students understand the concepts and differences between various business organizations effectively.
Short Answer Type Questions:
Q1) What is a sole proprietorship? What are its main characteristics?
Answer: A sole proprietorship is a type of business owned and operated by a single person. The owner is responsible for all business decisions and profits and bears unlimited liability for business debts.
Characteristics:
- Single ownership
- Full control of decision-making
- Unlimited liability
- No legal distinction between owner and business
Example: A local grocery store owned by an individual.
Q2) Explain the merits and demerits of a sole proprietorship.
Answer: Merits:
- Quick decision-making
- Direct relationship with customers
- Easy to start and close
Demerits:
- Unlimited liability
- Limited resources and capital
- Lack of continuity if the owner dies or retires
Example: A freelance graphic designer.
Q3) What is a partnership firm? How is it formed?
Answer: A partnership is a business organization where two or more individuals agree to share profits, losses, and responsibilities. It is formed by a mutual agreement (partnership deed) between partners.
Example: A law firm run by multiple partners.
Q4) Explain the meaning of a partnership deed. What are its essential elements?
Answer: A partnership deed is a written agreement between partners specifying the terms and conditions of the partnership. It includes details about profit-sharing, responsibilities, capital contribution, and more.
Essential Elements:
- Name of the firm
- Names of partners
- Capital contributions
- Profit-sharing ratio
- Duties of each partner
Q5) Differentiate between sole proprietorship and partnership.
Answer:
- Sole Proprietorship: One owner, unlimited liability, full control.
- Partnership: Two or more owners, shared control, joint liability (can be limited or unlimited).
Q6) What is the difference between active and sleeping partners?
Answer:
- Active Partner: Actively involved in managing the business.
- Sleeping Partner: Contributes capital but does not participate in day-to-day activities.
Q7) What is a Hindu Undivided Family (HUF) business? Who is a Karta in HUF?
Answer: HUF business is a family business governed by Hindu Law, where all family members (co-parceners) share ownership. The Karta is the head of the family and manages the business.
Example: A traditional family-run textile business in India.
Q8) List out the features of a cooperative society.
Answer:
- Voluntary membership
- Democratic control (one member, one vote)
- Profit distribution among members
- Service-oriented rather than profit-maximizing
Example: Amul, a dairy cooperative society.
Q9) What are the advantages of a cooperative society?
Answer:
- Limited liability for members
- Equal voting rights
- Lower operating costs
- Social benefits
Example: A credit cooperative society providing loans to its members.
Q10) Differentiate between partnership and joint-stock companies.
Answer:
- Partnership: Limited number of partners, unlimited or limited liability, mutual consent required for transfer of ownership.
- Joint-Stock Company: Shareholders with limited liability, shares can be freely transferred.