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NIOS Class 10 Business Studies Chapter 3 Sole Proprietorship, Partnership & Hindu Undivided Family
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Sole Proprietorship, Partnership & Hindu Undivided Family
Chapter: 3
NIOS TEXTBOOK QUESTIONS ANSWERS
Intext Questions 3.1
Fill in the blanks with suitable words in the following statements relating to sole proprietorship business:
(i) The sole proprietor may not be able to raise adequate __________ for the expansion of business.
Ans:- Capital.
(ii) The life of the business depends on the life of the ______________.
Ans:- Proprietor/Owner.
(iii) Due to limited financial resources and limitation of the expertise of the owner, the business may lack professional _____________.
Ans:- Management.
(iv) The business is suitable for simple business where ________ skill is required.
Ans:- Manual.
(v) Sole proprietorship best caters the needs of customers where the market for the product is __________ and __________________.
Ans:- Small and Local.
Intext Questions 3.2
Fill in the blanks with appropriate words given in brackets.
(i) It is _______ (not necessary, necessary) to get the partnership firm registered.
Ans:- Not necessary.
(ii) The partnership firm is a ________________(flexible, rigid) form of business organisation.
Ans:- Flexible.
(iii) In partnership, business risk is ______ (shared, not shared) by all the partners.
Ans:- Shared.
(iv) Partnership is a/an ________ (group, individual) effort.
Ans:- Group.
(v) LLP act was framed in the year________. (2008, 2010)
Ans:- 2008.
Intext Questions 3.3
I. Fill in the blanks by choosing a suitable word(s):
(i) HUF stands for ______________
Ans:- Hindu Undivided Family.
(ii) ___________ successive generations can simultaneously inherit the ancestral property.
Ans:- Three.
(iii) Members of Joint Hindu Undivided family are known as __________
Ans:- Coparcener.
(iv) Oldest member of the Joint Hindu Undivided family is known as __________
Ans:- Karta.
(v) _________ has unlimited liability.
Ans:- Karta.
II.
| Multiple Choice Questions |
(i) Himanshi is running a business in sole-proprietorship. Due to loss in business she decided to wind up her business. On the day of winding up the assets are worth Rs. 5 lakhs and liabilities (all creditors) are worth Rs. 10 lakhs. Himanshi has her personal property of Rs. 600000. How much do you think the creditors will get at the time of winding up of business?
(a) Rs. 5 Lakhs.
(b) Rs. 10 lakhs.
(c) Rs. 7 lakhs.
(d) Rs. 11 lakhs.
Ans:- (b) Rs. 10 lakhs.
(ii) Limitations of sole Proprietorship do not include.
(a) Limited Capital.
(b) Lack of Continuity.
(c) Unlimited size.
(d) Lack of Managerial Expertise.
Ans:- (c) Unlimited size.
(iii) Indian Partnership Firms are governed by Indian Partnership act
(a) 1932
(b) 1956
(c) 2008
(d) 1912
Ans:- (a) 1932.
(iv) Characteristics of JHF do not include
(a) Membership by birth.
(b) Unlimited Liability of Karta.
(c) Unaffected by death.
(d) Youngest Member of the family is Karta.
Ans:- (d) Youngest Member of the family is Karta.
(v) Members of Joint Hindu Family are known as:
(a) Partners.
(b) Members.
(c) Coparceners.
(d) Owner.
Ans:- (c) Coparceners.
| Terminal Exercise |
1. Define ‘Sole proprietorship’.
Ans:- ‘Sole’ means single and ‘proprietorship’ means ownership. It means only one person or an individual is the owner of the business. A sole proprietor pools and organises the resources in a systematic way and controls the activities with the sole objective of earning profit.
2. What is meant by Sole Proprietorship form of business organisation ?
Ans:- The business organisation in which a single person owns, manages and controls all the activities of the business is known as the sole proprietorship form of business organisation. The individual who owns and runs the sole proprietorship business is called a ‘sole proprietor’ or ‘sole trader’.
3. Can a sole proprietorship business exist forever? Justify your answer.
Ans:- A sole proprietorship business can theoretically exist indefinitely as long as the owner is alive and willing to continue operating it. A sole proprietorship is a non-registered, unincorporated business run solely by one individual proprietor with no distinction between the business and the owner. The owner of a sole proprietorship is entitled to all profits but is also responsible for the business’s debts, losses, and liabilities.
4. Describe how sole proprietorship facilitates employment generation ?
Ans:- Sole proprietorship facilitates employment generation in several ways:
(i) Flexibility: The flexibility to run the business the way you want, without the need to consult with partners or a board of directors. This allows them to adapt quickly to changing business needs and market demands, potentially leading to more employment opportunities.
(ii) Low Barriers Entry: barriers to entry is an economics and business term describing factors that can prevent or impede newcomers into a market or industry sector, and so limit competition.
(iii) Local Focus: Many sole proprietorships operate on a local or small-scale level, serving niche markets or specific communities.
(iv) Personalized Employment Practices: Sole proprietors have the flexibility to tailor their employment practices to suit their business needs and personal values. They can create unique job roles, offer specialised training, and provide individualised attention to employees, which can enhance job satisfaction and retention.
(v) Responsive to Market Changes: To combat feeling overwhelmed, to make business more organised. Note down and define your daily tasks and goals. Once it identifies the tasks, list them in order of priority and cluster-related tasks.
(vi) Opportunities for Growth: Sole proprietorships are automatically tied to you personally, and this gives you complete control over the company and its trajectory. There is no need to make decisions based on the wants of shareholders or the requirements of legal partners. By starting small and gradually expanding their operations, sole proprietors can contribute to sustained employment growth over time.
Overall, sole proprietorships play a vital role in employment generation by providing individuals with the opportunity to pursue entrepreneurship, creating jobs tailored to local needs, and fostering a dynamic and responsive business environment.
5. State the maximum number of partners in case of banking and other business?
Ans:- The new Companies Act 2013 has prescribed the maximum number of members in case of a partnership firm should not be more than 100 in case of partnerships. As per the previous Companies Act 1956, the maximum limit in case of partnerships was 10 and 20 for banking business and other businesses respectively.
6. Define Partnership?
Ans:- Basically a relation between two or more persons who join hands to form a business organisation with the objective of earning profit it is known as partnership.
7. State any four features of a partnership form of business organisation?
Ans:- The various features of the form of business organisation are as follows:
(i) Two or more Members: At least two members are required to start a partnership business. But the number of members should not exceed 10 in case of banking business and 20 in case of other business.
(ii) Agreement: Whenever you think of joining hands with others to start a partnership business, first of all, there must be an agreement between all of you.
This agreement contains-
(a) The amount of capital contributed by each partner.
(b) Profit or loss sharing ratio.
(c) Salary or commission payable to the partners, if any.
(d) Duration of business, if any.
(e) Name and address of the partners and the firm.
(f) Duties and powers of each partner.
(g) Nature and place of business. and
(iii) Lawful Business: The partners should always join hands to carry on any kind of lawful business. To indulge in smuggling, black marketing etc, can not be called partnership business in the eyes of the law.
(iv) Sharing of Profit: The main objective of every partnership firm is sharing of profits of the business amongst the partners in the agreed proportion. In the absence of any agreement for the profit sharing, it should be shared equally among the partners.
8. Define Joint Hindu Family?
Ans:- The Joint Hindu family business refers to a business which is owned by the members of a joint Hindu family. It is also known as Hindu Undivided Family Business. This form of organisation exists under Hindu law and is governed by the law of succession. The joint Hindu family form is a form of business organisation in which the family possesses some inherited property.
9. State characteristics of Joint Hindu Family?
Ans:- The essential characteristics of Joint Hindu Family are discussed below:
(i) Membership by birth: Membership of a Joint Hindu family business is automatic by birth of a male child. It is not created by an agreement among family members.
(ii) Management: The management vests in the Karta, the eldest member of the family. However, the Karta may associate other members of the HUF to assist him.
(iii) Liability: The Karta has unlimited liability, i.e. even his personal assets can be used for payment of business dues. Every other coparcener has a limited liability up to his share in the HUF property.
(iv) No Maximum limit: There is no restriction on the number of coparceners of the HUF business. However, the membership is restricted to three successive generations.
(v) Minor members: A male child at the time of birth becomes a coparcener. Thus, an HUF does not restrict membership to minors.
(vi) Unaffected by death: The HUF business continues even after the death of a coparcener including the Karta. The next senior most surviving male member of the HUF becomes the Karta. However, it may come to an end if all the members notify that they are not members of the Joint Hindu Family.
10. Write down the silent features of LLP.
Ans:- The salient features of the LLP Act 2008 inter alia are as follows:
(i) 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 Register, form a Limited Liability Partnership. The LLP will have perpetual succession.
(ii) 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 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. In the absence of any such agreement, the mutual rights and duties shall be governed by the provisions of the LLP Act.
(iii) The LLP will be a separate legal entity, liable to the full extent of its assets, with the liability of the partners being limited to their agreed contribution in the LLP which may be of tangible or intangible nature or both tangible and intangible in nature. No partner would be liable on account of the independent or unauthorised actions of other partners of their misconduct. The liabilities of the LLP and partners who are found to have acted with intent to defraud creditors or for any fraudulent purpose shall be unlimited for all or any of the debts or other liabilities of the LLP.
(iv) 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.
