Forms of Business Organisation

Topics in this chapter

• Sole Proprietorship Features
• Hindu Undivided Family Business
• Partnership Structure And Agreements
• Cooperative Society Principles
• Company Types And Characteristics
• Company Formation And Incorporation
• Choosing A Business Organisation

Cheat sheet

Practice questions

1. Question 1Q-D6967F

   Which feature is most closely associated with a sole proprietorship?

   1. A.Separate legal existence from the owner
   2. B.Unlimited liability of the proprietor
   3. C.Compulsory registration under the Companies Act
   4. D.Management by an elected board of directors
   See the answer and solution
2. Question 2Q-C9304A

   In a partnership firm, the principle of mutual agency means that:

   1. A.Every partner must contribute an equal amount of capital
   2. B.Each partner is both an agent and a principal of the firm
   3. C.Only the partner who invested the most capital can manage the firm
   4. D.A partner is liable only for transactions personally undertaken by them
   See the answer and solution
3. Question 3Q-0BD7A4

   Which statement correctly describes a Hindu Undivided Family business?

   1. A.The business is managed by a board elected by all members
   2. B.Membership is created only through a written partnership agreement
   3. C.The karta manages the business, and the karta has unlimited liability
   4. D.All members have unlimited liability for the business debts
   See the answer and solution
4. Question 4Q-5BF4D1

   Why is a cooperative society generally considered suitable for small producers or consumers who want to pursue a common economic interest?

   See the answer and solution
5. Question 5Q-960A37

   A company enters into a contract in its own name and acquires property independently of its shareholders. Which characteristic of a company is illustrated?

   1. A.Limited liability of members
   2. B.Separate legal entity
   3. C.Perpetual succession of directors
   4. D.Centralised ownership
   See the answer and solution