Assignment – Chapter 2(Forms of busisness Organisation)

Question-1

Question-2

Question-3

Question-4

Question-5

Question-6
Question-7

Question-8

Question-9
Farmers of Fatehpur in UP are facing problems in marketing their output at the end of every harvesting season. The
problems arise due to their inability to access main markets for selling their produce and exploitation by the
intermediaries. Hence, they decide to form a cooperative society, for efficient storage, transportation, selling and
marketing of the output. Explain how the formation of such cooperative society will help farmers?

Question-10
Two years ago Gopal started manufacturing low fat, sugar free ice-cream on a small-scale basis in his home town,
Vishakhapatnam. After some time, his ice-cream became popular among health-conscious young customers and old
persons specially those having diabetes or some heart ailment. Because of the popularity of the ice-cream the
demand has increased manifolds. Gopal is unable to meet the same, because of his limited managerial ability and
limited capital. Gopal also felt that whenever he fell sick his business was temporarily closed. To overcome this
problem, he decided to admit in the business, his 16 year old friend Mohan who has recently completed his MBA
and is ready to invest money for the expansion of the business. Mohan advised Gopal to get their firm registered.

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

(a) Enlist three limitations indicated in the above case from which Gopal’s business suffered.

(b) Why did Mohan advise Gopal to get the firm registered?

Question-11
Gupta Brothers inherited some ancestral property. They decided to form a 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 three features of a Hindu Undivided Family Business (HUF) not discussed above.

Question-12
Mahika wanted to pitch in to reduce the financial crisis prevailing in her house and thought of working as a cook. She
started working in three different households, one Punjabi, one Gujrati and one South Indian family. She soon
realized that all the three households had different cuisine. It was indeed a challenge for her to learn the techniques
of the cuisine. All the families greatly appreciated the timeframe within which she had mastered the local cuisine.
After working for them for a year, she decided to open a small eating joint of her own along with two of her friends
by the name ‘Fusion’. They decided to share profits and losses equally and that each of them will be liable for acts
performed by the other two. Soon the eatery became a hot spot because of the fusion platter which was being
offered.

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

(a) Identify the kind of business organisation which was set up by Mahika and her friends.

(b) Quoting the lines from the paragraph, state the features of this form of business organisation.

Question-13
Vaibhav after completing his XII exam from his village school joined the course of electrician at a centre in a town
near his village. On completion of this course, he tried for a government job but could not get the same. He,
therefore decided to help as a worker to a renowned electrician in that area. After working with him for two years
he decided to start his own electrician shop in the village. For this he purchased equipment for Rs. 10,000 and hired
a shop at a monthly rent of 2000. He decided to manage the shop by himself. Identify the form of business
organisation started by Vaibhav.

Question-14
Mr. Savinder is in the business of school books for the past 20 years. To help his friend, Mr. Gaurav, a beginner he
projected himself as a partner in front of Mr. Ashu, a wholesaler of school and college books. Mr. Ashu gave Mr.
Gaurav the stock without asking for payment and gave him credit limit of one month. Classify Mr. Savinder as a
partner.

Question-15
Nikhil, in order to promote local craftsmen of Gujarat, formed an organization where in the persons voluntarily
associate themselves to promote common economic interest. The basic purpose of this organization was to help
these craftsmen to find market for their products.

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

(a) Identify the form of business organization set up by Nikhil.

(b) Quoting the lines from the above para, enlist any two features of this form of organization

Question-16
After doing her [Link], Komal went back to her village in Himachal Pradesh. She wanted to contribute for the
development of women of her village, so she formed an organisation, the membership of which was open for all the
women villagers on a voluntary basis by paying Rs.500 only, which will be treated as their capital. Komal knew that
the land of her village was suitable for the farming of medicinal plants. So she motivated the members of her
organisation for growing such plants in their fields under the guidance and help of the local agricultural department.
It was also decided that the organisation will purchase the produce of each member and sell the same to drug
manufacturing companies at a very good price which was not possible for the members individually. The main
objective of the organisation is to render services to its members rather than to earn profit. A computer training
centre for young boys and girls of the village was started under the guidance of Komal from the surplus of the
profits.

(i) Identify the kind of organisation that was formed by Komal.

Question-17
Ajay is the sole owner of a Shoe manufacturing factory. He took a loan of Rs. 20,00,000 from Ace finance Company
for the expansion of his business. Because of continuous losses, he was not able to pay the loan on time. Assets of
business were not enough to pay the liabilities in full. As a result, the finance company asked him to repay the loan.
He refused to do so on the ground that the loan was taken by his business and not 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.

Question-18
Harshit owns an ancestral house in Shimla. On the advice of his friend he converted it into a lodge with renovation.
The revenue from the lodge helps to supplement his income substantially. On his death the lodge is inherited by his
three sons, Luv, Akash and Puneesh (in the order of their age), who carry on with the business under the form of JHF.

(i) Name the law which governs JHF business.

Question-19
The business assets of an organization amount to Rs. 50,000 but the debts that remain unpaid are Rs. 80,000. What
course of action can the creditors take if:

(i) The organization is a sole proprietorship firm.

Question-20
The basic principle ‘ Each for all and all for each’ is followed by which of these business organisations:
(a) Sole Proprietorship
(b) Cooperative Society
(c) Partnership
(d) Hindu Undivided Family

Question-21
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

Assertion (A) : Sole proprietor bears unlimited liability.

Question-22
The cooperative society can be started with a minimum of ________ members.
(a) Three (b) Four (c) Ten (d) Nine

Question-23
Read the following statements carefully:
Statement 1: Partnership at will is a partnership for an indefinite period.
Statement 2: It comes to an end only when venture gets over.
In context of the given statements, choose correct alternative from the following:
(a) Both the statements are true
(b) Both the statements are false
(c) Statement 1 is true and Statement 2 is false
(d) Statement 2 is true and Statement 1 is false

Question-24
A partner whose association is unknown to the general public is known as:

(a) Secret partner (b) Minor partner (c) Nominal partner (d) Sleeping partner

Question-25
Read the following statements - Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true but Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true.

Assertion (A) : JHF business is managed and controlled by Karta.