1. A member of a cooperative society who contributes 25% of the capital:
(a) Can cast 25% of the votes (b) Cannot vote
(c) Can vote sometimes (d) Can cast only one vote
Ans: (d) Can cast only one vote
2. The most suitable form of business organization very common in areas of personalized services on a small scale is:
(a) Sole Proprietorship (b) Partnership
(c) Co-operative society (d) Joint Stock Company
Ans: (b) Can cast only one vote
3. A minor in a partnership firm:
(a) Has an unlimited liability (b) Cannot be asked to bear losses
(c) Can enter into a valid contract (d) Cannot become a partner
Ans: (b) Cannot be asked to bear losses
4. The form of business organization where membership is decided by birth is:
(a) Sole Proprietorship (b) Partnership
(c) Joint Hindu family (d) Joint Stock Company
Ans: (c) Joint Hindu family
5. In case of death or insolvency of a shareholder of a company:
(a) The company gets automatically dissolved
(b) New shareholders may be added
(c) Does not affect the company’s existence
(d) Its capital gets reduced
Ans: (c) Does not affect the company’s existence
6. A private limited company:
(a) Is required to keep an index of members
(b) Must have at least seven members.
(c) Is subject to certain restrictions with regard to loans granted to directors.
(d) Does not invite public to subscribe to its share capital.
Ans: (d) Does not invite public to subscribe to its share capital.
7. Sahil accompanies his friend Anil, who is a partner in a firm to a business meeting with another firm. Sahil actively participates in the negotiations and gives the impression that he is a partner in the firm of Anil. Sahil will be called:
(a) Dormant Partner (b) Partner by holding out
(c) Secret Partner (d) Partner by estoppel
Ans: (d) Partner by estoppel
8. The Board of Directors of a Public Company is elected by:
(b) Government Bodies (b) General Public
(c) Shareholders (d) Trade Unions
Ans: (c) Shareholders
9. ‘If a business fails, the creditors can recover their dues not merely from the business assets, but also from the personal assets of the proprietor.’ This statement signifies which limitation of Sole Proprietorship:
(a) Limited Managerial ability (b) Unlimited Liability
(c) Limited Resources (d) Limited life of Business Concern
Ans: (b) Unlimited Liability
10. Which of the following is NOT a consequence of non-registration of a partnership firm:
(a) A partner of an unregistered firm cannot file a suit against the firm or other partners.
(b) The firm cannot file a suit against third parties
(c) The firm cannot file a case against the partners.
(d) The firm cannot continue business legally.
Ans: (d) The firm cannot continue business legally.
11. The ‘Karta’ in Hindu Undivided Family has:
(a) Joint liability with other coparceners
(b) Unlimited Liability
(c) Limited Liability
(d) No liability for the family’s debts
Ans: (b) Unlimited Liability
12. Which of the following principle is followed in a cooperative society?
(a) No vote (b) One share one vote
(c) One person one vote (d) Multiple votes
Ans: (c) One person one vote
13. ‘A company will remain even if all its members die.” Which feature of the company does this statement signify:
(a) Perpetual Existence (b) Professional Management
(c) Limited Liability (d) Transfer of Interest
Ans: (a) Perpetual Existence
14. Qualification shares are subscribed by:
(a) Directors of the company (b) Auditors of the company
(c) Bankers of the company (d) Employees of the company
Ans: (a) Directors of the company
15. Which of the following is NOT a basic factor to be considered while starting a business:
(a) Plant Layout (b) Tax Planning
(c) Physical Facilities (d) Foreign policy of the country
Ans: (d) Foreign policy of the country
16. Which of the following statements is correct about sole proprietorship?
(a) A sole proprietor has unlimited resources.
(b) A sole proprietorship firm has unlimited life.
(c) A sole proprietorship has unlimited managerial ability.
(d) A sole proprietorship has unlimited liability.
Ans: (d) A sole proprietorship has unlimited liability.
17. Which of the following statements is correct about Hindu Undivided Family (HUF) Business?
(a) Registration of Hindu Undivided Family business is compulsory.
(b) The Karta has Limited Liability.
(c) Male and female become coparcener in HUF
(d) HUF comes into being out of law of contract.
Ans: (a) Registration of Hindu Undivided Family business is compulsory.
18. A partner who invests in a partnership business but does not take part is known as:
(a) Active Partner (b) Dormant Partner
(c) Secret Partner (d) Nominal Partner
Ans: (b Dormant Partner
19. Gujarat Cooperative Milk Marketing Federation manages which famous brand:
(a) Mother Dairy (b) Gopaljee
(c) DMS (d) Amul
Ans: (d) Amul
20. ‘A good company can afford to employ people who are specialists in their area’. Which merit of company form of business is highlighted by this statement?
(a) Professional Management (b) Scope for expansion
(c) Perpetual existence (d) Transfer of Interest
Ans: (a) Professional Management
21. Which of the following stages do not apply to formation of a Private Limited Company?
(a) Promotion (b) Incorporation
(c) Commencement of Business (d) Capital Subscription
Ans: (c) Commencement of Business
22. In a case of recovery of debts against a sole proprietor filed by the creditor, the court rejected the sole proprietor’s plea that firm was responsible for paying off the business debts. This is due to which feature of Sole Proprietorship:
(a) Unlimited Liability (b) No separate Entity
(c) Both (a) and (b) (d) Limited resources
Ans: (a) Unlimited Liability
23. What is true about Limited Liability partnership?
(a) It combines the advantages of both a company and partnership.
(b) Partners would not be responsible for all actions of other partners.
(c) The liability of all partners is limited to their capital contribution.
(d) The liability of a firm is limited to the capital of its partners.
Ans: (a) It combines the advantages of both a company and partnership.
24. Which of the following statements is true about Hindu Undivided Family?
(a) All the members have unlimited liability.
(b) There are two systems, which govern the HUF.
(c) The business ends after death of Karta.
(d) It is created by agreement among the members.
Ans: (b) There are two systems, which govern the HUF.
25. Match the type of cooperative society Column I with its function Column II:
Column Column II
A. Consumers’ Co-op. Society. (i) Provide easy loans to members.
B. Marketing Co-op. Society. (ii) Purchases goods in bulk and sells to
its members and others.
C. Credit Co-op. Society. (iii) Helps small producers to sell their
D. Farmers Co-op. Society. (iv) Provides quality seeds etc. to its
members at Reasonable cost.
Select from the following options:
(a) A-(iii); B-(i); C-(iv); D-(ii) (b) A-(ii); B-(iii); C-(i); D-(iv)
(c) A-(i); B-(ii); C-(iii); D-(iv) (d) A-(iv); B-(ii); C-(i); D-(iii)
Ans: (b) A-(ii); B-(iii); C-(i); D-(iv)
26. Which one is the correct distinction between a public and a private company?
(a) Minimum number of members in a public company is 2 while in a private company it is 7.
(b) A pubic company can invite public to subscribe for shares while a private company cannot.
(c) The restriction in a public company to transfer its shares where as it is not so in a private company.
(d) Public company is owned by Govt., whereas private company by private individuals.
Ans: (b) A pubic company can invite public to subscribe for shares while a private company cannot.
27. Provision of residential accommodation to the members at reasonable rates is the objective of
(a) producer’s cooperative society (b) consumer’s cooperative society
(c) housing cooperative society (d) credit cooperative society
Ans: (c) housing cooperative society
28. Joint Stock Company has to follow a certain specified legal procedure for
its formation. Arrange the following steps of formation in a proper order.
I. Capital subscription stages II. Promotion
III. Commencement of business IV. Incorporation Select from the following options:
(a) III, II, I, IV (b) II, IV, III, I
(c) IV, II, III, I (d) II, IV, I, III
Ans: (d) II, IV, I, III
29. The partner who neither invests money nor has a share in the profit and loss and does not participate in the administration of the firm is known as ........ .
(a) Active partner (b) Partner by estoppel
(c) Sleeping partner (d) Secret partner
Ans: (b) Partner by estoppel
30. Which of the following statements is true about a Private Company:
(a) The minimum paid up capital of a private company is ₹ 5 Lacs
(b) A private company must have a minimum of 3 directors
(c) It can start business after receiving certificate of incorporation
(d) It is compulsory for a private company to maintain index of members
Ans: (c) It can start business after receiving certificate of incorporation
31. ‘One member one vote’ is the principle of
(a) sole proprietorship (b) private limited company
(c) cooperative society (d) partnership firm
Ans: (c) cooperative society
32. ‘It is a democratic large sized organisation having numerous shareholders; the owners having minimum influence in terms of controlling or running the business.” Which form of organisation and the corresponding limitation is highlighted here?
(a) Joint Stock Company – Oligarchic Management
(b) Cooperative Society – Government Control
(c) Cooperative Society – Inefficiency in Management
(d) Joint Stock Company – Impersonal Work Environment
Ans: (a) Joint Stock Company – Oligarchic Management
33. Transfer of ownership is easy in case of whereas it is difficult in case of ............... .
(a) Sole Proprietorship, Joint Stock Company
(b) Sole Proprietorship, Partnership
(c) Joint Stock Company, Partnership
(d) Partnership, Joint Stock Company
Ans: (c) Joint Stock Company, Partnership
34. Which organization can help in protection of traders from exploitation by middlemen and improve their competitive position?
(b) Chambers of Commerce and Industry
(c) Marketing Cooperative Societies
(d) Charitable Organizations
Ans: (c) Marketing Cooperative Societies
35. The concept of ‘Separate Legal Existence’ applies to:
(i) Sole proprietorship (ii) Partnership
(iii) Joint stock company (iv) Cooperative society Choose the correct option:
(a) (iii) and (iv) (b) (i) and (iii)
(c) (ii) and (iii) (d) (ii) and (iv)
Ans: (a) (iii) and (iv)
36. Which one of the following carries the feature of limited liability?
(a) Sole Proprietorship, Cooperative society and Company
(b) Sole Proprietorship, Cooperative Society and Partnership,
(c) Limited Liability Partnership, Cooperative Society and HUF
(d) Limited Liability Partnership, Cooperative Society, Company and One Person Company
Ans: (d) Limited Liability Partnership, Cooperative Society, Company and One Person Company
37. Vashisht is the promoter of a company. He was in the process of making an application to a stock exchange for listing the securities. The allotment will become void if the company does not receive the permission within the stipulated time frame of
(a) Two weeks from the date of closure of subscription
(b) Ten months from the date of closure of subscription
(c) Ten weeks from the date of closure of subscription
(d) None of the above
Ans: (a) Two weeks from the date of closure of subscription
38. Does a cooperative society have perpetual succession?
(a) No, it is a characteristic of Joint Stock Company only
(b) Yes, as cooperative society has separate legal existence
(c) Yes, as cooperative society has to be registered
(d) No, as cooperative society is less likely to get success in long run
Ans: (a) No, it is a characteristic of Joint Stock Company only
39. In which of the business organizations, the liability of members/owners is generally limited?
(a) Sole Proprietorship, Partnership, OPC and Cooperative Society
(b) Sole Proprietorship, Cooperative Society, Joint Stock Company and OPC
(c) OPC, Joint Stock Company and Cooperative Society
(d) Sole Proprietorship and Partnership
Ans: (c) OPC, Joint Stock Company and Cooperative Society
40. Chandramukhi purchased 250 shares of Great Company Limited, the face value of shares being ₹ 100. The company has called ₹ 80 per share till date, and all such amounts as called by company, have been paid by Chandramukhi. What is the liability of Chandramukhi now?
(a) Unlimited Liability (b) ₹ 5,000
(c) ₹ 25,000 (d) ₹ 20,000
Ans: (b) ₹ 5,000
41. The minimum and maximum number of members to form a Public company is:
(a) Minimum – 1, Maximum – No limit
(b) Minimum – 2, Maximum – 200
(c) Minimum – 7, Maximum – No limit
(d) Minimum – 1, Maximum – 50
Ans: (c) Minimum – 7, Maximum – No limit
42. The registration of the partnership firm is optional, still most partnership firms willingly go through the legal formalities and get their business registered because:
(a) Registered partnerships have perpetual succession.
(b) Registration is done free of cost.
(c) Government grants subsidies and tax reliefs to registered partnership firms.
(d) Partners can sue each other and third parties only if firm is registered.
Ans: (d) Partners can sue each other and third parties only if firm is registered.
43. Which Certificate authorized by Registrar of Companies certifies the birth of a “Private” Company?
(a) Certificate of Commencement of business
(b) Certificate of Promotion
(c) Certificate of Incorporation
(d) None of the above
Ans: (c) Certificate of Incorporation
44. AMUL is an example of:
(a) Farmers’ Cooperative Society (b) Credit Cooperative Society
(c) Joint Stock Company (d) Public Private Partnership
Ans: (a) Farmers’ Cooperative Society
45. After working for a year as cook, few friends decided to open a restaurant: “Humari Rasoi”. They decided to share the profits equally and each one of them will be liable for the acts done by other. Identify the type of business organisation referred above:
(a) Joint Hindu Family (b) Private Company
(c) Partnership firm (d) Cooperative Society
Ans: (c) Partnership firm
46. The correct difference between Preference Shares and Debentures is:
(a) Preference share holders get priority over Debenture holders in terms of return
(b) Preference shareholders get voting rights and Debenture holders do not get such rights
(c) The rate of return on debentures is fixed, but rate of return on preference shares is fluctuating.
(d) Preference shareholders are owned funds and Debentures are borrowed funds.
Ans: (d) Preference shareholders are owned funds and Debentures are borrowed funds.
47. There have been many cases of cheating of depositors by some finance companies. It means that:
(a) Depositors and finance companies are engaged in unethical contracts.
(b) Depositors are engaged in unethical practices.
(c) Some finance companies are engaged in unethical practices.
(d) All of the above.
Ans: (c) Some finance companies are engaged in unethical practices.
48. ‘The documents that serve as constitution of the company’ and ‘the document that serves as doctrine of indoor management’ are as follows:
(a) Prospectus and Articles of Association respectively
(b) Memorandum and Articles of Association respectively
(c) Memorandum and Prospectus respectively
(d) None of the above.
Ans: (b) Memorandum and Articles of Association respectively
49. ‘Members may come, Member may go, but Company goes on forever.’ This means the following:
(a) The employees of a company have to keep moving from one place to another in order to look for business opportunities.
(b) Employees may join or leave a company but company will continue its operations.
(c) A company has perpetual succession.
(d) A company, once formed, cannot be dissolved even if the members come and go in the court.
Ans: (c) A company has perpetual succession.
50. ‘Oligarchic Management’ is a limitation of following form of business organization:
(a) Sole Proprietorship (b) Joint Hindu Family Business
(c) Cooperative Society (d) Joint Stock Company
Ans: (d) Joint Stock Company
51. The head of Joint Hindu Family Business is called as:
(a) Proprietor (b) King
(c) Karta (d) Shahenshah
Ans: (c) Karta
52. Himanshi is running a business in sole-proprietorship. Due to loss in business she decided to dissolve her business. On the day of dissolution, the assets are worth ₹ 10 lakhs and liabilities (all creditors) are worth ₹ 20 lakhs. Himanshi has her personal property of ₹ 12,00,000. How much do you think the creditors will get at the time of winding up of business?
(a) ₹ 20 Lakhs (b) ₹ 10 lakhs
(c) ₹ 22 Lakhs (d) Nil
Ans: (a) ₹ 20 Lakhs
53. Signatories to Memorandum are:
(a) Promoters of the company (b) Employees of the company
(c) Shareholders of the company (d) First directors of the company
Ans: (d) First directors of the company
54. Who is not authorised to sign on statutory declaration to be submitted to RoC, stating that all requirements pertaining to registration have been complied with?
(a) Registrar of Companies
(b) Advocate of High Court/Supreme Court
(c) Chartered Accountant/Company Secretary
(d) Signatories to Memorandum of Association
Ans: (b) Advocate of High Court/Supreme Court
55. Which of the following statements are true about ‘Certificate of Incorporation’?
(i) It is a proof of birth of a company
(ii) The date given on certificate of incorporation is the date from which the company can begin the incorporation process.
(iii) A company can enter into valid contracts on or after the date of incorporation as mentioned in the certificate.
(iv) Certificate of Incorporation is not mandatory for establishing a company.
Choose the correct answer:
(a) (i) and (ii) (b) (ii) and (iii)
(c) (iii) and (iv) (d) (i) and (iii)
Ans: (d) (i) and (iii)
56. Sweet, Bitter and Sour are friends. They completed their MBA together from a reputed institute. They recently completed a survey in Delhi to find that number of working population is increasing and they face problems in finding helpers such as House Maids, Creches, Plumbers, Electricians, etc. So, they decide to launch such business that provides these services at the click of a mouse. They together studied in detail about technical, financial and economic feasibility of this business. Once they were convinced about the viability of the idea, they got the name of business approved from RoC, appointed a few professionals and prepared necessary documents.
Which step of formation of company is being highlighted here?
(a) Incorporation (b) Promotion
(c) Capital subscription (d) All of the above
Ans: (b) Promotion
57. Which of the following is not a factor to be considered while deciding a suitable form of organisation?
(a) Capital investment and Liability
(b) Business Continuity
(c) Stock market situation
(d) Degree of control
Ans: (d) Degree of control
58. Which of the following information is not included in the document specifying terms and conditions of form of Business Organisation which is characterised by Mutual Agency and Profit sharing:
(i) Name of the business firm (ii) Nature of business
(iii) Names and addresses of Partners
(iv) Bank Account Balances of Partners
(v) Hobbies of Partners
(vi) Methods of resolving disputes among Partners
(vii) Methods of resolving disputes among Partners
(viii) and their spouses Choose the correct answer:
(a) (vii) only (b) (iv) and (v) only
(c) (iv), (v) and (vii) only (d) (iv), (v), (vi) and (vii) only
Ans: (d) (iv), (v), (vi) and (vii) only
59. Sumit Singh had five other friends who also did farming like him .They all decided to consolidate their holdings in order to have more produce and sell it at a reasonable and better price. Help them in forming an appropriate cooperative society.
(a) Producers cooperative society
(b) Marketing cooperative society
(c) Credit cooperative society
(d) Consumer cooperative society
Ans: (a) Producers cooperative society
60. The following table comprises of different points of Merits and Limitations of one of the form of Business Organisation. Identify the form of Business Organisation:
S. No. Merits S. No. Limitations
(i) Limited liability (i) Oligarchic Management
(ii) Scope for expansion (ii) Conflict of interests
(iii) Professional management (iii) Impersonal work environment
(a) Joint Stock Company (b) Sole Proprietorship
(c) Partnership (d) Cooperative Society
Ans: (a) Joint Stock Company
61. Fill in the blanks in the following paragraph with suitable types of Partner.
(i) A partner is one who allows the use of his/her name by the firm, but does not contribute capital.
(ii) A partner does not take active part in management of the company, but has unlimited liability, shares in profit and loss and contributes capital as well.
A partner who makes capital contribution, takes active part in management, shares profit/loss and bears unlimited liability is called
(iii) partner. Choose the correct answer:
(a) (i) Nominal, (ii) Dormant, (iii) Active
(b) (i) Dormant, (ii) Minor, (iii) Nominal
(c) (i) Active, (ii) Secret, (iii) Special
(d) (i) Nominal, (ii) Sleeping, (iii) Dormant
Ans: (a) (i) Nominal, (ii) Dormant, (iii) Active