First PUC Business Studies

Chapter-2 Forms of Business Organization

Section-A

Answer the following questions, each question carries 1 mark:

  1. Name any one form of business organization.

Ans: Sole trading concern, partnership firm, Joint Stock Company

  1. Give an example to sole trading concern.

Ans: Medical shops, Stationery shop

  1. Who is karta?

Ans: Karta is the eldest male member of the joint Hindu family having unlimited liability.

  1. State the minimum & maximum members in partnership.

Ans: Minimum no. is 2 & Maximum is 10 in case of banking business and 20 in case of non banking business.

  1. State the minimum & maximum members in co-operative society.

Ans: .Minimum is 10 & maximum is unlimited.

  1. Which act governs the partnerships in India?

Ans: The Indian Partnership Act of 1932

  1. Which act governs co-operative societies in India?

Ans: Co-operative societies Act of 1912.

  1. Who are co-parceners?

Ans: They are the male members of the joint hindu family whose liability is

limited. They help karta in managing business.

  1. Who is a minor partner?

Ans: He is a partner in a partnership firm whose age is below 18 years, contributes capital, shares only profits, and has limited liability.

  1. Is registration of partnership is compulsory?

Ans: No it is not compulsory.

Section-B

Answer the following questions, each question carries 2 marks:

  1. Give the meaning of HUF.

Ans: It is a form of business organization which is owned and managed by the members of the same family, controlled by Karta and managed by other male members called coparceners.

  1. Define Partnership.

Ans: “The relation between persons who have agreed to share the profit of the business carried on by all or any one of them acting for all.”

  1. Who is an active partner?

Ans: He is a partner who contributes capital, participates in management, shares profits/losses having unlimited liability.

  1. Who is a sleeping partner?

Ans: He is a partner who contributes capital, does not participates in management, shared profits/losses having unlimited liability.

  1. Who is secret partner?

Ans: He is a partner who contributes capita, participates in management, shares profits/losses having unlimited liability but he is unknown to the public.

  1. Who is a nominal partner?

Ans: He is a partner who neither contributes capital nor participates in management but has unlimited liability as he allows the firm to use his name.

  1. Who is partner by estoppels?

Ans: He is a partner who neither contributes capital nor participates in management but has unlimited liability as he gives an impression to outsiders he is a partner of the firm.

  1. Who is a partner by holding out?

Ans: He is a partner who neither contributes capital nor participates in management but has unlimited liability as he allows the firm to be represented as a partner.

  1. What is partnership at will?

Ans: It is a type of partnership firm which comes into existence or winded up at the will of the partners.

  1. What is particular partnership?

Ans: It is a type of partnership firm which is formed for a particular objective or for a specified time. After the completion of an objective or time it can be dissolved or continued as per the will of the partners.

  1. What is general partnership?

Ans: It is a type of partnership firm where partners can participate in the management of the firm as their liability is unlimited. Registration of such firm is not compulsory.

  1. What is limited partnership?

Ans: It is a type of partnership firm where liability of at least one partner is unlimited and others may have limited liability. Registration of such firm is compulsory. Partners here cannot participate in the management of the firm.

  1. What is a co-operative society?

Ans: It is a voluntary association of persons. Who join together with the motive of welfare of the members.

  1. What is consumer co-operative society?

Ans: It is a type of co-operative society formed to protect the interest s of consumers by providing good quality products at reasonable prices.

  1. What is producer’s co-operative society?

Ans: : It is a type of co-operative society formed to protect the interests of small producers by supplying raw materials , equipments and other inputs and buying their output for sale.

  1. What is marketing co-operative society?

Ans: : It is a type of co-operative society formed to protect the interest of the producers by providing them transportation, warehousing, packaging functions to sell the output at the best possible price.

  1. What is farmer’s co-operative society?

Ans: : It is a type of co-operative society formed in the interest of farmers by providing them better inputs at reasonable costs and help them gain the benefits of large scale farming.

  1. What is credit co-operative society?

Ans: : It is a type of co-operative society for providing easy credit on reasonable terms to the members.

  1. What is a co-operative housing society?

Ans: : It is a type of co-operative society formed to help people with limited income to construct house at reasonable costs.

Section-C

Answer the following questions, each question carries 5 marks:

1.  Briefly explain the features of sole trading concern.

Ans: Following are the features of of sole trading concern.

a.  Formation & closure: Easy to form and also close business as no legal formalities.

b.  Liability: Unlimited liability of owner.

c.  Profir/Loss: Owner enjoys profits & bears losses alone.

d.  Control: Owner alone controls business.

e.  No separate entity: in the eyes of law no distinction is made between owner and business.

Lack of business continuity: Death, insanity, bankruptcy of owner leads to closure of business.

2.  Explain the types of partnership firms.

Ans: Classification on the basis of Duration:

  1. Partnership at will
  2. Particular partnership

Classification on the basis of Liability:

  1. General partnership
  2. Limited partnership

(For explanation, refer 2 marks answers)

3.  Explain the features of partnership firms.

Ans: Following are the features of partnership firms:

a.  Formation: As per the Indian partnership Act of 1932

b.  Liability: Unlimited.

c.  Risk bearing: Sharing risk among partners.

d.  Decision making & control: Mutual consent of all partners.

e.  Continuity: Death, retirement, insolvency of a partner will not affect life of the business.

f.  Membership

g.  Mutual agency: Business carried on all or any one of them acting for all.

4.  Explain the features of co-operative societies.

Ans: Following are the features of co-operative societies:

a.  Voluntary membership: Anyone can

become the member irrespective of religion, caste, gender.

b.  Legal status: Registration is compulsory.

c.  Limited liability

d.  Control: Decisions are taken by managing committee.

e.  Service motive

5.  What is Partnership Deed? Mention the contents.

Ans: It is an agreement in writing which specifies the terms and conditions that govern the partnership.

Following are the contents:

a.  Name & address of the firm

b.  Nature of business

c.  Duration of business

d.  Names and addresses of partner4s

e.  Capital invested by each partner

f.  Distribution of profits or losses

g.  Duties and obligations of partners

h.  Salaries and drawings of partners

i.  Rules followed during admission, retirement, death of a partner dissolution of firm

j.  Preparation of accounts

k.  Method of solving disputes.

Section-D

Answer the following questions, each question carries 10 marks:

1.  Explain the merits and demerits of sole trading concern.

Ans: Merits:

a.  Quick decision making

b.  Business secrets can be maintained

c.  Owner alone enjoys profits

d.  Ease of formation and closure

e.  Self-satisfaction to the owner.

Demerits:

a.  Limited resources

b.  Limited life of the business

c.  Unlimited liability

d.  Limited managerial ability

e.  Incompetent

2.  Explain the merits and demerits of partnership firms.

Ans: Merits:

a.  Ease of formation and closure

b.  Balanced decision making

c.  Capital contribution by all partners

d.  Sharing risk among all partners

e.  Secrecy: no publishing books of accounts

Demerits:

a.  Unlimited liability of partners

b.  Limited resources as max.no.of partners is 10 or 20

c.  Conflicts among partners

d.  Lack of continuity as retirement, death, insolvency of partners leads to dissolution of firm

e.  No public confidence as books of accounts are not published

3.  Explain the merits and demerits of co-operative societies.

Ans: Merits:

a.  Equal voting rights: one man one vote

b.  Limited liability

c.  Stable existence-long life of business

d.  Economy in operation as middlemen are avoided

e.  Support from government- tax exemptions on income

f.  Ease of formation

Demerits:

a.  Limited resources- capital contribution only from members

b.  Inefficiency in management as professionals are not appointed

c.  Lack of secrecy-open discussions in meeting

d.  Government control- GOVT. Rules to be followed

e.  Differences of opinions- chances of disputes are more

4.  Explain the types of partners:

Ans: following are the types of partners:

a.  Active partner

b.  Sleeping partner

c.  Secret partner

d.  Nominal partner

e.  Minor partner

f.  Partner by estoppels

g.  Partner by holding out

(For explanation, refer 2 marks answers)

5.  Explain the types of co-operative societies.

Ans: following are the types of co-operative societies:

a.  Consumer co-operative societies:

b.  Producer’s co-operative societies

c.  Marketing co-operative societies

d.  Farmer’s co-operative societies

e.  Credit co-operative societies

f.  Co-operative housing societies

(For explanation, refer 2 marks answers)

co-operative societies

Section - A

1.  what is a co-operative society?

It is a voluntary association of persons, who join together with the motive of welfare of the members.

2.  which act governs the co-operatives societies in India?

The co-operative Societies Act of 1912.

SECTION - B

3.  Mention any two type of co-operative societies?

Consumer Co-operative societies and Marketing Co-operative societies.

SECTION - C

4.  Explain the characteristic features of co-operative societies?

·  voluntary membership: The membership in a co-operative society is voluntary. There is no compulsion for the members to join. Membership is open to all irrespective of the caste, religion and gender.

·  legal status: It can enter into contract and hold property in its name.

·  limited liability: Liability is limited to the extent of the amount of capital contributed by them .

·  control: The right to vote gives the members a chance to choose the members who will constitute the managing committee.

·  Service motive: The values of the society emphasis mutual help and welfare.

5.  Explain the merits of co-operative societies?

·  Equality of voting rights: Irrespective of the amount of capital contributed by the member , each member has equal voting rights. One man one vote is the governing principle.

·  Limited Liability: The liability of the members is limited to the extent of capital contributed by them.

·  Stable existence: The existence of the members does not affect the continuity of the society.

·  Ease of operation: It can be started easily with minimum of 10 members. It has simple legal formalities. Its formation is governed by Co-operative Societies Act of 1912.

6.  Explain the demerits of co-operative societies?

·  Limited Resources: The capital contribution of the members are from limited means.

·  Inefficiency in management: The members who offer the services are not professionally equipped to handle the management functions effectively.

·  Lack of Secrecy: As the meetings of the members are often open discussions they cannot maintain secrecy .

·  Government Control: The intervention of the government in complying with rules and regulations, auditing and accounts etc., does not allow the society to function efficiently.

·  Difference of opinion: Personal motive may dominate the welfare motive and the benefit of other members may take back the performance of the members.

SECTION - D

1.  Explain the types of co-operative societies?

·  Consumer's co-operative society: This is formed to protect the interest of the consumers. It aims at eliminating middle man to achieve economy in operations.

·  Producer's Co-operative Society: It is formed to protect the interest of small producers. It supplies raw materials and equipments and other inputs to the members and also buys their output for sale.

·  Marketing Co-operative Societies: It aims to eliminate middleman and improve competitive position of its members by securing a favourable market for the products.

·  Farmer's Co-operative Societies: The aim is to gain the benefits of large scale farming and increase the productivity. These societies provide better quality seeds, fertilizers and other modern equipments for the use in the cultivation of crops.

·  Credit Co-operative Societies: The aim of such society is to protect the members from the exploitation of lenders who charge high rates of interest on loans. They provide loan to the members at low rate of interest.

·  Co-operative housing Societies: The members of these societies consist of people who are desirous of procuring residential accommodation at lower cost.

CHAPTER 3

JOINT STOCK COMPANY

SECTION - A

1.  Define Joint Stock Company?

"A company is an artificial person created by law having a separate legal entity with a perpetual succession and a common seal".

2.  what is the minimum and maximum member in a private company ?

minimum 2 and maximum 50.

3.  what is the minimum and maximum members in a public company?

minimum 7 and maximum unlimited.

4.  which type of company issues prospectus?

Public limited companies.

5.  State two documents for incorporation of company.

MOU and AOA

6.  State two certificates for the formation of a company?

Incorporation certificate and business commencement certificate.

7.  Who are promoters?

A promoter is said to be one who undertakes to form a company with reference to given project and to set it going and who takes the necessary steps to accomplish that purpose.

8.  Name the two types of company.

Public company and

private Company.

SECTION - B

9.  What is prospectus?

It is an invitation inviting the general public for the subscription of shares and debentures of the company or to make deposit in the company.

10.  what is meant by minimum subscriptions?

In order to prevent companies from commencing business with inadequate resources, it has been provided that the company must receive applications for a certain minimum number of shares before allotment .