DELHI PUBLIC SCHOOL, NACHARAM

SECUNDERABAD
MOCK PAPER

CLASS: XI SUB: BUSINESS STUDIES

MARKS: 30 TIME:1 Hr

TOPIC: FORMS OF BUSINESS ORGANISATION

GENERAL INSTRUCTIONS:
a. All questions are compulsory.
b. Question numbers 1 to 6 are objective type and carry 1 mark each.
c. Question numbers 7 to 11 are short type and carry 2 marks each.
d. Question number 12 is essay type and carries 4 marks .
e. Question numbers 13 to 14 are essay type and carries 5 marks each

SECTION A 1
The society aims to fight against the big capitalists and enhance the
1 bargaining power of the small producers.

(a) Consumer’s cooperative societies

(b) Producer’s cooperative societies
(c) Marketing cooperative societies
(d) Farmer’s cooperative societies

2 A company is a creation of law and exists independent of its members. 1

(a) Formation
(b) Separate legal entity
(c) Perpetual succession
(d) Artificial person

3 The liability of members of a cooperative society is ......... to the extent of 1

their capital contribution.

(a)Born
(b) Shared
(c) Unlimited
(d) Limited

4 It is optional for a partnership firm to get registered. 1

(a) True
(b) False
 (c) Partly True
(d) None of these

5 The Partnership form of organization is governed by The Indian Partnership 1

Act,......

(a)1912
(b)2013
(c)1932
(d)1965

6 ................ is a type of business unit where a person is solely responsible for 1

providing the capital.

(a) Sole proprietorship

(b) Joint Hindu family business
(c) Partnership
(d) Cooperative societies

SECTION B 2

7 Rani is a friend of Seema who is a partner in a software firm, Simplex

Solutions. On Seema’s request, Rani accompanies her to a business meeting
with Mohan Softwares and actively participates in the negotiation process
for a business deal and gives the impression that she is also a partner in
Simplex Solutions. Three months credit is extended to Simplex Solutions on
the basis of these negotiations.

On the basis of the given information about Rani, answer the following
questions:

(a) Will Rani be liable to the lender if Seema does not make payment to him
by the due date?
(b) Specify and explain Rani’s role in the aforesaid situation.

8 In which form of organization is a trade agreement made by one owner 2

binding on the others? Give reasons to support your answer.

9 Ajay is the sole owner of a shoe manufacturing factory. He took loan of ` 20 2

lakhs from Ace finance company for the expansion of his business. Because
of continuous losses however, he was not able to repay the loan on time.
Assets of the business were not enough for repaying liabilities in full. As a
result, the finance company asked him to repay their loan. He refused to do
so on the ground that the loan was taken by his business and not by him for
his personal use. The company filed a case against him. The court gave
 decision in favour of the company on the ground that Ajay was operating as
the sole proprietor and a sole proprietor did not have a separate entity distinct
of his own. The court further stated that Ajay had unlimited liability and held
him liable to repay the loan even by selling his personal property, if need be.

Identify and explain two features of the form of business organisation

formed by Ajay by quoting the lines from the case.

10 Gupta Brothers inherited some ancestral property. They decided to form a 2

Hindu Undivided Family (HUF) consisting of four male members and
invested the ancestral property into the business. The family is headed by
Shyam Sunder Gupta. The business took a loan of ` 10 lakh from Syndicate
Bank for a term of three years. Due to poor financial position of the business,
the family members were unable to repay the loan. The bank filed a suit for
the recovery of loan. Shyam Sunder Gupta pleaded the court that as the
entire loan was taken for the purpose of business, all members of the
business were liable for the repayment of the loan. The court gave a decision
and stated that all the members except Shyam Sunder Gupta, are liable for
repayment of the loan only to the extent of their share of co-parcenary
property of business. However, Shyam Sunder Gupta had to pay the balance
amount from his personal property

On the basis of the given information, answer the following questions:

(a) Why did the Court hold Shyam Sunder Gupta responsible for paying the
business liabilities out of his personal assets?
(b) Explain any two advantages of a Hindu Undivided Family Business
(HUF).

11 Briefly explain the following terms in brief. 2

(a) Perpetual succession
(b) Common seal
12 SECTION C 4

A group of people in a locality of Delhi used to go for a walk in the morning.

After the walk , they would often sit together and discuss the subjects like
Politics, Demonetisation , Electins , Market prices of different goods etc.
There were about fifty persons in this group . One day , instead of other
subjects , their focus of discussion was “ Market Prices of Different goods”.
During the discussion , the emphasis laid on the point was that goods
become very costly by the time they reach the consumers after getting
transported from the producers. Consequently , everyone’s budget is getting
disturbed. To get rid of this problem some people suggested that they should
join together to form a society. The society would sell the goods to all the
 members as per their requirements after buying them in a large quantity
directly from the producers. This suggestion was appreciated by all of them.
They all became members of the society and encouraged other people also to
become its members . In no time, 100 members assembled and the society
was formed. The idea of forming the society immediately proved to be
successful. Now their budget became balanced. A special characteristics of
this society was that apart from its members it also sold goods to the other
people of the society at cheaper rates. All of them were very happy with the
formation of the society.

a) Identify the type of the society formed by them.

b) Explain any other three types of society.

13 Kiran is a sole proprietor. Over the past decade, her business has grown from 5
operating a neighbourhood corner shop selling accessories such as artificial
jewellery, bags, hair clips and nail art to a retail chain with three branches in
the city. Although she looks after the varied functions in all the branches, she
is wondering whether she should form a company to better manage the
business. She also has plans to open branches countrywide.

(a) Explain two benefits of remaining a sole proprietor

(b) Explain two benefits of converting to a joint stock company
(c) What role will her decision to go nationwide play in her choice of form of
the organization?

14 Mahesh Chandra Sharma operates a business of iron and steel for the last 25 5
years. His family is joint and has a lot of ancestral property. All the twenty
family members are a part of this business. He is the eldest male member in
the family so he heads the business. He is liable to all the creditors of the
business as he is the decision maker. Sharma’s grandson was born a few
days ago and he is also a member of the business

On the basis of the given information about Mahesh Chandra Sharma,

answer the following questions:

(a) Which form of business is being undertaken by Mahesh Chandra

Sharma?
(b) Identify the features of the form of business identified in part (a). Explain
them.