Steps involved in Establishing Business Test 20

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Steps involved in Establishing Business Test 20

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Question 1
1 / -0

Which of the following is not characteristic of LLP?

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

B
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

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

D
Easy to establish than sole proprietorship.

Solution

LLP is a corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. The following are the characteristic of LLP:
1. A legal entity having perpetual succession, separate from its partners.
2. Each partner is an equal member of a LLP company, etc.
But the on is fourth is not correct because a sole proprietorship is easy to establish in comparison to LLP.
Thus the correct answer is D.
Question 2
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Sole proprietorship form is not suitable _______________.

A
Where capital requirement is large and risk involvement is heavy.

B
Where manual skill is required.

C
Where the market for the product is small and local.

D
All of above.

Solution

The sole proprietorship form is not suitable where the capital requirement is large and risk involvement is heavy because the higher the capital higher will be the risk and it is only suitable for the small business with less capital.
Thus the correct answer is D.
Question 3
1 / -0

The right choice of the form of the business depends upon ______________.
I - Nature of business
II - Volume of business
III - Area of operation
Select the correct answer from the options given below:

A
I and II

B
III and II

C
I and III

D
I, II and III

Solution

The right choice of the form of the business depends upon all the options that are given below because nature of business, volume of business and location of the business all are the important factors which are to be considered while selecting a form of business.
Thus the correct option is D.
Question 4
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Following is not a characteristic of sole proprietorship business _______________.

A
Easy to form and wind up

B
Difficult to maintain secrets

C
Direct motivation

D
None of the above

Solution

Characteristics of Sole proprietorship business are-
1. : There is no separate law that governs sole proprietorship. Hardly any legal formalities are required to start a sole proprietary business, though in some cases one may require a license. Closure of the business can also be done easily. Thus, there is ease in formation as well as closure of business.
2. The risk of failure of business is borne all alone by the sole proprietor. However, if the business is successful, the proprietor enjoys all the benefits. He receives all the business profits which become a direct reward for his risk bearing.
3. The right to run the business and make all decisions lies absolutely with the sole proprietor. He can carry out his plans without any interference from others and there is no difficulty in maintain secrets.
Option D is the correct option.
Question 5
1 / -0

The partners have a ___________ relationship.

A
family

B
principal and agent

C
business

D
none of the above

Solution

The partners have a relationship like a Principal and Agent, a partner is an agent to the other partner as his acts bind the other partners. He is principal as he can be held liable for the acts of the other partners. So we can say the partners have a principal and agent relationship.
Thus the correct answer is B.
Question 6
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The business in which only a single owner arranges the capital is ____________.

A
Partnership

B
Hindu joint family business

C
Sole proprietorship

D
NGOs

Solution

The business in which only a single owner arranges the capital is Sole proprietorship, it is the simple type of business that can be started by an individual and can be easily established due to a lack of government regulation. These types of businesses are very popular among sole owners of businesses, individual self-contractors, and consultants. Many sole proprietors do business under the registration of their own names is not necessary for these types of business.
Thus the correct answer is C.
Question 7
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Even a single partner may be called upon to pay the debts of a partnership firm.

A
Partly true

B
True

C
Partly false

D
False

Solution

The statement is true because even a single partner may be called upon to pay the debts of a partnership firm. As per the partnership Act, every partner is liable, jointly with all the other partners and also severally, for all acts of the firm done by them. The Partners will be held personally responsible for another partner's carelessness.
Thus the correct answer is B.
Question 8
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The sole proprietorship form of business discourages self employment.

A
True

B
False

C
Partly true

D
Partly false

Solution

The statement is False as a sole proprietorship form of business does not discourage self-employment even these types of businesses are very popular among sole owners of businesses, individual self-contractors, and consultants. Many sole proprietors do business under the registration of their own names as it is not necessary for these types of business.
Thus the correct answer is B.
Question 9
1 / -0

The risk of the sole proprietorship business is shared with the employees of the business _______________.

A
Partly true

B
True

C
Partly false

D
False

Solution

The statement is False as the risk of the sole proprietorship business is not shared with the employees of the business, it will only be bear by sole proprietor because he is the only one who will take the risk of the Business.
Thus the correct answer is D.
Question 10
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Every business enterprise is an independent undertaking.

A
True

B
False

C
Partly True

D
Partly False

Solution

Every business enterprise is an independent undertaking because every business enterprise has separate identity, independent ownership, independent management and independent risk bearance.

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Every business enterprise is an independent undertaking because every business enterprise has separate identity, independent ownership, independent management and independent risk bearance.

Steps involved in Establishing Business Test 20

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Steps involved in Establishing Business Test 20

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Question 1

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

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

Each partner is an equal member in a LLP company.

Easy to establish than sole proprietorship.

Solution

Question 2

Where capital requirement is large and risk involvement is heavy.

Where manual skill is required.

Where the market for the product is small and local.

All of above.

Solution

Question 3

I and II

III and II

I and III

I, II and III

Solution

Question 4

Easy to form and wind up

Difficult to maintain secrets

Direct motivation

None of the above

Solution

Question 5

family

principal and agent

business

none of the above

Solution

Question 6

Partnership

Hindu joint family business

Sole proprietorship

NGOs

Solution

Question 7

Partly true

True

Partly false

False

Solution

Question 8

True

False

Partly true

Partly false

Solution

Question 9

Partly true

True

Partly false

False

Solution

Question 10

True

False

Partly True

Partly False

Solution

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