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NIOS Class 10 Business Studies Chapter 4 Cooperative Societies and Joint Stock Companies
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Cooperative Societies and Joint Stock Companies
Chapter: 4
NIOS TEXTBOOK QUESTIONS ANSWERS
Intext Questions 4.1
Fill in the blanks with suitable word(s) in the following statements:
(i) A co-operative society is a _______ association of individuals who come together to achieve common _______ objectives.
Ans:- Voluntary and Economic.
(ii) The motive of cooperative society is to provide ________ to the members.
Ans:- Services.
(iii) A cooperative society has separate ________ from the members.
Ans:- Legal entity.
(iv) A co-operative society works on the principle of self-help as well as _____.
Ans:- Mutual help.
(v) Consumers’ co-operative societies help to eliminate _______ in the process of distribution of goods.
Ans:- Middlemen.
(vi) Apna Bazar and Kendriya Bhandar are example of _____ co-operative societies.
Ans:- Consumer.
Intext Questions 4.2
Which of the following statements about co-operative societies are true or false?
(i) Any competent person can become a member of a cooperative society, at any time.
Ans:- True.
(ii) The liability of the members is limited.
Ans:- True.
(iii) It can exist for a long time due to a legal entity separate from its members.
Ans:- True.
(iv) The society is managed by one person only.
Ans:- False.
(v) The Co-operative Societies are formed to provide service rather than maximising profit.
Ans:- True.
(vi) Co-operative Societies are formed to provide service rather than maximising profit.
Ans:- True.
(vii) Professional managers do not prefer to work in co-operative societies because they do not get adequate remuneration.
Ans:- True.
(viii) The success of a cooperative society depends on the loyalty of its members, something that is neither assured nor can be enforced.
Ans:- True.
Intext Questions 4.3
Which of the following statements is True and which is False?
(i) Legal formality is required to form a Joint Stock Company.
Ans:- True.
(ii) The shares of a public limited company are freely transferable.
Ans:- True.
(iii) The shareholders of a Joint Stock Company have unlimited liability.
Ans:- False.
(iv) A Joint Stock Company cannot own property on its own name.
Ans:- False.
Intext Questions 4.4
Fill in the blanks with suitable word(s) in the following statements:
1. There should be at least ___________ members in a Private Limited Company.
Ans:- Two.
2. Freely transfer of shares from one member to another is not possible in case of ____________ Limited Company.
Ans:- Private.
3. Hindustan Machine Tools is ___________ Company.
Ans:- Government.
4. Minimum amount of capital required to start a private limited company is Rs ____________.
Ans:- One lakh.
Intext Questions 4.5
Fill in the blanks with suitable word(s) in the following statements:
(i) The liability of members of a joint stock company is limited to the extent of the ____________.
Ans:- Face value of shares held by them.
(ii) A joint stock company form of business organisation is managed by ____________.
Ans:- Board of directors.
(iii) The cost of formation of a company is very ____________.
Ans:- High.
(iv) Indian Oil Corporation and ONGC are examples of ____________.
Ans:- Indian multinational companies.
(v) The risk of loss in a company is spread over a large number of ____________.
Ans:- Members.
Intext Questions 4.6
I. Given below are some statements about Multinational Companies.
State which of them are true and which are false:
(i) Multinational Companies slow down the economic development of underdeveloped countries.
Ans:- False.
(ii) Multinational Companies help to earn foreign exchange for the host countries.
Ans:- True.
(iii) Domestic producers improve their performance because of Multinational Companies.
Ans:- True.
(iv) Generally Multinational Companies invest money in profitable industries.
Ans:- True.
(v) Multinational Companies never dominate the markets of the host countries.
Ans:- False.
II.
| Multiple Choice Questions |
(i) Cooperative societies do not have the following characteristics
(a) Open Membership.
(b) Separate legal entity.
(c) Profit Motive.
(d) Voting Power.
Ans:- (c) Profit Motive.
(ii) Which of the following is not an example of consumer cooperative society?
(a) Apna Bazar.
(b) Kendriya Bhandar.
(c) Super Bazar.
(d) Narain Group Housing Society.
Ans:- (d) Narain Group Housing Society.
(iii) Liability of the members of a cooperative society is
(a) Limited.
(b) Unlimited.
(c) Joint.
(d) Joint & Several.
Ans:- (a) Limited .
(iv) The success of a cooperative society depends on
(a) Loyalty of its members.
(b) Central Government.
(c) State Government.
(d) Local Self Government.
Ans:- (a) Loyalty of its members.
(v) In a Private Limited Company, capital is contributed by:
(a) Central Government.
(b) Public and Government only.
(c) Its own members only.
(d) Issue of shares to Public only.
Ans:- (c) Its own members only.
| Terminal Exercise |
1. What is the meaning of cooperative society?
Ans:- The term co-operation is derived from the Latin word co-operari, where the word co means ‘with’ and operari means ‘to work’. Thus, co-operation means working together. It means those who want to work together with some common economic objective can form a society which is termed as “co-operative society”.
2. What are the activities undertaken by a Consumer’s Co-operative Society?
Ans:- Consumer’s Co-operative Societies are formed to protect the interest of general consumers by making consumer goods available at a reasonable price. They purchase goods directly from the producers, this eliminates the middlemen in the process of distribution. Kendriya Bhandar, Apna Bazar and Super Bazar are examples of consumers’ co-operative societies.
3. Give two examples each of consumer’s cooperative societies and producer cooperative societies.
Ans:- The two examples of consumer’s cooperative societies are Apna Bazar and Super Bazar.
The two examples of producer cooperative societies are e APPCO and Boyanika.
4. What is meant by Thrift and Credit Society?
Ans:- Thrift and Credit Cooperative Societies are formed to provide financial support to the members. They accept deposits from members and grant them loans at reasonable rates of interest in times of need. Village Service Co-operative Society and Urban Cooperative Banks are examples of co-operative credit societies.
5. What are the causes of conflict and lack of motivation among members of a cooperative society?
Ans:- Some of the causes of conflict and lack of motivation among members of a cooperative society are discussed below:
(i) Lack of Motive: The members do not work with full zeal and devotion as there is no profit motive.
(ii) Limited Capital: The amount of capital that a cooperative society can raise from its members is very limited because the membership is generally confined to a particular section of the society.
(iii) Problems in Management: The management of a cooperative may not be particularly competent, because a cooperative generally offers only low scales of remuneration to the staff employed.
(iv) Lack of Commitment: The success of a cooperative depends on the loyalty of its members, something that is neither assured nor can be enforced.
(v) Lack of Cooperation: The co-operative societies are established with the objective of mutual cooperation. But it is generally seen that there is a lot of friction between the members because of personality differences, ego clashes, etc. The selfish attitude of members may sometimes being an end to society.
6. Give the difference between ‘Producers co-operative society’ and ‘Marketing cooperative society’.
Ans:-
| Basis | Producers co-operative society’ | Marketing cooperative society’ |
| 1. Meaning | These societies are formed to protect the interest of producers who are basically small in size, by making available items of their needs for production like raw materials, tools and equipment and machinery, etc. Handloom societies like APPCO, Boyanika, Haryana Handloom, etc., are examples of producers’ co-operative societies. | These are cooperatives societies of small producers and manufactures who find it difficult to sell their products individually. These societies collect the products from the individual members and take the responsibility of selling those products in the market. Gujarat Cooperative Milk Marketing Federation that sells AMUL milk products is an example of a marketing co-operative society. |
| 2. Objective | To serve the members and customers by supplying household consumption goods required by them at their doorsteps. | A societal marketing concept builds trust and increases customer loyalty by demonstrating a broader commitment to addressing social welfare. |
7. What is meant by a Joint Stock Company?
Ans:- A joint-stock company is a business owned by its shareholders, who can buy and sell shares freely. Historically, the shareholders of a joint-stock company could bear unlimited liability for debts owed by the company.
8. State the advantages of Joint Stock Company.
Ans:- There are many advantages which the company form of business organisation enjoys over other form of business organisations some of them are as follows:
(i) Limited Liability: The liability of a shareholder is limited. The risk of loss is limited to the unpaid amount on the face value of shares held.
(ii) Economies of large-scale operation: A joint-stock company can undertake business on a large scale. As a result, it can derive all the advantages of large-scale production.
(iii) Transferability of Shares: The shares of a public limited company can be freely transferred by the members without the consent of other members.
(iv) Diffused Risk: The risk of loss in a company is spread over a large number of members.
(v) Economic development: The framework of the joint stock company was only obtainable by specific statute or royal charter and was a cumbersome and expensive process, best suited to major projects. The shareholders would have a direct incentive to monitor the company’s solvency and therefore its progress.
9. State the meaning of Multinational Company.
Ans:- It is a company which carries on business not only in the country of its incorporation but also in one or more other countries. Such a company may produce goods or arrange services in one or more countries and sell these in the same or other countries.
The Multinational Companies enjoy several advantages by way of huge earnings due to large-scale production and distribution activities across national borders.
10. Describe any four characteristics of a Joint Stock Company.
Ans:- The four characteristics of joint stock company are as follows:
(i) Separate legal entity: A joint stock company is an individual legal entity, apart from the persons involved. It can own assets and can because it is an entity it can sue or can be sued. Whereas a partnership or a sole proprietor, it has no such legal existence apart from the person involved in it.
(ii) Perpetual: A joint stock company is perpetual in existence. This implies that the only way for a joint stock company to cease into existence is by a function of law. The company is not affected by the death, insolvency, or transfer of shares to other members.
(iii) Number of members: Owned by a large number of members.
(iv) Transferable of share: Each joint stock company share is transferable, and if the company is public, then its shares are marketed on registered stock exchanges.
11. What are the features of a Private Limited Company? How does it differ from Public Limited Company?
Ans:- Private limited company has following features:
(a) Restricts the right of its members to transfer their shares.
(b) Limits the number of its members to fifty only.
(c) Prohibits any invitation to the public to subscribe for any shares or debentures of the company; and
(d) Prohibits any invitation or acceptance of deposits from persons other than its members, directors or their relatives.
According to Indian Companies Act 1956 , Private Company means a company which has a minimum paid-up capital of one lakh rupees or such higher paid-up capital, as may be prescribed, and by its articles. On the other hand A public limited company means a company that is listed on a recognised stock exchange and whose shares are publicly traded.
12. Distinguish Between Private Limited and Public Limited Company.
Ans:
| Private limited company | Public limited company |
| In the case of a private company, the minimum number of persons required to form a company is two. | While it is seven in the case of a public company. |
| A private company has to have a minimum paid up capital of Rs. 1 lakh. | whereas a public company has to have a minimum paid up capital of Rs. 5 lakh. |
| In case of a private company the maximum number of members must not exceed fifty. | whereas there is no such restriction on the maximum number of members in case of a public company. |
| In private companies the right to transfer shares is restricted. | whereas in the case of a public company the shares are freely transferable. |
| A private company cannot issue a prospectus. | while a public company may invite the general public to subscribe for its Shares or Debentures. |
| A private company must have at least two Directors. | whereas a public company must have at least three Directors. |
| A private company can commence business immediately after receiving the certificate of incorporation. | while a public company can commence business only when it receives a certificate to commence business from the Registrar of Companies. |
| A private company need not hold a statutory meeting. | A public company must hold a statutory meeting and file a statutory report with the Registrar. |
| A public company must hold a statutory meeting and file a statutory report with the Registrar. | In a public company this number is five members. |
13. Enumerate the advantages of Joint Stock Company.
Ans:- There are many advantages which the company form of business organisation enjoys over other form of business organisations some of them are as follows:
(i) Limited Liability: Shareholders of a company are liable only to the extent of the face value of shares held by them.
(ii) Large Financial Resources: Company form of ownership enables the collection of huge financial resources. The capital of a company is divided into shares of small denominations so that people with small means can also buy the shares of a company.
(iii) Continuity: A company enjoys uninterrupted business life. As a body corporate, it will continue to exist even if all of its members die or desert it.
(iv) Transferability of Shares: The shares of a public limited company can be freely transferred by the members without the consent of other members.
(v) Diffused Risk: The risk of loss in a company is spread over a large number of members.
(vi) Social Benefits: The company organisation helps to mobilise savings of the community and invest them in industry.
14. State the limitations of Joint Stock Company.
Ans:- Some of important limitation of Join Stock Company are discussed below:
1. Difficulty of Formation: It is a very difficult and expensive to form a company. A number of documents have to be prepared and filed with the Registrar of companies.
2. Excessive Government Control: A company is subject to elaborate statutory regulations in its day-to-day operations. Periodical reports. Audit and Publications of accounts is obligatory.
3. Oligarchic Management: The management of a company is supposed to be democratic but in practice company becomes an Oligarchy (rule by few).
4. Delay in Decision: Too many levels of management create problems in taking decisions. A lot of time is wasted in calling and holding meetings and in passing resolutions.
5. Lack of Secrecy: Under the Companies Act, 1956 a company is required to disclose to the public a variety of information on its working. This results in lack of secrecy.
15. Give five examples of Multinational Companies.
Ans:- The five examples of multinational companies are, Philips, LG, Hyundai, General Motors, Coca Cola etc.
