Tag: elements of business

Questions Related to elements of business

A florist opened a shop in the year $2000$ but due to certain looses he did wind it up in a single day after $9$ years of operations i.e. in $2009$. What kind of organization it is________________.

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. sole proprietorship

  2. company

  3. limited liability partnership

  4. none of the above

Show answer
Correct Option: A

Which of the following is/ are disadvantage of a company form of organization?

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. The formation of a joint stock company is much more complicated than sole proprietorship or partnership

  2. A joint stock company has greater tax burden

  3. Separation of ownership from control

  4. All of above

Show answer
Correct Option: D
Explanation:

A company has a separate legal artificial body with a name and common seal by the law. The disadvantages of a company form of organisation are 

1. The process of incorporation or formation of a company is very complicated.
2. A company has greater tax burden as compared to order form of business. 
3. A company has separate owners group and management group which make it hard for the owners to keep a track on all the activities being performed in the organisation. 

Which of the following is/ are advantage of LLP?

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. Restrictions as to maximum number of partners

  2. LLP and its partners are not distinct from each other

  3. Partners are not liable for act of other partners

  4. All of above

Show answer
Correct Option: C
Explanation:

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. In this form of partnership, the partners are not liable for the acts of other partners. 

Which of the following is/ are advantage of LLP?

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. Personal assets of the partners are liable in all cases

  2. Much more difficult to dissolve or wind-up

  3. No requirement to maintain statutory records excepts books of account

  4. All of above

Show answer
Correct Option: C
Explanation:

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. In this form of business, there is no requirement to maintain statutory records but books to accounts is compulsory. 

LLP can raise funds from public.

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. True

  2. False

  3. Partly true

  4. None of above

Show answer
Correct Option: B
Explanation:

False. 

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. Therefore, LLP cannot raise funds from public in any form. 

Which of the following is not characteristic of LLP?

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. A legal entity having perpetual succession, separate from its partners

  2. 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 partners

  3. Each partner is an equal member in a LLP company

  4. Easy to establish than sole proprietorship

Show answer
Correct Option: D
Explanation:

LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. The process of establishing LLP is just like a company which is very complicated. 

Which of the following is/ are advantage of LLP?

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. Perpetual existence

  2. Internationally renowned form of business in comparison to Company

  3. No requirement of minimum capital contribution

  4. All of above

Show answer
Correct Option: D
Explanation:
LLP stands for Limited liability partnership which refers to a company form of business where the only the partners contribute in the capital and their liability remains limited to the extent of their capital contribution in the business. LLP  has perpetual existence due separate legal entity and their is no requirement minimum capital contribution by any partner. Moreover, it is the most internationally renowned form of business. 

Obtaining a license to operate business is mandatory for a sole proprietorship. Choose the appropriate answer option.

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. No license is required for any sole proprietorship.

  2. License is required for those businesses which requires it.

  3. License is required for all type of businesses under Sole Proprietorship.

  4. None of the above

Show answer
Correct Option: B
Explanation:

Obtaining a license to operate business is mandatory for a sole proprietorship. License is required for those business which requires it will be the correct option. In sole proprietorship type of business the single individual takes all initiatives and run the business. 'Sole' means singe and 'proprietorship' means ownership. 
The business organization in which the single owner owns, manages and controls all the activities of the business is known as sole proprietorship form of business organization.

As the business flourishes, a sole proprietorship might not get a chance to decrease costs as it lacks the economies of large scale business.

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

As business flourishes, a sole proprietorship might not get a chance to decrease costs as it lacks the economies of large scale business- this is a true statement. Sole proprietors operate mostly on a small-scale basis and their number is large. 'Sole' means singe and 'proprietorship' means ownership. 


The business organization in which the single owner owns, manages and controls all the activities of the business is known as sole proprietorship form of business organization.

Sole traders operate mostly on a small-scale basis and their number is large. Identify the particular advantages.

elements of business sole trade meaning, features and merits of sole proprietorship sole proprietorship - meaning & features formation, characteristics, merits & demerits and objectives of sole proprietorship

  1. Ease of formation and closure

  2. Secrecy of information

  3. Social utility

  4. All of the above

Show answer
Correct Option: C
Explanation:

Sole traders operate mostly on a small-scale basis and their number is large. Social utility is one of the advantages of sole proprietorship or sole trader.  Sole trader can be referred as the single individual who takes all initiatives and run the business. 'Sole' means singe and 'proprietorship' means ownership. The business organization in which the single owner owns, manages and controls all the activities of the business is known as sole proprietorship form of business organization.