Tag: ownership structures - sole proprietorship and joint hindu family business

Questions Related to ownership structures - sole proprietorship and joint hindu family business

Which of the following is/are features of KARTA in HUF form of business?

organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

  1. Karta is the eldest male member of the family.

  2. Karta is the custodian of the income and assets of the HUF.

  3. Karta is to manage the HUF property.

  4. All of above

Show answer
Correct Option: D
Explanation:

The affairs of business are managed by the head of the family, who is known as the Karta. In the entire Hindu joint family, the karta occupies a very important position. Karta is the eldest member of the family. Only a coparcener can become Karta. Features of Karta in HUF form of business are:a) Karta is the eldest male member of the family. b) Karta is the custodian of the income and assets of the HUF.c) Karta is to manage the HUF property.

Which of the following can be treated as advantages of HUF form of business?

organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

  1. A HUF business is not affected by the insolvency or death of any member including that of karta.

  2. An inefficient karta can also do harm to the business.

  3. The continuity of business is always under threat It may be due to a small rift within the family and if aco- parcener asks for a partition the business is closed.

  4. Since the karta has absolute freedom to manage the business, there is scope for him to misuse it for his personal gains.

Show answer
Correct Option: A
Explanation:

A HUF business is not affected by the insolvency or death of any member including that of karta- this can be treated s advantage of HUF form of business. In a Hindu Undivided Family business only the male members get a share in the business by virtue of their being part of the family. A Hindu Undivided Family is an extended family arrangement prevalent among Hindus of the Indian subcontinent. It came into existence as per Hindu Inheritance Laws of India.

Which of the following can be treated as disadvantages of HUF form of business?

organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

  1. An inefficient karta can also do harm to the business.

  2. In a HUF business the male members of three successive generations are involved which may leads to conflict between generations.

  3. The continuity of business is always under threat. It may be due to a small rift within the family and if a coparcener asks for a partition the business is closed.

  4. All of above

Show answer
Correct Option: D
Explanation:
In a Hindu Undivided Family business only the male members get a share in the business by virtue of their being part of the family. A Hindu Undivided Family is an extended family arrangement prevalent among Hindus of the Indian subcontinent. It came into existence as per Hindu Inheritance Laws of India. Following can be treated as disadvantage of HUF form of business:
a) An inefficient karta can also do harm to the business.b) In a HUF business the male members of three successive generations are involved which may leads to conflict between generations.
c) The continuity of business is always under threat. It may be due to a small rift within the family and if a coparcener asks for a partition the business is closed.