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Standard XI
Business Studies
Merits and Limitations of Joint Stock Company
Which of the ...
Question

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

A
The formation of a joint stock company is much more complicated than sole proprietorship or partnership.
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B
A joint stock company has greater tax burden.
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C
Separation of ownership from control
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D
All of above
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Solution

The correct option is C All of above
A company is a distinct legal entity separate from its shareholders or officers. The following are the disadvantages of a company form of organization:
1. The formation of a joint-stock company is much more complicated than a sole proprietorship or partnership.
2. A joint-stock company has a greater tax burden.
3. Separation of ownership from control.
4. The reporting requirements can be complex.
Thus the correct answer is D.


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Q.

As compared to a sole proprietorship and partnership organization, joint stock company formation is easier.


Q.

The structure in which there is separation of ownership and management is called

(a) Sole proprietorship

(b) Partnership

(c) Company

(d) All business organisations

Q. State whether the following statements are True or False:
(a) A joint stock company is separate legal entity.
(b) A company survives even if all its members die.
(c) A joint stock company is a voluntary association of persons.
(d) A joint stock company is less stable than a partnership.
(e) Registration of a joint stock company is optional.
(f) There can be no conflict of interest in a joint stock company.
(g) A company is an artificial legal person.
Q. 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.
Q.

State True or False. In a joint stock company, the process of formation is easy and faster as compared to sole proporietorship.


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