Question:
Explain meaning, features, merits and demerits of Sole Proprietorship.
Answer:
Sole Proprietorship means a business owned, financed and controlled by a single person who is recipient of all profits and bearer of all risks. It is suitable in areas of
personalized services like beauty parlour, hair cutting saloons and small scale activities like retail shops.
Features:
- Single Ownership: It is wholly owned by one individual.
- Control: Sole proprietor has full power of decision making.
- No Separate legal entity: Business and businessman are not separate entities in the eyes of law.
- Unlimited liability: The liability of owner is unlimited. In case the assets of business are not sufficient to meet its debts, the personal property of owner can be used for paying debts.
- No legal formalities: No legal formalities are required to start, manage and dissolve such business organization.
- Sole risk bearer and profit recipient: He bears the complete risk and there is nobody to share profit / loss with him.
Merits:
- Easy to start and close: It can be easily started and closed without any legal formalities.
- Quick decision making: As sole owner is not required to consult or inform anybody about his decisions.
- Secrecy: He is not expected to share his business decisions and secrets with anybody.
- Direct incentive: Direct relationship between efforts and reward provide incentive to the sole trader to work hard.
- Personal touch: The sole trader can maintain personal contacts with his customers and employees.
- Social utility: It provides employment to persons with limited money who are not interested to work under others. It prevents concentration of wealth in a few hands.
Limitations:
- Limited financial resources: Funds are limited to the owner's personal savings and his borrowing capacity.
- Limited managerial ability: Sole trader can't be good in all aspects of business and he can't afford to employ experts also.
- Unlimited liability: Unlimited liability of sole trader compels him to avoid risky and bold business decisions.
- Uncertain life: Death, insolvency, lunacy or illness of a proprietor affects the business and can lead to its closure.
- Limited scope for expansion: Due to limited capital and managerial skills, it cannot expand to a large scale.
Forms of Business Organisation
Q 1.
X is interested in the floatation of a company. Briefly discuss the steps he should take.
Q 2.
What is the role of Karta in Joint Hindu Family business?
Q 3.
Compare the status of a minor in a Joint Hindu Family Business with that in a partnership firm.
Q 4.
What is meant by ˜partner by estoppel'? Explain.
Q 5.
Define promoter. What are the functions of a promoter?
Q 6.
Explain meaning, features, merits and demerits of Sole Proprietorship.
Q 7.
Explain different types of partners.
Q 8.
Explain procedure of registering a partnership firm.
Q 9.
Explain procedure of registering a partnership firm.
Q 10.
Explain meaning, features, merits and demerits of partnership firm.
Q 11.
What are the steps required for raising funds from public?
Q 12.
What do you mean by incorporation of a company? What are the steps involved in corporation of a company?
Q 13.
Explain meaning, features, merits and demerits of joint stock company.
Q 14.
State the important privileges available to a private company.
Q 15.
Discuss the characteristics, merits and limitations of the cooperative form of organization. Also describe briefly different types of cooperative societies.
Q 16.
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
Q 17.
Define Articles of Association. What are its contents?
Q 18.
Explain the contents of Memorandum of Association.
Q 19.
Is registration of partnership firm compulsory? What are the consequences of non-registration?
Q 20.
What do you understand by a.sole proprietorship firm? Explain its merits and limitations.
Q 21.
Distinguish between a Joint Hindu family business and partnership.
Q 22.
Despite limitations of size and resources, many people continue to prefer sole proprietorship over other forms of organization. Why?
Q 23.
Distinguish between a Joint Hindu family business and partnership.
Q 24.
Explain the concept of mutual agency in partnership with suitable example.
Q 25.
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
Q 26.
Explain the meaning, features, merits and demerits of cooperative society.
Q 27.
Explain different types of partners.
Q 28.
Explain the following terms in brief:
(i) Perpetual succession (ii) Common seal
(iii) Karta (iv) Artificial person
Q 29.
If registration is optional, why do partnership firms willingly go through this legal formality and get themselves registered? Explain.
Q 30.
How does a cooperative society exemplify democracy and secularism? Explain.
Q 31.
Why is partnership considered by some to be a relatively unpopular form of business ownership? Explain the merits and limitations of partnership.
Q 32.
Differentiate between:
- Memorandum of Association and Articles of Association.
- Private and Public Company
