Here, we will discuss the summary and key facts in MCQ format of Chapter 2: Forms of Business
Organisation| Part I: Foundations of Business | Business Studies |Textbook for Class XI
1. Which business organisation is owned, managed, and controlled by an individual who is the recipient of all profits and bearer of all risks?
a) Sole proprietorship
b) Joint Hindu family business
c) Partnership
d) Cooperative societies
Answer. a) Sole proprietorship
Definition-1: Sole trader is a type of business unit where a person is solely responsible for providing the capital, for bearing the risk of the enterprise and for the management of business.
( by J.L. Hansen)
Definition-2: The individual proprietorship is the form of business organisation at the head of which stands an individual as one who is responsible, who directs its operations and who alone runs the risk of failure.
( By L.H. Haney)
2. When was the Indian Partnership Act passed?
a) 1932
b) 1942
c) 1962
d) 1972
Answer. a) 1932
The Indian Partnership Act, 1932 defines partnership as “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.”
3. The Hindu Succession Act came in which year?
a) 1982
b) 1926
c) 1956
d) 1986
Answer. c) 1956
Joint Hindu family business is a specific form of business organisation found only in India. It is one of the oldest forms of business organisation in the country. It is governed by the Hindu Succession Act, 1956.
4. In which year was the Hindu Succession Act of 1956 amended to give equal rights to daughters in their father's property?
a) 1995
b) 2005
c) 2015
d) 2025
Answer. b) 2005
According to the Hindu Succession (Amendment) Act, 2005, the daughter of a coparcener of a Joint Hindu Family shall, by birth, become a coparcener. At the time of partition of such a ‘Joint Hindu Family ’, the coparcenary property shall be equally divided among all the coparceners irrespective of their gender (male or female). The eldest member (male or female) of a ‘Joint Hindu Family’ shall become Karta. A married daughter has equal rights in the property of a Joint Hindu Family.
5. According to section 464 of the Companies Act 2013, maximum number of partners in a partnership firm can be how many?
a) 50
b) 100
c) 150
d) unlimited
Answer. b) 100;
The minimum number of partners needed to start a partnership firm is two. According to section 464 of the Companies Act 2013, maximum number of partners in a partnership firm can be 100, subject to the number prescribed by the government. As per Rule 10 of The Companies (miscelleneous) Rules 2014, at present the maximum number of members can be 50.
6. A business owned, managed, and controlled by one person is called:
a) Partnership
b) Company
c) Sole proprietorship
d) Cooperative society
Answer: c) Sole proprietorship
One person owns, manages, and bears all business risks.
7. Which is a major merit of sole proprietorship?
a) Perpetual succession
b) Quick decision-making
c) Large capital
d) Separate legal identity
Answer: b) Quick decision-making
The sole owner can take decisions quickly.
8. Which of the following is not a type of partner?
a) Active partner
b) Sleeping partner
c) Secret partner
d) Public partner
Answer: d) Public partner
Common types include active, sleeping, secret, and nominal partners.
9. In a Joint Hindu Family Business, who generally controls the business?
a) Managing Director
b) Karta
c) Sleeping partner
d) Secretary
Answer: b) Karta
Karta manages and controls the Joint Hindu Family Business.
10. A cooperative society is primarily formed to:
a) Maximise one person's profit
b) Protect the economic interests of its members
c) Control government businesses
d) Eliminate competition
Answer: b) Protect the economic interests of its members
It is a voluntary association formed for members' mutual economic interests.
11. The principle of one member, one vote is associated with:
a) Sole proprietorship
b) Partnership
c) Cooperative society
d) Company
Answer: c) Cooperative society
Cooperative societies follow democratic voting irrespective of the amount of capital contributed.
12. A company is considered an artificial person because it:
a) Has no legal existence
b) Exists only in the eyes of law
c) Must be owned by one person
d) Cannot own property
Answer: b) Exists only in the eyes of law
A company has a separate legal identity from its members.
13. Which feature means that a company continues to exist despite the death or retirement of its members?
a) Limited liability
b) Transferability
c) Perpetual succession
d) Specialisation
Answer: c) Perpetual succession
The company's existence continues irrespective of changes in its membership.
14. Which company can invite the public to subscribe to its securities?
a) Public company
b) Private company
c) Sole proprietorship
d) Partnership firm
Answer: a) Public company
A public company can raise funds by inviting the public to subscribe to its securities.
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