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CBSE Questions for Class 9 Elements Of Business Steps Involved In Establishing Business Quiz 5 - MCQExams.com
CBSE
Class 9 Elements Of Business
Steps Involved In Establishing Business
Quiz 5
A partner has an implied authority to bind the firm if he__
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Buys goods on behalf of the firm in which the firm deals
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Sells such goods
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Borrow money on credit of the firm
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All the three
Explanation
Option D is the correct answer.
A minor person can......
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Stand as surety
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Be admitted as partner for profits only
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Execute a contract
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Do nothing
Explanation
Option B is the correct answer.
Profits and losses of a partnership firm are shared by the partners......
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In the ratio of capital contributed
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Equally
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As per agreement
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According to seniority
Explanation
Option C is the correct answer.
Which of the following statement is true
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A firm is liable for wrong acts of a partner
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An unregistered firm is an illegal organization
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Sharing of profit or loss is a conclusive evidence of existence of a partnership
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A person can be admitted as a partner with the consent of majority of persons
Explanation
Option A is the correct answer.
An act of the partner is ___________ upon other partners.
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Binding
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Optional
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Binding upon active partner only
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Binding upon dormant partner only
Explanation
Option A is the correct answer.
What is one of the hardships of a sole proprietorship?
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Capital is limited to owners savings and bank loans
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It has to complete too many registration formalities
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As they are government owned there is no profit motive
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More tax is charged on them
Explanation
A business which is owned and managed by a single person is called as sole proprietorship. As the owner is a single person he/she has limited capital with him/her to invest in the business. Hence, it is one of the hardships of a sole proprietorship. The limited capital might be due to very low internal sources of finance and/or banks or other external sources of finance will also be unavailable.
A, B, C, and D are partners A retires, B dies, the status of partnership ______.
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remains unchanged
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comes to an end
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reconstituted
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all of the above
Explanation
False.
If A retires and B dies, the status of partnership will be reconstituted as 2 partners C and D remain and then can form a new partnership agreement after giving A and B their respective shares and revaluating the assets and liabilities on the basis of previous of previous agreement.
If the remaining partner wants to continue the business, after the retirement of a partner, a new partnership agreement is ______.
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necessary
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not necessary
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optional
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none of above
Explanation
Retirement, admission, death of partner leads to reconstitution of the firm where old partnership agreement comes to an end and new partnership agreement is formed.
Looking at the below mentioned options one of the advantages of a partnership form of business organization is that _______.
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all partners always have limited liability
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all the decisions are taken by one partner
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the business survives on the death of the partners
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the business has access to more capital than a sole trader
Explanation
A business which is carried out by two or more persons together is called as partnership firm. The features of this firm are:
Equal sharing of profit between all partners.
Decision making is done by all the partners together.
Their liability is unlimited, joint and several.
They have large capital as compared to sole trading concern.
The partnership may come to an end due to the _________.
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death of a partner
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insolvency of partner
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by giving notice
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all of the above
Explanation
According to the section 39 of the Indian Partnership Act, 1932, the dissolution of the partnership firm may happen in the following cases:
Death of the partner.
Insolvency of the partner.
By giving notice.
What is one of the best advantages of proprietorship?
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Shares can be sold to raise capital
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Profits are to be shared
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The owner has independence
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Limited liability is enjoyed
Explanation
A business which is owned and managed by a single person is called as sole proprietorship. The advantages of this are:
No sharing of profit.
The owner is independent.
Owner only makes decisions.etc.
Limited liability partnership possesses not more than 2 of the following character.
Limited liability
Raise funds from public
No separation of management from owners
No Restriction on number of partners.
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2 and 4
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1 and 2
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1 and 3
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1 and 4
Explanation
Limited liability company is a partnership in which some or all partners have limited liability. There is no restriction on number of partners to enter in this firm. Hence, it possess 2 characteristics:
Limited liability.
Raise funds from public.
The most suitable definition of a sole trader form of business organization is _______.
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the business who manufacture only one product
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the business is owned by one person
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the firm has a single buyer
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there is a single seller is the industry
Explanation
A sole trading concern is a business which is owned and managed by a single person. He is the only risk taker in the business and the profit is enjoyed by himself only. Hence, the most suitable definition of a sole trader form of business organization is the business is owned by one person.
A florist opened a shop in the year 2000 but due to certain losses he did wind it up in a single day after 9 years of operation i.e. inWhat kind of organization it is _________.
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Sole proprietorship
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Company
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Limited liability partnership
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None of the above
Explanation
In the given case, shop was opened by a single person and was wound by himself only. That means the shop was owned, controlled and managed by the single person and the loss was also borne by him. In sole proprietorship, the business is owned and managed by single person. Hence, it is sole proprietorship type of organization.
A partner can transfer his share to an outsider ________.
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without the consent of other partners but with the consent of Registrar of companies.
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with the consent of other partners and the consent of registrar of companies
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with the consent of other partners
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none of the above
Explanation
According to the provisions of the Indian Partnership Act, 1932, all the partners are obliged to follow certain rules and regulations and one such rule is that a partner is not allowed to transfer his share to an outsider without the consent of other partners.
In relation to business organisation structure, which one of the following is easy to form and wind up?
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A company
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A sole proprietorship
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Statutory corporation
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Public enterprises
Explanation
A sole proprietorship business requires only one person, less capital to set up. It requires very less legal formalities to establish the business as compare to a company, statutory corporation. public enterprises. Hence, sole proprietorship is easy to form and wind up.
Whenever a new partner is added to the firm the firm is _______.
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Dissolved
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Continued
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Not affected
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Reorganized
Explanation
When a new partner joins a partnership the old partnership is dissolved and a new partnership is formed. Accounting for the admission of a new partners depends on the nature of the arrangement between the existing partners and the new partners. And the new partner contributes according to the agreement.
Hence, option (A) is the correct answer.
Which of the following statement is incorrect?
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The partnership comes into existence only by an agreement
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A person who received the profits is always partner
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The true test of partnership is the mutual agency i.e., agency relationship among partners
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A person who receives the profits is not necessarily a partner
_____________ is a feature of partnership form of business.
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Separate legal entity, from the firm
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Limited scope for raising finance
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The liability of a partner is limited to his contribution to capital
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Registration of partnership is compulsory
Explanation
Partnership form of business main features are:
Ease of formation is its most important feature because it is not required to go through elaborate legal formalities.
No agreement is to be made and registration of the firm is also not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration.
The firm has no legal existence separate from its owner.
The capital required by the organisation is supplied wholly by the owner himself and he depends largely on his own savings and profits of his business.
Owner alone enjoys the benefits or profits of the business and he alone bears the losses.
The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.
Owner has a complete control over all the aspects of his business and it is he who takes all the decisions though he may engage the services of a few others to carry out the day-to-day activities.
The formation and operation of a sole proprietorship form of business organisation requires almost no legal formalities.
The legal claimants can pursue the personal property of the proprietor and not simply the assets used in the business.
Which one of the following does not have perpetual succession?
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Company
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Statutory Corporation
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Sole Proprietorship
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Co-operative Society
Explanation
Perpetual succession means continuous without any stoppage. In case of a sole proprietorship there is only one person and the business comes to and end if the owner dies because he is the only owner. Hence, sole proprietorship does not have perpetual succession.
Mr. Varun wanted to start a bakery shop with limited money. What kind of business organization you would suggest him?
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Sole proprietorship
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HUF
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Partnership
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Corporation
Explanation
A sole proprietorship is a business which is owned and managed by a single person. It consists of limited capital as there is only one person. Hence, it is a sole proprietorship form of business organization.
Which of the following people cannot be called partners?
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Minors
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Insolvents
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Co-owners without the agreement to carry on the business
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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.
Which of the following is not a form of organisation?
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Partnership
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Company
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Partners
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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.
Mr. Varun is a rich man with ample amount of working capital. He wants to go for a business of chain of 5 star hotels. What kind of business organization you will suggest him?
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Company
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Partnership
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Sole proprietorship
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Trust
The choice of an appropriate form of business organisation largely depends upon:
I. Ease of formation
II. Continuity and stability
III. Liability aspects
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I and II
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II and III
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I and III
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I, II and III
Explanation
Whenever a business organisation is formed it always focuses on the following points :
Ease of formation.
Continuity and stability.
Liability aspects.
If these points are found in the business organization a busness can be efficiently managed.
A sub-partner is a person __________.
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who is sharing the profits of some partner
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who does not invest and shares the profits
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who invests but does not work
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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 ".
Partnership at will can be dissolved by any partner by ________.
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communicating with the principal
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not allowed
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giving due notice to other partners
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all of the above
Explanation
If a partnership is at will, it can be dissolved by any partner giving a notice to other partners. The notice for dissolution must be in writing. The dissolution will be effective from the date of the notice. In case no date is mentioned in the notice, and then it will be dissolved from the date of receipt of notice. A notice once given can not be withdrawn without the consent of all the partners.
In a partnership firm of $$5$$, four became insolvent. Therefore, the firm ___________.
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will dissolve
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will look out for other partners
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will continue
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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 ________.
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director
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investor
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partner
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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.
Partnership is formed with an object to ________.
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earn profit
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not to earn profit
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welfare of members
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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.
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