business studies - forms of business organisation

Class 11 - Business Studies

Forms of Business Organisation

MCQ
Q&A
Question:

State the important privileges available to a private company.

Answer:

A company can be registered as a private company or a public company. When a company is incorporated as a private company, it enjoys certain privileges and exemptions when compared to a public company.
Some of the privileges enjoyed by a Private Company are:

  • The minimum number of members required to form a Private Company is only 2, whereas it is 7 in case of a Public Company.
  • A Private company can start its business immediately after its incorporation. It need not obtain the Certificate of Commencement of Business.
    ‘Certificate of Commencement of Business, is issued by the Registrar of Companies to Public Companies. Once a Company has been registered or formed, it shall apply for the Certificate of Commencement of Business in the prescribed form to the ROC (Registrar of Companies). Only after this certificate has been obtained it can commence its business. This certificate has to be obtained within 6 months from the date of incorporation of a Company.'
  • No qualification shares and consent of the Director to act as a Director is required to be filed with the ROC at any time during the tenure of the company, as in case of a Public company.
  • A Private Company is not required to issue or file a prospectus or statement in lieu of prospectus with the Registrar of Companies.
    ‘Prospectus, is an important document for a public company. It is nothing but an invitation to the public to subscribe for the shares of the Company. In case a public company does not intend to invite the public to subscribe to the shares, it has to file a statement in lieu of prospectus.
  • It is not required to have an index of members, as in case of a public company. The reason being the Companies Act limits the maximum number of members required for a Private Company to 50.
  • It is not required to hold a statutory meeting or file a statutory report.
    ‘Statutory meeting is a general meeting of the shareholders of the Company which has to be held within a period of not less than one month and not more than 6 months from the date, on which it is entitled to commence its business."
  •  It is not required to offer new shares to existing shareholders in proportion to their shareholdings.
    In case of a Public Company further issue of capital shall be made to the persons who at the date of the issue are holders of the equity shares of the Company in proportion to their holding.
  • A Private Company need to have a minimum of two directors only whereas a Public Company needs to have a minimum of three directors.
  • All the Directors may be appointed by a single resolution in case of a Private Company.
  • The Directors of a Private Company need not to retire by rotation i.e., they can be Permanent Directors.


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Questions and Answers


Forms of Business Organisation - Questions
1.

Explain the following terms in brief:
(i) Perpetual succession (ii) Common seal
(iii) Karta (iv) Artificial person


Answer
2.

If registration is optional, why do partnership firms willingly go through this legal formality and get themselves registered? Explain.


Answer
3.

How does a cooperative society exemplify democracy and secularism? Explain.


Answer
4.

What is meant by ˜partner by estoppel'? Explain.


Answer
5.

What do you understand by a.sole proprietorship firm? Explain its merits and limitations.


Answer
6.

Distinguish between a Joint Hindu family business and partnership.


Answer
7.

Distinguish between a Joint Hindu family business and partnership.


Answer
8.

Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization. Why?


Answer
9.

Explain the concept of mutual agency in partnership with suitable example.


Answer
10.

What is the role of Karta in Joint Hindu Family business?


Answer
11.

Explain procedure of registering a partnership firm.


Answer
12.

Explain procedure of registering a partnership firm.


Answer
13.

What are the steps required for raising funds from public?


Answer
14.

Define Articles of Association. What are its contents?


Answer
15.

Define promoter. What are the functions of a promoter?


Answer
16.

Explain the contents of Memorandum of Association.


Answer
17.

What do you mean by incorporation of a company? What are the steps involved in corporation of a company?


Answer
18.

Explain meaning, features, merits and demerits of Sole Proprietorship.


Answer
19.

Explain meaning, features, merits and demerits of partnership firm.


Answer
20.

Explain meaning, features, merits and demerits of joint stock company.


Answer
21.

Explain the meaning, features, merits and demerits of cooperative society.


Answer
22.

Explain different types of partners.


Answer
23.

X is interested in the floatation of a company. Briefly discuss the steps he should take.


Answer
24.

For which of the following types of business do you think a partnership firm of organization would be more suitable, and why?
(i) Grocery store (ii) Medical store
(iii) Legal consultancy (iv) Craft centre
(v) Internet cafe (vi) Chartered accountancy firm


Answer
25.

Compare the status of a minor in a Joint Hindu Family Business with that in a partnership firm.


Answer
26.

State the important privileges available to a private company.


Answer
27.

Why is partnership considered by some to be a relatively unpopular form of business ownership? Explain the merits and limitations of partnership.


Answer
28.

Discuss the characteristics, merits and limitations of the cooperative form of organization. Also describe briefly different types of cooperative societies.


Answer
29.

Is registration of partnership firm compulsory? What are the consequences of non-registration?


Answer
30.

Differentiate between:

  • Memorandum of Association and Articles of Association.
  • Private and Public Company

 


Answer
31.

Explain different types of partners.


Answer
32.

For which of the following types of business do you think a sole proprietorship firm of organization would be more suitable, and why?
(i) Grocery store (ii) Medical store
(iii) Legal consultancy (iv) Craft centre
(v) Internet cafe (vi) Chartered accountancy firm


Answer
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