Steps involved in Establishing Business Test 29

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Steps involved in Establishing Business Test 29

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Weekly Quiz Competition

Question 1
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Which of the following is/ are advantage of LLP?

A
Restrictions as to maximum number of partners

B
LLP and its partners are not distinct from each other

C
Partners are not liable for act of other partners

D
All of above

Solution

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.
Question 2
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Which of the following is/ are advantages of LLP?

A
Personal assets of the partners are liable in all cases

B
Much more difficult to dissolve or wind-up

C
No requirement to maintain statutory records excepts books of account

D
All of above

Solution

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.
Question 3
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LLP can raise funds from public.

A
True

B
False

C
Partly true

D
None of above

Solution

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.
Question 4
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A partnership firm has no separate existence apart from its members. Whereas a company is a ___________ distinct from its member.

A
Do not have separate legal entity

B
Separate legal entity

C
Non-profit making organization

D
None of the above

Solution

A company has a separate legal artificial body with a name and common seal by the law. Therefore, its existence does not depend upon the existence of its owners that is the shareholders and the company is not affected by the death, disability and insolvency of its shareholders. Therefore, company has a separate legal entity.
Question 5
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A change in the nature of the business can only be brought about by the consent of __________.

A
Majority partners

B
All the partners

C
Any two partners

D
Any five partners

Solution

A partnership basically refers to the contract between two or more people who have agreed to carry on certain businesses in order to achieve common goals. Therefore, any change in the nature of the business can be brought forward only by the consent of all the partners mentioned in the partnership deed.
Hence, option (B) is the correct answer.
Question 6
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Identify which of the following statement is true and which is false?
(i) As relations of partners inter se are that of agency, no consideration is required to create the partnership,
(ii) Partnership and Joint Hindu Family both are created by status.
(iii) There is no restriction as to maximum number of members for HUF.
(iv) Registration is also required for HUF.
Select the correct answer from the options given.

A
(i)-True, (ii)-False, (iii)-True, (iv)-False

B
(i)-False, (ii)-True, (iii)-False, (iv)-True

C
(i)-True, (ii)-False, (iii)-False, (iv)-True

D
(i)-False, (ii)-True, (iii)-True, (iv)-False

Solution

(i) According to the partnership act, 1932, it is not necessary for the partners to register under any type of act.
(ii) Both partnership and joint hindu family business is created by the relations between the members of the business.
(iii) In joint hindu family business, there is no restriction for the maximum number of members in the business.
(iv) In joint hindu family business registration depends upon the members of the business as there is no compulsory registration under this business by any law.
Question 7
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The right choice of the form of the business depends upon ___________.
(I) Nature of business
(II) Volume of business
(III) Area of operation

A
(I) and (II)

B
(III) and (II)

C
(I) and (III)

D
All of above

Solution

The right choice of the form of the business depends upon the nature of business, volume of business and the area of operations. Nature of business includes what type of business whether labour intensive or capital intensive. Volume of business means what will be the scale of production large or small. Area of operation includes the geographic are which will be covered by the business.
Question 8
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Which of the following is/ are advantage of LLP?

A
Perpetual existence

B
Internationally renowned form of business in comparison to Company

C
No requirement of minimum capital contribution

D
All of above

Solution

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.
Question 9
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Which of the following is not the 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 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.
Question 10
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A partner can transfer his interest so as to substitute the transferee in his place as the partner, without the consent of all the other partners; a member of company cannot transfer his share to any one he likes.

A
False

B
True

C
Partly true

D
Partly false

Solution

A company is a separate legal artificial body with a name and common seal by the law. In a company, the owners of the company that is the shareholders can transfer their ownership in the stock exchange market whenever they find it necessary without the consent of any other shareholder.
Hence, option (A) is the correct answer.

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Steps involved in Establishing Business Test 29

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Steps involved in Establishing Business Test 29

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SHARING IS CARING

Question 1

Restrictions as to maximum number of partners

LLP and its partners are not distinct from each other

Partners are not liable for act of other partners

All of above

Solution

Question 2

Personal assets of the partners are liable in all cases

Much more difficult to dissolve or wind-up

No requirement to maintain statutory records excepts books of account

All of above

Solution

Question 3

True

False

Partly true

None of above

Solution

Question 4

Do not have separate legal entity

Separate legal entity

Non-profit making organization

None of the above

Solution

Question 5

Majority partners

All the partners

Any two partners

Any five partners

Solution

Question 6

(i)-True, (ii)-False, (iii)-True, (iv)-False

(i)-False, (ii)-True, (iii)-False, (iv)-True

(i)-True, (ii)-False, (iii)-False, (iv)-True

(i)-False, (ii)-True, (iii)-True, (iv)-False

Solution

Question 7

(I) and (II)

(III) and (II)

(I) and (III)

All of above

Solution

Question 8

Perpetual existence

Internationally renowned form of business in comparison to Company

No requirement of minimum capital contribution

All of above

Solution

Question 9

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 10

False

True

Partly true

Partly false

Solution

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