8th Standard, Social, Business Studies, Chapter 29
EMERGENCE OF DIFFERENT BUSINESS ORGANISATIONS
Exercises
I. Fill in the blanks with suitable words:
1. The concern that is owned and managed by a single person is called Sole trading concerns.
2. The Indian Partnership Act was passed in the year 1932 to regulate the affairs of the partnership firms.
3. The Maximum number of partners in a firm which carries out banking business is 10.
4. The Head of the Hindu undivided family business is known as “KARTA”.
5. The only business concern under private business organization found in India is Hindu undivided family business.
II. Answer the following questions in one or two sentences each:
6. Which are the small scale business organizations?
Answer: The small scale business organizations are as follows.
1) Sole trading concerns,
2) Partnership firms
3) Hindu undivided family firms.
7. How do sole trading concerns help the consumers?
Answer: The sole trading concerns directly come into contact with the consumers. They fostering trust, rapport, and a better understanding of individual needs of consumers. That is how the sole trading concerns help the consumers.
8. What are partnership firms?
Answer: Two or more persons join together and carry out the business is called partnership firms.
9. Who are sleeping partners?
Answer: The partners who contribute capital but do not take active part in day-to-day transactions of the firm are called sleeping partners. The profits and losses are shared in proportion to their share of the capital.
10. Dissolution of partnership firm is easy, how?
Answer: Partnership firms can be dissolved easily. Any partner can apply for dissolution by giving fourteen days’ notice or with the consent of all the partners it can be dissolved.
III. Answer the following questions:
11. Mention any four merits of sole trading concerns.
The four merits of sole trading concerns.
1) No legal formalities are required to commence the business.
2) It can be started by own capital.
3) No difficulties arise in day to day running of the business.
4) The owner enjoys all the profits and bears all the losses.
12. Mention any four limitations of sole trading concerns.
Answer: The four limitations of sole trading concerns are as follows.
1) Capital is limited and they cannot expand the business.
2) The managerial ability is limited.
3) Two heads are always better to take decisions.
4) All the losses are to be borne by a single person.
13. How are partnership firms started? Explain briefly.
Answer: The limitations of the sole trading concerns lead to the formation of partnership firms. In these firms two or more persons join together and carry out the business. Partnership firms Act was passed in 1932. According to the section 4 of partnership act the partnership firm is defined as the relation between the persons who have agreed to share the profits of a business carried on by all or any of them acting for all. The maximum number of partners are ten if they carry out the financial business or twenty in case of carrying out general partnership business.
14. Who are the different types of partners?
Answer: The different types of partners are as follows.
1. Active Partners.
2. Sleeping Partners.
3. Nominal Partners.
4. Minor Partners.
15. Mention any four merits of partnership firms.
Answer: The four merits of partnership firms are,
1) Easy to form
2) More capital
3) Greater efficiency
4) Trust worthiness
16. Mention any four demerits of partnerships firms.
Answer: The four demerits of partnerships firms are as follows.
1. Sometimes the disunity among the partners may hamper business and it leads to disputes.
2. Since the number of partners is limited, the capital investment is also limited.
3. Liability is unlimited, so it discourages many people to join as partners.
4. Reckless and foolish decisions of some partners may lead to heavy setbacks.
17. What are the advantages of registering a partnership firm?
Answer: The advantages of registering a partnership firm are as follows.
1. A Registered firm can file a suit in the court of law against third party, in case the loan amount is more than Rs. 100/-. But it is not possible in case of an unregistered firm.
2. A Registered firm can file a case against the other partners against the loans they owe to the firm.
3. However third parties can file a case against an unregistered firm or against its partners for the recovery of loans.
4. Any partner can file a case against the firm or other partners for the dissolution of the firm or for the settlement of accounts.
18. Explain briefly about “Hindu undivided family business”.
Answer: They are found only in India. They are in accordance with “HINDU LAW”. They are the firms which consist of all the male members of the Hindu family, who are the descendants from a common male ancestor. Only three successive generations of male members namely, father, sons, grandsons and great grandsons acquire the birth right or hold on the ancestral property. The eldest or senior most member of the family manages the business and he is called “KARTA”. The liability of Karta is unlimited. While the liability of other members is limited to the extent of their share in the business.
Additional Questions.
1 . What are the different forms of business organizations?
Answer: Today we see different forms of business organizations. They may be classified into four types. They are:
1. Business organizations in the private sector.
2. Business organizations in the public sector.
3. Joint sector business organizations.
4. Public utilities.
2. What are the advantages of Sole Trading concerns?
Answer: The advantages of Sole Trading concerns are,
1) No legal formalities are required to commence the business.
2) It can be started by own capital.
3) No difficulties arise in day to day running of the business.
4) The owner enjoys all the profits and bears all the losses.
5) They directly come into contact with the consumers.
6) They render some social services also.
7) They provide employment to some people.
8) They help in distribution of wealth.
9) They understand the likes and dislikes of the customers and supply goods accordingly.
10) They pay taxes to the government.
3. What are the disadvantages of Sole Trading concerns?
Answer: The disadvantages of Sole Trading concerns are as follows.
1) Capital is limited and they cannot expand the business.
2) The managerial ability is limited.
3) Two heads are always better to take decisions.
4) All the losses are to be borne by a single person.
5) With the death or insolvency of the sole trader, the trading concerns may have to be closed.
4. What are the merits of partnership firms?
Answer: The merits of partnership firms are as follows.
1) Easy to form
2) More capital
3) Greater efficiency
4) Trust worthiness
5) Sharing of business loss
6) Secrecy of business
7) Simple dissolution
5. What are the demerits of partnership firms?
Answer: The demerits of partnership firms are as follows.
- Sometimes the disunity among the partners may hamper business and it leads to disputes.
- Since the number of partners is limited, the capital investment is also limited.
- Liability is unlimited, so it discourages many people to join as partners.
- Reckless and foolish decisions of some partners may lead to heavy setbacks
- Partnership firms lack stability; the death or insolvency of any partner may lead to dissolution.
- It is difficult to transfer the share of partners to others.
7. Owing to lack of control by the government and publishing of accounts, partnership firms cannot gain public support.
8. The secrecy of the business cannot be maintained since there are two or more than two partners.
IV. Activity:
1. Collect two advertisements and study them in the context of your lesson.
