CS Foundation Forms of Business Organisation MCQ Questions

CS Foundation Forms of Business Organisation MCQ Questions

Question 1.

The key elements of public enterprises are:

a. Recruitment and state control
b. Recruitment and Useful to various sectors
c. Public accountability and state control
d. Recruitment and Public accountability
Answer:
c. Public accountability and state control

Question 2.

State-owned enterprises differ from privately funded companies because:

a. Public companies can never belong to individual shareholders
b. Public ownership involves workers in the running of the company then in the private sector.
c. They are funded out by government, funded from taxation.
d. None of the above
Answer:
a. Public companies can never belong to individual shareholders

Question 3.

Food co-operation of India is

a. A joint stock company
b. Company managed by department
c. Company established by Special Act of Parliament
d. None of the above.
Answer:
c. Company established by Special Act of Parliament

Question 4.

An enterprise incorporated by a Special Act of Parliament or the State Legislature intending to carry on some business of national importance is called.

a. Public company
b. Statutory corporation
c. Registered company
d. Registered statutory company
Answer:
b. Statutory corporation

Question 5.

One of the best advantages of proprietorship is that:

a. Limited liability is enjoyed
b. Shares can be sold to raise capital
c. Profits are to be shared
d. The owner has independence
Answer:
d. The owner has independence

Question 6.

One of the hardships of a sole proprietorship is that:

a. Capital is limited to owner’s savings and bank loans
b. It has to complete too many registration formalities
c. As they are government owned there is no profit motive
d. More tax is charged on them
Answer:
a. Capital is limited to owner’s savings and bank loans

Question 7.

A, B, C, and D are partners A retires, B dies, the status of partnership

a. Remains unchanged
b. Comes to an end
c. Reconstituted
d. All of the above
Answer:
b. Comes to an end

Question 8.

Looking at the below mentioned options one of the advantages of a partnership form of business organization is that:

a. All partners always have limited liability
b. All the decisions are taken by one partner
c. The business survives on the death of the partners
d. The business has access to more capital than a solq trader
Answer:
d. The business has access to more capital than a solq trader

Question 9.

Select out the feature which is NOT found in a private limited company?

a. Raising capital for the business is easier.
b. Shares can be bought and sold on the Stock Exchange.
c. Subscribers of the business have limited liability
d. The business continues after the death of shareholders
Answer:
b. Shares can be bought and sold on the Stock Exchange.

Question 10.

Many private limited companies convert into public limited companies because:

a. They do not want to change their business
b. They want to gain the benefits of limited liability
c. They want to get guarantee from its members
d. They want to raise additional capital to expand the business
Answer:
d. They want to raise additional capital to expand the business

Question 11.

Amongst all of the following which statements about co-operative business organizations is true?

a. All co-operatives are only for public sector
b. Profits are shared equally amongst members.
c. They are owned by government
d. Workers have no say in decision-making
Answer:
b. Profits are shared equally amongst members.

Question 12.

Legal controls, restrictions are more and strict on public companies:

a. True
b. False
c. Not relevant
d. Nothing applicable
Answer:
a. True

Question 13.

Which of the following can have minor as members?

a. HUF
b. Proprietorship
c. Private limited Company
d. All of the above
Answer:
a. HUF

Question 14.

Which of the following is an advantage of a corporation that is not an advantage of being a limited partner in a partnership?

a. Limited liability
b. Double taxation
c. Easy transfer of ownership
d. All of the above
Answer:
b. Double taxation

Question 15.

Limited liability company posses not more than 2 of the following characters

1. Limited liability
2. Raise funds from public
3. No separation of management from owners
4. Restriction on number of partners

a. 2 and 4
b. 1 and 2
c. 1 and 3
d. 1 and 4
Answer:
a. 2 and 4

Question 16.

Limited liability partnership posses not more than 2 of the following character

1. Limited liability
2. Raise funds from public
3. No separation of management from owners
4. No Restriction on number of partners

a. 2 and 4
b. 1 and 2
c. 1 and 3
d. 1 and 4
Answer:
b. 1 and 2

Question 17.

For partnership agreement should be

a. Written agreement
b. Oral agreement
c. Written or oral
d. None of these
Answer:
c. Written or oral

Question 18.

An Indian citizen cannot make …….. form of organization in America.

a. HUF
b. Partnership
c. Company
d. Society
Answer:
a. HUF

Question 19.

Invariably……. is the disadvantage of co-operative society

a. Business secrecy
b. Low prices
c. Limited liability
d. Open membership
Answer:
a. Business secrecy

Question 20.

An auditor has the right to communicate the audit results to

a. Employers
b. Some other auditor
c. Company
d. a and c
Answer:
c. Company

Question 21.

The most suitable definition of a sole trader form of business organization is:

a. The business who manufacture only one product
b. The business is owned by one person
c. The firm has a single buyer
d. There is a single seller is the industry
Answer:
b. The business is owned by one person

Question 22.

For the formation of an ideal organization it is not uncommon to keep factors in mind

a. Lawful business
b. Number of people making organization
c. Risk involved
d. All of the above
Answer:
d. All of the above

Question 23.

Which of the following statements suits best to private limited company?

a. It is owned by the government.
b. It is owned by shareholders who can sell their shares in the Stock Exchange
c. It is formed for the benefit of society at large
d. Its accounts can be kept private and it receives little coverage in the business
Answer:
d. Its accounts can be kept private and it receives little coverage in the business

Question 24.

Which of the following statement about most public limited companies is true?

a. They are owned and controlled by the employees
b. They are owned by the directors but controlled by the shareholders.
c. They are owned by shareholders but controlled by directors
d. They are owned and controlled by the promoters
Answer:
b. They are owned by the directors but controlled by the shareholders.

Question 25.

To determine demand for internet services in a market, companies should survey:

a. Percentage purchase made online
b. Percentage use of the internet.
c. Percentage that have access to the internet.
d. All of the above.
Answer:
d. All of the above.

Question 26.

A partner can transfer his share to an outsider

a. Without the consent of other partners but with the consent of Registrar of companies.
b. With the consent of other partners and the consent of registrar of companies
c. With the consent of other partners
d. None of the above.
Answer:
c. With the consent of other partners

Question 27.

A partner can carry on business to that of the firm.

a. Similar
b. Not similar
c. Both a and b
d. None of the above
Answer:
b. Not similar

Question 28.

Everything is an advantages of joint ventures except.

a. The costs of a new project can be split between the companies involved
b. Manufacturing costs will be divided between the firms in the venture
c. Joint ventures between firms in different countries can create new market opportunities
d. Management of the joint venture will lead to disagreements.
Answer:
d. Management of the joint venture will lead to disagreements.

Question 29.

Process to start LLP is

1. Acquire DPIN, Acquire DSC
2. Register DPIN, DSC with LLP
3. Check name availability
4. Download LLP forms
5. File electronically
6. Track status
7. Receive certificate after
8. LLP ready to function Correct sequence will be

a. 1, 2, 3, 4, 5, 6, 7, 8
b. 1,2,4, 3, 6, 5, 7, 8
c. 2, 1,3,4, 6, 5, 7, 8
d. 2, 1, 4, 3, 6, 5, 7, 8
Answer:
a. 1, 2, 3, 4, 5, 6, 7, 8

Question 30.

Co-operative society has

a. Separate legal entity
b. Government support
c. Service motive
d. All of the above
Answer:
d. All of the above

Question 31.

What categories should an organization evaluate when making an outsourcing decision?

a. Salary cost
b. Geopolitical risk
c. English proficiency
d. All of the above
Answer:
c. English proficiency

Question 32.

Minimum number of subscribers required for LLP are

a. 3
b. 2
c. 4
d. 6
Answer:
b. 2

Question 33.

Limited liability company has not more than two of the following character

1. Limited liability
2. Raise funds from public
3. No separation of management from owners
4. Restriction on number of partners

a. 2 and 4
b. 1 and 2
c. 1 and 3
d. 1 and 4
Answer:
a. 2 and 4

Question 34.

DIN is a unique identification number for

a. Existing director of the company
b. Person intending to become director of the company
c. Existing Chairman of the company
d. Both a and b
Answer:
d. Both a and b

Question 35.

Karta of HUF is of his family

a. Owner
b. Representative
c. Employee
d. None of the above
Answer:
b. Representative

Question 36.

When it is not registered, a partnership firm is

a. Deemed to be illegal organization and disallowed to carry on business
b. Allowed to carry on business subject to payment of penalty
c. Allowed to carry on business subject to certain disabilities
d. All of the above
Answer:
c. Allowed to carry on business subject to certain disabilities

Question 37.

Limited liability is enjoyed by

a. A general partnership.
b. A corporation.
c. A sole proprietorship.
d. None of the above.
Answer:
b. A corporation.

Question 38.

It was found that the liabilities of a corporation are far excess than its assets after it became bankrupt. You are a shareholder in that corporation. You will be called on to pay:

a. A proportionate share of all the liabilities claims based on the number of shares that you own.
b. A proportional share of all creditor claims based on the number of common shares that you own.
c. An amount that could, at most, equal what you originally paid for the shares of common stock in the corporation.
d. Nothing.
Answer:
b. A proportional share of all creditor claims based on the number of common shares that you own.

Question 39.

Money market mutual funds

a. Enable individuals and small businesses to invest indirectly in money-market instruments.
b. Are available only to high net-worth individuals.
c. Are used in acquiring and placing mortgages.
d. Are mostly tradable on stock exchange
Answer:
c. Are used in acquiring and placing mortgages.

Question 40.

A partnership agreement should be

a. Written agreement
b. Oral agreement
c. Written or oral
d. None of these
Answer:
c. Written or oral

Question 41.

A new partner may be admitted to a partnership:

a. With the consent of all partners
b. With the consent of two third of old partners
c. With the consent of any one of the partners
d. Without consent of old partners
Answer:
a. With the consent of all partners

Question 42.

The partnership may come to an end due to the

a. Death of a partner
b. Insolvency of partner
c. By giving notice
d. All of the above
Answer:
d. All of the above

Question 43.

At the time of retirement of a partner full goodwill is credited to the accounts of:

a. All partners
b. Only retiring partner
c. Only remaining partner
d. None of the above
Answer:
a. All partners

Question 44.

If the remaining partner want to continue the business, after the retirement of a partner, a new partnership agreement:

a. Necessary
b. Not necessary
c. Optional
d. None of above
Answer:
a. Necessary

Question 45.

Company is defined under which section of the Companies Act?

a. Section 3(1)
b. Section 4(2)
c. Section 2(4)
d. Section 1(3)
Answer:
a. Section 3(1)

Question 46.

Assets of the company belongs to

a. Company
b. Shareholders
c. Members
d. Promoters
Answer:
a. Company

Question 47.

Minimum number of members in case of private company is:—

a. 1
b 2
c. 3
d. 5
Answer:
d. 5

Question 48.

A handed over 500 units of cement bags to B. This kind of an arrangement is

a. Partnership
b. Sole proprietorship
c. HUF
d. None of the above
Answer:
d. None of the above

Question 49.

Management of a business organization should be on compulsory basis in the hands of

a. Shareholders
b. Workers
c. Both a and b
d. None of the above.
Answer:
a. Shareholders

Question 50.

The sole purpose of business organization is to

a. Conduct business
b. Earn profit
c. Establish relationship between men and material
d. All of the above.
Answer:
b. Earn profit

Question 51.

It is uncommon in a business organization

a. To have a unlawful purpose
b. To have continuity
c. To have risk
d. To deal in goods and services.
Answer:
a. To have a unlawful purpose

Question 52.

A florist opened a shop in the year 2000 but due to certain looses he did wind it up in a single day after 9 years of operation i.e. in 2009. What kind of organization it is

a. Sole proprietorship
b. Company
c. Limited liability partnership
d. None of the above.
Answer:
a. Sole proprietorship

Question 53.

Mr. Varun wanted to start a bakery shop with limited money. What kind of business organization you would suggest him.

a. Sole proprietorship
b. HUF
c. Partnership
d. Corporation
Answer:
a. Sole proprietorship

Question 54.

Mr. Varun is a rich man with ample amount of working capital. He wants to go for a business of chain of 5 star hotels. What kind of business organization you will suggest him.

a. Company
b. Partnership
c. Sole proprietorship
d. Trust
Answer:
a. Company

Question 55.

An Indian citizen cannot make ………. form of organization in America.

a. HUF
b. Partnership
c. Company
d. Society
Answer:
a. HUF

Question 56.

Maximum no. of members in case of private company is

a. 50
b. 100
c. 150
d. 200
Answer:
d. 200

Question 57.

Maximum no. of members in case of public company is

a. 0
b. Unlimited
c. 50
d. 100
Answer:
a. 0

Question 58.

Minimum paid up share capital in case of a private company is

a. 1 Lakh
b. 2 Lakhs
c. 3 Lakhs
d. 4 Lakhs
Answer:
c. 3 Lakhs

Question 59.

Minimum paid up share capital in case of a public company is

a. 1 Lakh
b. 3 Lakhs
c. 5 Lakhs
d. 7 Lakhs
Answer:
c. 5 Lakhs

Question 60.

Minimum no. of Directors in case of private company is

a. 1
b. 2
c. 3
d. 4
Answer:
b. 2

Question 61.

Partnership firm liability is generally

a. Limited
b. Unlimited
c. Situation does not arise
d. None of the above
Answer:
d. None of the above

Question 62.

Who has the power to transfer the joint property of HUF so as to bind the interest of both adult and minor coparceners?

a. Son’s of the HUF
b. Daughters of the HUF
c. All the co-parceners of HUF
d. Karta of HUF
Answer:
d. Karta of HUF

Question 63.

Who all can be co parceners in HUF

a. Daughters of family
b. Son’s of family
c. Both a and b
d. None of the above.
Answer:
c. Both a and b

Question 64.

Mr. X is planning to take a business of manufacturing cheap medicines in India. The most suitable type of organization will be

a. Company
b. Corporation
c. Co-operative
d. Society
Answer:
b. Corporation

Question 65.

If the objective for the business organization is self help as well as mutual help. It is type of organization.

a. Partnership
b. Sole proprietorship
c. Co-operative society
d. Company
Answer:
c. Co-operative society

Question 66.

A co-operative society can promise maximum ……….. amount of interest on the money contributed by its members.

a. 9%
b. 6%
c. 5%
d. unlimited rate of interest
Answer:
a. 9%

Question 67.

AMUL is a

a. Company
b. Co-operative society
c. Co-operation
d. None of the above.
Answer:
b. Co-operative society

Question 68.

Invariably………is the disadvantage of co-operative society

a. Business secrecy
b. Low prices
c. Limited liability
d. Open membership
Answer:
a. Business secrecy

Question 69.

If there is no LLP agreement for limited liability partnership it is governed by

a. Schedule 11 of Limited Liability Partnership Act.
b. Schedule 1 of Limited Liability Partnership Act.
c. Schedule 7 of Limited Liability Partnership Act. .
d. None of the above.
Answer:
b. Schedule 1 of Limited Liability Partnership Act.

Question 70.

This is UNTRUE about LLP

a. It has no perpetual existence
b. No requirement of minimum capital
c. Easy to wind up
d. Less cost of formation.
Answer:
a. It has no perpetual existence

Question 71.

……….is a feature of partnership form of business.

a. Separate legal entity from the firm
b. Limited scope for raising finance
c. The liability of a partner is limited to his contribution to capital
d. Registration of partnership is compulsory
Answer:
b. Limited scope for raising finance

Hint
Partnership form of business main features are:—
• Ease of formation is its most important feature because it is not required to go through elaborate legal formalities.
• No agreement is to be made and registration of the firm is also not essential. However, the owner may be required to obtain a license specific to the line of business from the local administration.
• The firm has no legal existence separate from its owner.
• The capital required by the organisation is supplied wholly by the owner himself and he depends largely on his own savings and profits of his business.
• Owner alone enjoys the benefits or profits of the business and he alone bears the losses.
• The liability of the proprietor is unlimited i.e. it extends beyond the capital invested in the firm.
• Owner has a complete control over all the aspects of his business and it is he who takes all the decisions though he may engage the services of a few others to carry out the day-to-day activities.
• The formation and operation of a sole proprietorship form of business organisation requires almost no legal formalities.
• The legal claimants can pursue the personal property of the proprietor and not simply the assets used in the business.

Question 72.

………form of business is/are appropriate for retail business.

a. Sole proprietorship
b. Partnership
c. Company
d. Both (a) and (b)
Answer:
d. Both (a) and (b)

Hint
Business which provide direct services like restaurants, professional services, retail services etc. are generally organised as proprietary concerns or partnership while some more organised drawing large amount of capital are generally Public limited or private limited companies.

Question 73.

Which one of the following does not have perpetual succession?

a. Company
b. Statutory Corporation
c. Sale Proprietorship
d. Co-operative Society
Answer:
c. Sale Proprietorship

Question 74.

What is the maximum number of partners involved in the non-banking organisation in India?

a. 10
b. 15
c. 20
d. 7
Answer:
c. 20
The maximum number of partners as per Companies Act, 2013 can be 100.

Question 75.

In a Hindu Undivided Family, liability of is unlimited.

a. Karta
b. Co-parceners
c. Both a and b
d. Neither a and b
Answer:
a. Karta

Hint
The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Question 76.

In relation to business organisation structure, which one of the following is easy to form and wind up?

a. A company
b. A sole proprietorship
c. Statutory corporation
d. Public enterprises
Answer:
b. A sole proprietorship

Hint:
A sole proprietorship is the simplest and least expensive business structure to establish. Just like formation it is also very easy to wind up the business.

Question 77.

Which is not a feature of LLP?

a. Separate legal entity
b. All LLP have existence for fixed period.
c. Partners in an LLP are required to turn into an agreement
d. In an LLP, partners are not liable for the act of other partners.
Answer:
b. All LLP have existence for fixed period.

Hint
The characteristic features of LLP are
• The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
• It offers limited liability protection for its partners. As a sole trader or partnership business, personal
assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP. ‘
• The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act, 2008. The act provides flexibility to devise the agreement as per their choice.
• Renowned and accepted form of business worldwide
• An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from
its partners. Corporate entity status enables LLP to be taken more seriously than a
proprietorship/partnership status does.
• Every LLP shall have at least two partners and shall also have at least two individuals as Designated
Partners, of whom at least one shall be resident in India. The duties and obligations of Designated
Partners shall be as provided in the law.
• The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
• The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
• The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act, 2008.
• The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.
• Low cost of Formation and compliances.
• Body corporate can be a partner of an LLP

Question 78.

Voting right that vests with each member of co-operative society is:

a. One member one vote
b. Right to vote in proportion of capital contributed
c. Right to vote as mentioned in memorandum
d. None of the above.
Answer:
a. One member one vote

Question 79.

Gas Authority of India Limited is an example of:

a. Limited liability partnership
b. Private limited company
c. Public enterprise
d. None of the above.
Answer:
c. Public enterprise

Hint
Public enterprise, a business organization wholly or partly owned by the state and controlled through a public authority.

Question 80.

Which one of the following is treated as a separate legal entity different from its members?

a. Sole proprietorship
b. Hindu undivided family
c. Partnership
d. Limited liability partnership.
Answer:
d. Limited liability partnership.

Hint
An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than a proprietorship/partnership status does.

Question 81.

Why co-operative marketing society is formed?

a. To protect the interest of general consumers
b. To sell the product of small farmers and producers
c. To protect the interest of small producers
d. To provide financial support to the members. Questions of December 2013
Answer:
b. To sell the product of small farmers and producers

Hint
According to RBI “Co-operative Marketing is a co-operative association of cultivators formed primarily for the purpose of helping members to market their produce more profitably”.

Question 82.

The choice of an appropriate form of business organisation largely depends upon:

I. Ease of formation
II. Continuity and stability
III. Liability aspects Correct option is

a. I and II
b. II and III
c. I and III
d. I, II and III.
Answer:
b. II and III

Hint
Factors which should be checked while deciding the form of organisation most suitable for business are
• Ease of formation
• Adequacy of capital
• Nature of business
• Liability
• Control
• Tax liability
• Flexibility

Question 83.

The minimum number of members required to get a co-operative society registered is—

a. 15
b. 20
c. 10
d. 5
Answer:
c. 10

Question 84.

Which of the following entity is created under an Act of the Parliament or an Act of the State legislature?

a. Statutory corporation
b. Government companies
c. Co-operative society
d. Limited Liability Partnership.
Answer:
a. Statutory corporation

Question 85.

Which form of business organisation has a separate legal entity ?

a. Hindu Undivided Family (HUF)
b. Co-operative society
c. Partnership firm
d. Sole proprietorship.
Answer:
b. Co-operative society

Hint
After registration a co-operative enterprise becomes a body corporate independent of its members i.e. a separate legal entity. Registration of a co-operative enterprise is compulsory. A co-operative society may be registered with the Registrar of Co-operatives Societies.

Question 86.

What is the liability of each partner under LLP?

a. Limited
b. Unlimited
c. Partially Limited
d. None of the above
Answer:
a. Limited

Hint
LLP offers limited liability protection for its partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP.

Question 87.

Which of the following is not a form of organisation?

a. Partnership
b. Company
c. Partners
d. Sole Proprietorship
Answer:
c. Partners

Hint
Partners is not any form of organisation.

Question 88.

Who can be the head of Joint Hindu Family business?

a. Karta
b. Coparcener
c. Manager
d. Director
Answer:
a. Karta

Hint
A Hindu undivided family do business jointly under the control of the head of the family who is known as the ‘Karta’.

Question 89.

Maximum number of partners in case of non-banking business is

a. 10
b. 20
c. 30
d. 40
Answer:
The minimum number of partners must be two, while the maximum number can be 100.

Question 90.

Members of HUF are known as

a. Partners
b. Shareholders
c. Members
d. Coparceners
Answer:
d. Coparceners

Hint
The members of the family are known as ‘Coparceners’

Question 91.

Head of HUF is known as

a. Karta
b. Coparceners
c. Manager
d. Head
Answer:
a. Karta

Hint
The characteristic features of LLP are
• The LLP shall be a body corporate and a legal entity separate from its partners. Any two or more persons, associated for carrying on a lawful business with a view to profit, may by subscribing their names to an incorporation document and filing the same with the Registrar, form a Limited Liability Partnership. The LLP will have perpetual succession.
• It offers limited liability protection for its partners. As a sole trader or partnership business, personal assets of the proprietor or partners can be at risk in the event of a failure of the business, but this is not the case for an LLP.
• The mutual rights and duties of partners of an LLP inter se and those of the LLP and its partners shall be governed by an agreement between partners or between the LLP and the partners subject to the provisions of the LLP Act, 2008. The act provides flexibility to devise the agreement as per their choice.
• Renowned and accepted form of business worldwide
• An LLP is a legal entity, a juristic person established under the Act. It has its existence separate from its partners. Corporate entity status enables LLP to be taken more seriously than’ a proprietorship/partnership status does.
• Every LLP shall have at least two partners and shall also have at least two individuals as Designated Partners, of whom at least one shall be resident in India. The duties and obligations of Designated Partners shall be as provided in the law.
• The Central Government has powers to investigate the affairs of an LLP, if required, by appointment of competent Inspector for the purpose.
• The LLP shall be under an obligation to maintain annual accounts reflecting true and fair view of its state of affairs. A statement of accounts and solvency shall be filed by every LLP with the Registrar every year. The accounts of LLPs shall also be audited, subject to any class of LLPs being exempted from this requirement by the Central Government.
• The compromise or arrangement including merger and amalgamation of LLPs shall be in accordance with the provisions of the LLP Act, 2008.
• The Indian Partnership Act, 1932 shall not be applicable to Limited Liability Partnerships.
• Low cost of Formation and compliances.
• Body corporate can be a partner of an LLP.

Question 92.

Which amongst the following is a feature of LLP?

a. Separate legal entity
b. Unlimited liability
c. No perpetual succession
d. Not a body corporate
Answer:
a. Separate legal entity

Question 93.

In case of HUF what are liabilities of Coparcener

a. Both have unlimited liability.
b. Coparcener’s liability is limited while Karta’s
c. Karta’s liability is limited while Coparcener’s
d. Both have limited liability.
Answer:
b. Coparcener’s liability is limited while Karta’s

Hint
The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Question 94.

To ………. form a partnership, the minimum capitalcontribution should be:

a. Rs. 1 Lakh
b. There is no minimum limit
c. Rs. 1 Crore
d. Rs. 5 Lakh.
Answer:
b. There is no minimum limit

Hint
Partnership is defined as a relation between two or more persons who have agreed to share the profits of a business carried on by all of them or any of them acting for all. There is no minimum capital contribution required for this form of organisation.

Question 95.

The Karta in Joint Hindu Family business has:

a. Unlimited liability
b. Joint liability
c. Limited liability
d. No liability for debts.
Answer:
a. Unlimited liability

Hint
The Karta has unlimited liability while the liability of the other members is limited to the value of their individual interests in the joint family.

Question 96.

The objects and powers of a statutory corporation:

a. May not change
b. May not be changed easily
c. May change easily
d. None applicable.
Answer:
b. Company

Hint
It is very difficult to form statutory corporations because it requires lengthy documentation, complicated formalities and passing of statue.
The policies once approved, the statue once passed cannot be changed easily. It can be done by the parliament only and this is very time consuming.

Question 97.

Which corporation has both characteristics i.e. of a partnership and of a separate legal entity?

a. Limited Liability Partnership (LLP)
b. Company
c. Partnership
d. Statutory Body.
Answer:
a. Limited Liability Partnership (LLP)

Hint
A Limited Liability Partnership, popularly known as LLP combines the advantages of both the Company and Partnership into a single form of organization.

Question 98.

Kendriya Bhandar is a:

a. Co-operative Credit Society
b. Consumers Co-operative Society
c. Producers Co-operative Society
d. Co-operative Marketing Society
Answer:
d. Co-operative Marketing Society

CS Foundation Business Environment and Entrepreneurship MCQ

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