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Question
State with reasons whether the following statements are true or false.
1. There is no limit for membership in Joint Hindu family Business.
2. The liability of a Karta in a Joint Hindu family firm is limited.
3. The maximum number of members in a Joint Hindu family is 20.
4. Company form of organization has developed before industrial revolution.
5. A joint stock company can raise huge capital.
6. Share holders can manage the business.
7. The ownership and management are not separate in Joint stock company.
8. The main purpose of a co-operative organization is to earn profit.
9. The membership of a co-operative society is voluntary.
10. Co-operative society differs from other forms of commercial organizations.
11. Maximization of profit is the main motto of co-operative society.
12. In partnership agreement may be oral or written.
13. In a partnership the liability of every partner of a firm is unlimited.
14. The owner of the sole proprietorship is the sole decision maker of his business.
15. Sole Proprietorship is useful for small business.
16. A sole trading concern is easiest to form.
1. There is no limit for membership in Joint Hindu family Business.
2. The liability of a Karta in a Joint Hindu family firm is limited.
3. The maximum number of members in a Joint Hindu family is 20.
4. Company form of organization has developed before industrial revolution.
5. A joint stock company can raise huge capital.
6. Share holders can manage the business.
7. The ownership and management are not separate in Joint stock company.
8. The main purpose of a co-operative organization is to earn profit.
9. The membership of a co-operative society is voluntary.
10. Co-operative society differs from other forms of commercial organizations.
11. Maximization of profit is the main motto of co-operative society.
12. In partnership agreement may be oral or written.
13. In a partnership the liability of every partner of a firm is unlimited.
14. The owner of the sole proprietorship is the sole decision maker of his business.
15. Sole Proprietorship is useful for small business.
16. A sole trading concern is easiest to form.
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Solution
1. There is no limit for membership in Joint Hindu family Business: True
Explanation: In a joint family business, each member of the family becomes a coparcener in the business by virtue of his or her birth. No agreement is required to become the member of the business. Thus, there is no limit for membership in Joint Hindu family Business.
2. The liability of a Karta in a Joint Hindu family firm is limited: False
Explanation: The Karta of a joint Hindu family business has unlimited liability. It implies that his personal property can be used for paying debts of the business if business assets are not sufficient. The liability of coparceners is limited.
3. The maximum number of members in a Joint Hindu family is 20: False
Explanation: There is no maximum limit on the number of members in a joint Hindu family business, as the membership comes in the form of legacy.
4. Company form of organization has developed before industrial revolution: False
Explanation: Company form of organisation was not developed prior to the industrial revolution. It came into existence in the post-revolution period. Soon after the industrial revolution, the need for capital, managerial skills, professional specialisation, etc., was realised. This eventually led to the emergence of a new form of organisation, which is formally regarded as the company form of organisation.
5. A joint stock company can raise huge capital: True
Explanation: A joint stock company has numerous sources of raising funds. A few of the fund-raising sources include, issuing financial securities (such as shares, debentures and bonds), raising finance from the general public via public deposits and borrowings from banks or other financial institutions. Thus, a joint stock company can raise huge capital.
6. Share holders can manage the business: False
Explanation: All shareholders cannot manage the business. This is because shareholders are large in number and are spread across the globe. In this scenario, managing the business by shareholders would lead to chaos and confusion. That is why shareholders elect representatives (directors) who collectively manage the business.
7. The ownership and management are not separate in Joint stock company: False
Explanation: The ownership and management are separate in a joint stock company. While the ownership lies in the hands of the shareholders, the management lies in the hands of the directors.
8. The main purpose of a co-operative organization is to earn profit: False
Explanation: The prime motive of a co-operative society is to render services and focus on the welfare of its members. Earning profit takes a subsidiary role in a co-operative organisation.
9. The membership of a co-operative society is voluntary: True
Explanation: The membership of a co-operative society is open to everyone, and all those who wish to join may do so, to fulfill their common mutual interests. Thus, the membership of a co-operative society is said to be voluntary or intentionally.
10. Co-operative society differs from other forms of commercial organizations: True
Explanation: The main purpose of other forms of commercial organisations is to maximise profit. On the other hand, the main purpose of a co-operative organisation is to provide services to its members. Thus, it differs from other forms of commercial organisations.
11. Maximization of profit is the main motto of co-operative society: False
Explanation: A co-operative society does not aim at profit maximisation but rather to provide services to its members. Earning profit takes a subsidiary role in a co-operative organisation.
12. In partnership agreement may be oral or written: True
Explanation: In a partnership, the agreement among partners may be oral or written, depending on the willingness of the partners. If partners wish to prepare a written agreement, they may do so, however, it is not mandatory.
13. In a partnership the liability of every partner of a firm is unlimited: True
Explanation: The liability of every partner in a partnership firm is unlimited. This implies that the personal property of each partner can be used for paying business debts if the assets of the business are not sufficient to pay them off.
14. The owner of the sole proprietorship is the sole decision maker of his business: True
Explanation: A sole proprietorship is owned and managed by an individual. Hence, he/she is the sole decision maker of the business.
15. Sole Proprietorship is useful for small business: True
Explanation: A sole proprietorship is good for small businesses. This is because in a sole proprietorship, the individual requires modest capital and limited managerial skills to operate the business.
16. A sole trading concern is easiest to form: True
Explanation: A sole trading concern is easy to form, as limited capital and few legal formalities are required. Any person who is a major (adult) and mentally sound can start a business.
Explanation: In a joint family business, each member of the family becomes a coparcener in the business by virtue of his or her birth. No agreement is required to become the member of the business. Thus, there is no limit for membership in Joint Hindu family Business.
2. The liability of a Karta in a Joint Hindu family firm is limited: False
Explanation: The Karta of a joint Hindu family business has unlimited liability. It implies that his personal property can be used for paying debts of the business if business assets are not sufficient. The liability of coparceners is limited.
3. The maximum number of members in a Joint Hindu family is 20: False
Explanation: There is no maximum limit on the number of members in a joint Hindu family business, as the membership comes in the form of legacy.
4. Company form of organization has developed before industrial revolution: False
Explanation: Company form of organisation was not developed prior to the industrial revolution. It came into existence in the post-revolution period. Soon after the industrial revolution, the need for capital, managerial skills, professional specialisation, etc., was realised. This eventually led to the emergence of a new form of organisation, which is formally regarded as the company form of organisation.
5. A joint stock company can raise huge capital: True
Explanation: A joint stock company has numerous sources of raising funds. A few of the fund-raising sources include, issuing financial securities (such as shares, debentures and bonds), raising finance from the general public via public deposits and borrowings from banks or other financial institutions. Thus, a joint stock company can raise huge capital.
6. Share holders can manage the business: False
Explanation: All shareholders cannot manage the business. This is because shareholders are large in number and are spread across the globe. In this scenario, managing the business by shareholders would lead to chaos and confusion. That is why shareholders elect representatives (directors) who collectively manage the business.
7. The ownership and management are not separate in Joint stock company: False
Explanation: The ownership and management are separate in a joint stock company. While the ownership lies in the hands of the shareholders, the management lies in the hands of the directors.
8. The main purpose of a co-operative organization is to earn profit: False
Explanation: The prime motive of a co-operative society is to render services and focus on the welfare of its members. Earning profit takes a subsidiary role in a co-operative organisation.
9. The membership of a co-operative society is voluntary: True
Explanation: The membership of a co-operative society is open to everyone, and all those who wish to join may do so, to fulfill their common mutual interests. Thus, the membership of a co-operative society is said to be voluntary or intentionally.
10. Co-operative society differs from other forms of commercial organizations: True
Explanation: The main purpose of other forms of commercial organisations is to maximise profit. On the other hand, the main purpose of a co-operative organisation is to provide services to its members. Thus, it differs from other forms of commercial organisations.
11. Maximization of profit is the main motto of co-operative society: False
Explanation: A co-operative society does not aim at profit maximisation but rather to provide services to its members. Earning profit takes a subsidiary role in a co-operative organisation.
12. In partnership agreement may be oral or written: True
Explanation: In a partnership, the agreement among partners may be oral or written, depending on the willingness of the partners. If partners wish to prepare a written agreement, they may do so, however, it is not mandatory.
13. In a partnership the liability of every partner of a firm is unlimited: True
Explanation: The liability of every partner in a partnership firm is unlimited. This implies that the personal property of each partner can be used for paying business debts if the assets of the business are not sufficient to pay them off.
14. The owner of the sole proprietorship is the sole decision maker of his business: True
Explanation: A sole proprietorship is owned and managed by an individual. Hence, he/she is the sole decision maker of the business.
15. Sole Proprietorship is useful for small business: True
Explanation: A sole proprietorship is good for small businesses. This is because in a sole proprietorship, the individual requires modest capital and limited managerial skills to operate the business.
16. A sole trading concern is easiest to form: True
Explanation: A sole trading concern is easy to form, as limited capital and few legal formalities are required. Any person who is a major (adult) and mentally sound can start a business.
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