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CBSE Questions for Class 11 Commerce Business Studies Forms Of Business Organisation Quiz 5 - MCQExams.com
CBSE
Class 11 Commerce Business Studies
Forms Of Business Organisation
Quiz 5
Voting right that vests with each member of cooperative society is ________________.
Report Question
0%
One member one vote
0%
Right to vote in proportion of capital contributed
0%
Right to vote as mentioned in memorandum
0%
None of the above
Explanation
The cooperative societies work with the democratic principle of "One man-one vote." All the members get only one voting right irrespective of capital contributed by them. The rich members by taking more shares cannot dictate their terms. A person who has 1000 shares and a person who has 10 shares will get one voting right only.
Hence, option (A) is the correct answer.
Invariably _________ is the disadvantage of co-operative society type of organization.
Report Question
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Business secrecy
0%
Low prices
0%
Limited liability
0%
Open membership
Explanation
Co-operative societies have to send their annual reports and accounts to the Registrar of Co-operative Societies. In this way the secrets of business become public. In this type of organization, there are open discussions in the meetings by members so it is difficult to maintain secrecy about the operations of cooperative society.
Hence, option (A) is the correct answer.
In order that persons may become partners, it is essential that _________.
I. There must be at least two persons
II. There must be a relationship arising out of status between two or more persons.
III. The agreement must be to share the profits of a business
Select the correct answer from the options given:
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0%
I & II only
0%
II & III only
0%
III only
0%
I & III only
Explanation
Option D is the correct answer.
The minimum number of members required to get a co-operative society registered is _______.
Report Question
0%
15
0%
20
0%
10
0%
5
Explanation
A cooperative form of business is a different form of business enterprise. In this form, the main motive is not earning profit but the main motive of the cooperative organization is mutual help. It works with the principle of each for all and all of each. A cooperative society or organization is a voluntary association of persons who join together for mutual help. A minimum of 10 persons is required to form a cooperative society. The registration of a cooperative society is compulsory and the capital of a cooperative organization is contributed by the members-only in the form of share capital. The cooperative organization can raise loans also from the banks.
Which of the following statement is incorrect?
Report Question
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The partnership comes into existence only by an agreement
0%
A person who received the profits is always partner
0%
The true test of partnership is the mutual agency i.e., agency relationship among partners
0%
A person who receives the profits is not necessarily a partner
The maximum amount with which a company gets registered is called __________.
Report Question
0%
authorized share capital
0%
issued share capital
0%
subscribed share capital
0%
paid up share capital
Explanation
The Authorised share capital
is the maximum amount of the capital for which shares can be issued by the Company to shareholders, the capital clause
is mentioned in the Memorandum of Association of the Company.
The Authorised capital can be increased at any time in the future by taking necessary steps as required by law or the Companies Act, 2013.
Thus the correct answer is A.
Which form of business organisation has a separate legal entity?
Report Question
0%
Hindu Undivided Family (HUF)
0%
Co-operative society
0%
Partnership firm
0%
Sole proprietorship
Explanation
After registration a co-operative enterprise becomes a body corporate independent of its members i.e. a separate legal entity. Registration of a co-operative enterprise is compulsory. A co-operative society may be registered with the Registrar of Co-operatives Societies.
Which of the following people cannot be called partners?
Report Question
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Minors
0%
Insolvents
0%
Co-owners without the agreement to carry on the business
0%
All of the above
Explanation
Indian Partnership Act provides that though a minor cannot be a partner in a firm, with the consent of all the partners for the time, he may be admitted to the benefits of the partnership by an agreement executed through his guardian with the other partners.
Insolvency means a person who is not able to pay their debts. So he cannot be a partner of a partnership firm.
No member can be a partner without an agreement between co-owners.
Hence, option (D) is the correct answer.
In case of HUF what are liabilities of coparcener and Karta?
Report Question
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Both have unlimited liability
0%
Coparcener's liability is limited while Karta's liability is unlimited
0%
Karta's liability is limited while Coparcener's liability is unlimited
0%
Both have limited liability
Explanation
Joint Hindu family business is regulated by the Hindu succession act. According to it the business is owned and managed by the karta, the head of the family and the members of the family are its co parceners. Hence, the head of the family business is called as karta. The liability of coparcener is limited whereas the liability of karta is unlimited.
A partnership form of business organization will be more advantageous in operation as it has _______.
Report Question
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access to large amount of initial capital
0%
limited liability
0%
both a and b
0%
none of the above
Explanation
In a partnership firm of business organization there is an increased ability to raise funds as there is more than one owner and each member can contribute a sufficient amount of capital which is not possible in a sole trading business as it is difficult to raise funds quickly and sufficiently.
Which statement is true?
Report Question
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Karta has unlimited liability In HUF
0%
Partner has unlimited liability in partnership
0%
Both HUF and partnership have unlimited liability
0%
a and b
Explanation
Every partner in a partnership has unlimited liability for all of the partnership’s debts and losses. The partners are personally responsible for debts of the business, even if they had nothing to do with creating them.
Each partner is responsible not only for liabilities also for the liabilities originated from a contract signed by any one of the partners.
Thus the correct answer is B.
Which of the following is not a form of organisation?
Report Question
0%
Partnership
0%
Company
0%
Partners
0%
Sole Proprietorship
Explanation
Partners are the members who come together to form partnership. They are not the form of organisation, They are just the members of the organisation.
Partners are ____________ of the firm.
Report Question
0%
owners
0%
employers
0%
agents
0%
none of the above
Explanation
Partner is a representative of a partnership business. As a representative of a partnership firm, the partners should conduct business based on the the powers given to them. Partners are agents who may act on behalf of the firm.
A sub-partner is a person __________.
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who is sharing the profits of some partner
0%
who does not invest and shares the profits
0%
who invests but does not work
0%
a partner who only gives his name for partnership
Explanation
When a partner enters into a contract with a third party to share his profit, the third party is called a sub partner. " The right to receive profits and bear losses becomes the asset of the sub partnership. A sub partnership which is in the receipt of the share of profit of a partner is the main partnership, has to be deemed to be a partner in the main partnership for the limited purpose of section 10(2-A) of the Income Tax act ".
XYZ partnership firm is a partnership firm between A and B. C posed that he is a partner in XYZ and earned profits form the market. C will be regarded as ______.
Report Question
0%
holding out partner
0%
dormant partner
0%
nominal partner
0%
none of the above
Explanation
C will be regarded as a partner in profit. A partner in profit is a partner who shares in the profit only without being liable for the losses. He contributes capital to the firm but does not take part in the management of the business. He is liable to third parties like other partners. Such a partner is generally inactive but associated with his money and goodwill.
Hence, option D is correct.
Which property will be considered as the property of a firm?
Report Question
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The movable and immovable property of the firm
0%
Property brought in by a partner and is vested in the firm
0%
Property brought in by partner and is being used in partnership business
0%
Both a and b
Explanation
Subject to contract between the partners, the property of the firm includes all movable and immovable property, rights, and interests in a property originally brought into the stock of the firm, or acquired, by purchase or otherwise, by or for the firm or for the purposes and in the course of business of the firm, and includes also the goodwill of the business. And any property brought in by a partner and vested in the firm will be considered as the property of the firm.
Hence, option D is correct.
In a partnership firm of $$5$$, four became insolvent. Therefore, the firm ___________.
Report Question
0%
will dissolve
0%
will look out for other partners
0%
will continue
0%
none of the above
Explanation
Dissolution of the firm means to discontinue all the business activities within the firm. A firm is compulsorily dissolved by operation of law when all the partners except one become insolvent. As for partnership there should be 2 minimum number of member if all the 4 become insolvent then there will be no partnership left.
The members of partnership firm are individually called as ________.
Report Question
0%
director
0%
investor
0%
partner
0%
manager
Explanation
Persons who have entered into partnership with one another to carry on a business are individually called "partners". But the liability of partners with regard to its business is just like a proprietorship, is not limited to their share in business but also personal properties of the partners are at stake.
The name under which partnership business is carried on is called _________.
Report Question
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Firm name
0%
Firm
0%
Business name
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Owners name
Partnership is formed with an object to ________.
Report Question
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earn profit
0%
not to earn profit
0%
welfare of members
0%
none of these
Explanation
In all the business undertakings in the private sector, the main motive is to earn profit. Profit is the driving force before and after entering into the business field. In fact profit is the oil which drives the wheels of a business. Members in a partnership firm enters a business with a expectation of high profit. Profit is the total revenue from sales minus the total cost of resources employed by the partners.
Investments in partnership is made by introducing ________.
Report Question
0%
cash
0%
non-cash assets
0%
cash or non-cash assets
0%
none of these
Explanation
When a partnership is formed or a partner is added and contributes assets other than cash , the partnership establishes the net realisable or fair market value for the assets . For example - if the walking partners company adds a partner who contributes accounts receivable and equipment the partnership evaluates the collectibility of the account receivable and records them at their net realisable value.
Changes in the partnership firm mean ___________________.
Report Question
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new partner is introduced
0%
a partner is adjudicated as an insolvent
0%
both a and b
0%
none of the above
Explanation
When a new partner is admitted in the partnership and in the consideration of a new partner towards the capital of the partnership of the partners. From the date new partner subject to the terms and conditions of the partnership deed, the profit and loss sharing ratio changes, the old partnership shall be liable for all the old debts and liabilities they shall be indemnity and also all the assets and rights of partnership firm against such debts and liabilities and against all proceedings cost, claims in respect thereof.
Where a partner in a firm is adjudicated insolvent he ceases to be a partner on the date on which the order of adjudication is made whether or not the firm is thereby dissolved.
Hence, option C is correct.
For a minor to be admitted to benefits of partnership ________.
Report Question
0%
all the partners should agree
0%
there should be at least $$2$$ major partners
0%
minor can not be admitted in a partnership firm
0%
both a and b
Explanation
If a minor become a partner, all the members should give their consent as the minor won't be able to participate in the workings. However, he will be entitled to the benefits. In order to make a minor a partner, there should be at least two major member as a partner. A minor is also not liable for any debts.
Good will of the business of a partnership firm is the property of _________.
Report Question
0%
partners
0%
partner who gave his property to firm
0%
partnership firm
0%
none of the above
Explanation
A business builds up some reputation after it has continued for some time . If the reputation is good, the firm will come to acquire a fixed clientele in the sense that a number of customers will automatically make their purchases from the firm . This is a very valuable asset even if one can not touch or see it. The asset is known as goodwill.
Which of the following are the rights of a partner in a partnership firm?
X. To take part in the conduct and management of the business.
Y. To receive remuneration for active working in the firm.
Z. To receive interest on the capital invested in the firm W. To receive share in the profit.
Which of the following is/are the correct options?
Report Question
0%
X and Y
0%
X and Z
0%
X and W
0%
X, Z and W
Explanation
X)Section $$12$$(b) - Every partner is bound to attend diligently to his duties in the conduct of the busines
-section.
Y)Section $$13$$(a) A partner is not entitled to receive remuneration for taking part in the conduct of the business.
Z)Section $$13$$(c) Where a partner is entitled to interest on the capital subscribed by him, such interest shall be payable only out of profits.
W)Section $$13$$(b) The partners are entitled to share equally in the profits earned and shall contribute equally to the losses sustained by the firm.
The relationship of partnership arises out of ________________.
Report Question
0%
an agreement
0%
statue
0%
operation of law
0%
both an agreement and statue
Explanation
The relationship of partnership arises out of an agreement, a
Partnership Agreement
is a contract between
two or more individuals
who decides to
manage and operate a business together for profit-making
.
The Agreement defines the
management roles
and once the Partnership Agreement is completed, all of the Partners will sign and date the Agreement and keep copies of the Agreement for their records.
Thus the correct answer is A.
Agreement to share profits in a partnership firm ___________.
Report Question
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must be coupled with an agreement to share losses
0%
is same as agreement to share losses
0%
implies an agreement to share losses
0%
does not necessarily mean an agreement to share losses
Explanation
As per Section $$4$$ of The Indian Partnership Act, $$1932$$ "Partnership" is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Each person contributes money, property, labour or skill and expects to share in the profits and losses of the business.
Partnership must arise from _______.
Report Question
0%
an agreement
0%
operation of law
0%
status
0%
all of the above
Explanation
Partnership agreement are written documents that explicitly detail the relationship between the business partners and their individual obligations and contributions to the partnership . Since partnership agreements should cover all possible business situations that could arise during the partnership's life, the documents are often complex.
legal counsel in drafting and reviewing the finished contract is generally recommended. If a partnership does not have a partnership agreement in place when it dissolves, the guidelines of the Uniform Partnership Act and various state laws will determine how the assets and debts of the partners distributed.
S a partner in AB and Sons has transferred his interest in the firm to D. Is the transfer correct?
Report Question
0%
No
0%
Yes
0%
D will decide
0%
Court will decide
Explanation
According to Section $$29$$ of the Indian Partnership Act, $$1932$$ a partner may transfer his interest in the firm by sale, mortgage or change. The transfer may be absolute or partial. The transfer donot provide transfree to interfere in the working of the organization, he has the right to share of profit only.
Each partner is __________.
Report Question
0%
required to contribute capital in the partnership firm
0%
not required to necessarily contribute capital in the partnership firm
0%
required to work in the partnership firm
0%
none of the above
Explanation
In partnership business, partners are to contribute capital to the firm, and the individual amount of such capital is determined by an agreement. However, it is not necessary for the partners to contribute capital in the partnership firm it is also not necessary that they are to contribute capital equally or in the profit-sharing ratio.
There are instances where partners contribute capital equally though they share profits unequally. It is also found that partners contribute capital unequally though they share profits equally.
Hence, option B is correct.
A partner who is entitled to share in the profits of a partnership firm without being liable to the losses, is called _________.
Report Question
0%
partner of profits only
0%
sleeping partner
0%
active partner
0%
dummy partner
Explanation
A person who becomes a partner for sharing profits only is known as a partner in profits.
He contributes capital to the firm but does not take part in the management of the business. He is liable to third parties like other partners.
Hence, option A is correct.
_________ business is a form of business organization found only in India.
Report Question
0%
The company
0%
The Hindu Undivided Family (HUF)
0%
The partnership
0%
The trust
Explanation
Joint Hindu family business is a specific form of business organisation found only in India. It is one of the oldest forms of business organisation in the country.
In which of the following cases a partnership firm is re-constituted?
Report Question
0%
Admission
0%
Retirement
0%
Death
0%
All of the above
Explanation
When the firm needs additional capital or managerial skills or both, the firm admits a new person as a partner of the firm. However, he is admitted into the firm with the consent of all the partners unless otherwise stated in the partnership deed. So in the admission of a partner, it brings change infirm.
On the retirement of a partner, there be withdrawal from the firm will bring about a change in the composition of partners along with a change in their relationship.
When a partner dies, like the retirement of a partner, it brings about a change in the composition of partners and in their mutual relationship because the remaining partners continue to run the firm with a new profit sharing ratio.
Hence, option D is correct.
The written agreement of partnership is called ________________.
Report Question
0%
partnership deed
0%
articles of association
0%
memorandum of association
0%
certificate of incorporation
Explanation
Partnership is created by an agreement between the parties. The agreement may be in writing or by words of mouth or implied by the conduct of the parties. However, it is always desirable for the partners to have the agreement in writing.
The document in writing should contain the important terms of the partnership as agreed upon by the partners themselves to avoid any future dispute. So the document in writing containing the terms and conditions as agreed between the partners is called a partnership deed.
Hence, option A is correct.
True Test of existence of partnership is ____________.
Report Question
0%
mutual agency
0%
sharing of profits
0%
sharing of losses
0%
all of the above
Explanation
The true test of partnership is the existence of Mutual Agency relationship which means the capacity of a partner to bind other partners by his acts done in firm’s name and also bound by the acts of other partners. The main element of the partnership is sharing of profit but it is not a conclusive proof of partnership.
Thus the correct answer is A.
Which property will be the property of a firm?
Report Question
0%
The movable and immovable property of the firm
0%
Property brought in by a partner and is vested in the firm
0%
Property brought in by a partner and is being used in partnership business
0%
Both a and b
Explanation
Option d is the correct answer .
The written agreement of partnership is called ___________.
Report Question
0%
partnership deed
0%
article of association
0%
memorandum of association
0%
certificate of incorporation
Explanation
The written agreement of partnership is called a partnership deed.
It
is a contract between
two or more individuals
who decide to
manage and operate a business together for profit-making
.
The deed defines the
management roles
and once the Partnership deed is completed, all of the Partners will sign and date the deed and keep copies of the deed for their records.
Thus the correct answer is A.
Transfer of share in the partnership firm is _____________.
Report Question
0%
restricted
0%
freely transferable
0%
prohibited
0%
none of these
Explanation
A
partnership firm
, is not a legal person and hence cannot be a shareholder of a
company however they can not issue shares to the public and if there are no share, transfer of shares is also not possible but t
he
firm can purchase shares
of a
company
in the individual names of its partners.
Thus the correct answer is A.
There can not be any partnership where a business is carried on ____________.
Report Question
0%
with a benevolent purpose
0%
where any one of the partners is entitled to total profit
0%
a and b
0%
where there is only one partner
Explanation
Option C is the correct answer.
For the existence of a partnership there must be an association of _________.
Report Question
0%
two or more persons
0%
one person only
0%
minimum 5 persons
0%
minimum 7 persons
Explanation
For the existence of a partnership, there must be an association of two or more persons, this statement is true, it is a legal form of business operation between two or more individuals who share management and profits
. A
ll members share both profits and liabilities equally and t
he individuals are personally responsible for the debts of the partnership.
Thus the correct answer is A.
In an annual return of a company which is filed with ROC, the particulars to be mentioned are _____________.
Report Question
0%
list of directors
0%
registered address of company
0%
list of shareholders
0%
all of the above
Explanation
In an annual return of a company which is filed with ROC in Form MGT-7, the following particulars to be mentioned are:
1. Capital of the Company
2. Shareholding of the members
3. List of Directors
4. Registered of the Company
5. Details of the meeting during the Financial Year, etc.
Thus the correct answer is D.
It is NOT UNCOMMON in partnership firm _______________.
Report Question
0%
Co-owner can ask for the division of property
0%
Co-owner can transfer his rights without the consult of others
0%
Co-owner has no lien on property of business
0%
All of the above
Explanation
Option D is the correct answer.
An idea of operating as a partnership would include _________.
Report Question
0%
greater power than a sole trader for decision-making
0%
being able to raise capital through share issues
0%
access to large amount of initial capital
0%
limited liability for all partners
Explanation
Option C is the correct answer.
When advising John of what to include in the production plan of his business plan for his entrepreneurial venture, what would you not include in you recommendation?
Report Question
0%
Manufacturing process
0%
Product price
0%
Names of suppliers of raw materials
0%
Physical plant
Explanation
The administrative process that takes place within a manufacturing business and which involves making sure that sufficient raw materials, staff, and other necessary items are procured and ready to create finished products according to the schedule specified in the production planning plan, the focus is on inputs and process, i.e., plant and machinery used, material to be used, suppliers details, the process of manufacturing.
Hence, option B is correct.
A partner who is entitled to share in the profits of a partnership firm without being liable to the losses, is called ___________.
Report Question
0%
Partner in profits only
0%
Sleeping partner
0%
Active partner
0%
Dummy partner
Explanation
A partner sharing the profits of the business without making himself responsible for losses, if any, is known as a partner in profits only. He contributes capital and is also liable to third parties like other partners. Such partners are not allowed to take part in the management and administration of the business.
Hence, option (A) is the correct answer.
The Hindu Undivided Family business is governed by ____________.
Report Question
0%
Contract law
0%
Hindu law
0%
Muslim law
0%
Company law
Explanation
HUF refers to a form of organisation wherein the business is owned and carried on by the members of the Hindu Undivided Family (HUF). It is governed by the Hindu Law. The basis of membership in the business is birth in a particular family and three successive generations can be members in the business.
Section $$5$$ of the Act states that the relation of partnership arises from ___________.
Report Question
0%
Status
0%
Contract
0%
Birth
0%
Offer
Explanation
Option B is the correct answer.
Which of the following are the rights of a partner in a partnership firm?
X. To take art in the conduct and management of the business.
Y. To receive remuneration for active working in the firm.
Z. To receive interest on the capital invested in the firm W. To receive share in the profit.
Correct option is _______________.
Report Question
0%
X and Y
0%
X and Z
0%
X and W
0%
X,Z and W
Explanation
In the partnership, the partners enter into a partnership deed which generally defines all the rights and responsibilities of partners. The following
are the rights of a partner in a partnership firm:
1. To take part in the conduct and management of the business.
2.
To receive interest on the capital invested in the firm
3. To receive a share in the profit.
4.
Accessing the books of accounts
5.
Indemnification rights etc
Thus the correct answer id D.
The relationship of partnership arises out of _________.
Report Question
0%
an agreement
0%
statute
0%
operation of law
0%
both an agreement and statute
Explanation
The relationship of partnership arises out of an agreement or deed.
The written agreement of partnership is called a partnership deed.
It
is a contract between
two or more individuals
who decide to
manage and operate a business together for profit-making
.
The agreement defines the
management roles
and once the Partnership agreement is completed, all of the Partners will sign and date the agreement and keep copies of the agreement for their records.
Thus the correct answer is A.
A business started by only one person is called________.
Report Question
0%
Company
0%
Sole proprietorship
0%
Trust
0%
Society
Explanation
A business started by only one person is called
a sole proprietorship, it is the simple type of business to establish due to a lack of government regulation. These types of businesses are very popular among sole owners of businesses, individual self-contractors, and consultants. Many sole proprietors do business under the registration of their own names is not necessary for these types of business.
Thus the correct answer is B.
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Practice Class 11 Commerce Business Studies Quiz Questions and Answers
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