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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
One man control is best in the world if that one man is big enough to manage everything . Explain the statement . |
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Answer» "One man control is best in the world if that one man is big enough to manage everthing"- W.R.Basset . One man control is best in the world because of the unique advantages of one man businesses . These advantages are as follows : (i) It requires less amount of capital . (ii) Ease of formation and closure of business . (iii) Quick decision making without consulting others . (iv)Confidentiality of information . (v) A sole proprietor is the sole recipient of all the profits . lt?brgt (vi) Flexibility of operations because all decisions are made by a single person. These advantages are available provided the man is capable of managing everything . In real life such a person does not exist . A person may be a rich engineer but he may lack financial ability . Therefore , one man business suffers from several . Limitations : (i) Limited financial resources and limited scope for expansion. (ii) Limited life of a business concern depending on the life of the owner . (iii) The sole proprietor has unlimited liability . (iv) Limited managerial ability Though sole proprietorship suffers from various shortcomings , many entrepreneurs opt for this form of organisation because of its inherent advantages . It requires less amount of capital . It is best suited for businesses which are carried out on a small scale and where customers demand personalised services . |
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| 2. |
"Working for oneself provides personal satisfaction" . Which merits of sole proprietorship is highlighted in this statement ? |
| Answer» Sense of accomplishment . | |
| 3. |
If the assets of a company are not enough to pay off its liabilities , personal assets of its shareholders may be taken over for the purpose . True / False ? Give reason. |
| Answer» False : The liability of the members is limited to the face value of the shares held by them . | |
| 4. |
Name the type of company in which there is restriction on the maximum number of members . What is that number ? |
| Answer» Private company , maximum number of members can be 200 , excluding present and past employees . | |
| 5. |
Is it necessary for a public company to get its share listed on a stock exchange? What happens if a public company going for a public issue fails to apply to a stock exchange for permission to deal in its securities or fails to get such permission? |
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Answer» Yes, it is mandatory for every public company to be listed on a stock exchange. The publiccompany is required to send an application to at least one stock exchange to getregistered. Once it is listed, the company is allowed to offer its shares in order to becomepublic. However, initially the company may offer only a small percentage of its shares to thepublic. If a public company going for a public issue fails to apply to a stock exchange forpermission to deal in its securities or fails to get such permission before the expiry of tenweeks from the date of closure of subscription list, the allotment of shares done by thecompany shall become void and all money received from the applicants will have to bereturned to them within eight days. |
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| 6. |
Yamuna Ltd., invited general public to subscribe for its public issue of ₹ 10 crore (10 lakh shares of ₹ 100 each ) through issue of prospectus . However , the company received applications for 8 lakh shares . Can the company proceed with allotment of shares ? Give reasons in support of your answer . |
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Answer» No , Yamuna Ltd., cannot proceed with allotment of shares as minimum subscription has not been received . In order to prevent companies from commencing business with inadequate resources , it is provided that a company must receive the amount of minimum subscription in cash within 120 days from the date of issue . Minimum subscription is 90 per cent of the issued amount ( according to SEBI guidelines) . Otherwise , the allotment cannot be made and the application money received must be returned to the applicants within the next 10 days (i.e., 130 days from the date of issue ) . |
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| 7. |
You are a business consultant . Mr . Madanpal has recently retired from government service . He is 60 years old and he wants to set up a factory to manufacture plastic goods . He has come to consult you so that you may suggest to him the most suitable form of business organisation . The following are his main expectations from the business organisation . (i) Ease in formation, (ii) Flexibility in operations, (iii) Sharing of profits with limited persons and (iv) Sufficient persons to look after various business activities . Which form of business organisation will you suggest to Mr. Madanpal ? Give reason in support of your answer . |
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Answer» Partnership form of organsation will suit Mr. Madanpal . Reasons : (i) Setting up a partnership firm is quite easier than company organisation . (ii) Since the number of partners is limited , operational decisions can easily be changed . (iii) In partnership form of organisation , sharing of profits is with limited persons . (iv) The availability of persons to look after the different business activities is more than one . |
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| 8. |
It is necessary to get every company incorporated , whether private or public . True / False ? Give reason. |
| Answer» True : Incorporation/ registration of every company is must with the Registrar of Companies . Every company (public or private) must get Certificate of Incorporation to have legal status . | |
| 9. |
Explain how company is an artificial person. |
| Answer» A company is an artificial legal person.It is artificialbecause it is created by a processother than the natural birth. It comesinto existence through the operation oflaw. It is a legal person because itexists in the eyes of the law. It can do anumber of things which can be done bya natural person g. a company canenter into a contract, it can purchaseand sell assets, it can be fined, it canfile s s it, and so on. It acts through theboard of directors elected by themembers. | |
| 10. |
Bharat Pvt. Ltd. Was promoted 2005 by a group of five friends. As business of the company has grown considerably over the years, its management is now planning to convert it into a bublic company and raise funds through public subscription of funds for expansion projects. State any four privileges that company will have to forego to convert in public ltd. company. |
| Answer» The company will not get following privileges. | |
| 11. |
What is the minimum number of directors for a private company and a public company ? |
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Answer» (i) Private company -2 (ii) Public company - 3 |
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| 12. |
State the law governing the partnership in India . |
| Answer» The Indian Partnership Act , 1932 . | |
| 13. |
Why is a company called an artificial person ? |
| Answer» A company is called an artificial person because it does not possess the body of a natural being. It cannot breathe , eat , run , talk and so on . | |
| 14. |
The two friends , Soniya and Raman started a business by the name of Soniya Fancy Dress Shoppy . Both of them invested equal capital in the business . At the start of the business , Soniya had placed one condition before Raman that if unfortunately they suffered a heavy loss in their business , she would not be able to give anything except the capital invested in the business . Raman had accepted this condition on the terms and condition that Soniya would not enjoy the right to participate in the management of the firm . Their business was gradually growing well and they were fully satisfied with their business . (a) To what form of business organisation is concerned the above para ? (b) Identify and explain the type of the form of organisation identified in (a) . |
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Answer» (a) Partnership (b) Limited Liability Partnership (LLP) (Explain) |
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| 15. |
An unregistered firm cannot be sued by a third party . True / False ? Give reason. |
| Answer» False : Non-registration of a partnership firm does not affect the right of third parties to file a suit against the firm for their claims . | |
| 16. |
`{:((a) , "The document containing the rules , regulations and bye-laws of a company" , (i) , "Articles of Association"), ((b) , "The document inviting subscriptions for shares and debendures" , (ii) , "Memorandum of Association"), ((c) , "The amount of money which must be raised before allotment of shares." , (iii) , "Prospectus" ), ((d) , "The principal document of a company." , (iv) , "Minimum subscription"):}` |
| Answer» (a) - (i) , (b) - (iii) , (c) - (iv) , (d) - (ii) | |
| 17. |
Which is the least regulated form of business ? |
| Answer» Sole proprietorship . | |
| 18. |
Name the basic document prepared in partnership firm . |
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Answer» Partnership deed Partnership deed is an agreement between the partners of a firm that outlines the terms and conditions of partnership among the partners. ... The partnership deed serves this purpose. It specifies the various terms such as profit/loss sharing, salary, interest on capital, drawings, admission of a new partner, etc. |
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| 19. |
What is the maximum number of partners in a partnership firm ? |
| Answer» Rule 10 of the Companies (Miscellaneous ) Rules 2014 provides the maximum limit as 50 partners . | |
| 20. |
Teachers of various schools in South Delhi form a society to buy land and construct flats for its members . Identify this form of business organisation . |
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Answer» Cooperative society (Cooperative housing society ) . These societies are formed to help their members to construct houses at reasonable costs. These societies either construct flats or provide plots to the members at reasonable rates. The members are allowed to pay for the same in easy instalments. |
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| 21. |
What is a Statement in Lieu of Prospectus? |
| Answer» The Statement in Lieu of Prospectus is a document filed with the Registrar of the Companies (ROC) when the company has not issued prospectus to the public for inviting them to subscribe for shares. | |
| 22. |
What is a prospectus of a company? Discuss its nature and importance. |
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Answer» The prospectus is a document issued by the company that offers the investment. This document provides you with basic information about the investment, such as background information about the company issuing it. The features and characteristics of the prospectus are: `(i)` It is a document issued as a prospectus; `(ii)` It is an invitation to the member of the public; `(iii)` The public is invited to subscribe to the shares or debentures of the company; `(iv)` It includes any notice, circular, advertisement inviting deposits from the public; `(v)` It is a document by which the company procures its share capital needed to carry on its activities. Importance of Prospectus: `1.`A prospectus keeps the focus entirely on your business. The key is to fill it with informative content, including attractive images of your nursery. They allow you to paint a picture for prospective parents before they even pay you a visit. `2.`They’re easy to distribute. Whether it’s in the local community, by post, via email or on your website, parents can access your prospectus at any point to find the information they need. `3.`Prospectuses a portable marketing tool. When handed out, prospectuses often make it to the cars of parents or even to their houses meaning that they have the opportunity to pick it up and read it at any point. |
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| 23. |
Name the form of business organisation in which a minor can be full-fledged member . |
| Answer» Joint Hindu Family Business . | |
| 24. |
Name the type of partner who contributes capital and shares profits/losses but does not take part in the day-to-day management of the firm . |
| Answer» Sleeping or dormant partner. | |
| 25. |
Profits do not have to be shared. This statement refers toA. PartnershipB. Joint Hindu Family BusinessC. Sole ProprietorshipD. Company |
| Answer» c.Sole Proprietorship | |
| 26. |
The capital of a company is divided into number of parts each one of which is calledA. DividendB. ProfitC. InterestD. Share |
| Answer» Correct Answer - d.Share | |
| 27. |
Which form of business is suitable for a tailoring shop ? |
| Answer» Sole proprietorship because personal attention is required . | |
| 28. |
Differentiate between the company and partnership. |
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Answer» Difference between the company and partnership
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| 29. |
Name the alternatives available to sole proprietor whose business is expanding. |
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Answer» The alternative available to sole proprietor whose business is expanding is that: 1.He/she have to appoint a paid assistant. 2.Admitting a partner. 3.Earn more profit. |
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| 30. |
Enumerate the two conditions necessary for formation of Joint Hindu Family Business. |
| Answer» 1.It requires a minimum of two members.2.Members should have some ancestral property. | |
| 31. |
Explain whether the liability of a sole proprietor is limited to the extent to the extent of his share in business. |
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Answer» 1.The liability of a sole proprietorship is not limited to the extent of his share in business. 2.The liability of sole proprietor is unlimited. 3.The sole proprietor is personally liable for all business obligations. His own funds can be used if the business profits are insufficient to meet the losses of business. |
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| 32. |
Who among the following can only be beneficiary of business and does not has unlimited liability?A. Secret PartnerB. Minor PartnerC. Active PartnerD. Sleeping Partner |
| Answer» Correct Answer - B.Minor Partner | |
| 33. |
Who elects the board of Directors?A. EmployeesB. DebentureholdersC. GovernmentD. Shareholders |
| Answer» Correct Answer - D.Shareholders | |
| 34. |
The board of directors of a joint stock company is elected byA. General publicB. Government bodiesC. ShareholdersD. Employees |
| Answer» Correct Answer - c.Shareholders | |
| 35. |
The maximum number of partners allowed in the banking business areA. TwentyB. TenC. No limitD. Two |
| Answer» Correct Answer - b.Ten | |
| 36. |
Which document is called charter of the company ? |
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Answer» Memorandum of Association The Memorandum of Association or MOA of a company defines the constitution and the scope of powers of the company. In simple words, the MOA is the foundation on which the company is built. In this article, we will look at the laws and regulations that govern the MOA. |
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| 37. |
Who are called the Real owner of the company?A. EmployeesB. DebentureholdersC. ShareholdersD. Creditors |
| Answer» Correct Answer - C.Shareholders | |
| 38. |
Which document is also called as Charter of the company?A. MoAB. AoAC. ProspectusD. Registration certificate |
| Answer» Correct Answer - C.Prospectus | |
| 39. |
Shakti Ltd. Issues 1,00,000 shares of ₹ 10 each for public subscription . Application (along with money) are received for 80,000 shares . Can the company allot these shares ? Explain . |
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Answer» No , the company cannot allot these shares because the legal formality of minimum subscription is not fulfilled . A company must receive the amount of minimum subscription in cash (which is 90% of the issued amount ) within 120 days from the date of issue . Otherwise , allotment cannot be made . In this case , the company has received only 80% of the issued amount . So , it cannot make allotment of these shares and will have to refund all the money received from the applicants within the next 10 days . |
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| 40. |
Application for approval of name of a company is to be made toA. SEBIB. Registrar of CompaniesC. Government of IndiaD. Government of the state in which company is to the registered |
| Answer» b.Registrar of Companies | |
| 41. |
A proposed name of Company is considered undesirable ifA. It is identical with the name of some other companyB. It resembles closely with the name of an existing companyC. It is an emblem of Government of India , United Nations , etc .D. In case of any of the above |
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Answer» Correct Answer - D (d)In case of any of the above option is correct answer. |
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| 42. |
A proposed name of company is considered undesirable ifA. It is identical with the name of an existing companyB. It resembles closely with the name of an existing companyC. It is an emblem Government of India, United Nations etc.D. In case of the above |
| Answer» d.In case of the above | |
| 43. |
A prospectus is issued byA. A private companyB. A public company seeking investment from public.C. A public enterpriseD. A public company |
| Answer» b.A public company seeking investment from public. | |
| 44. |
Stages in the formation of a public company are in the following orderA. Promotin, CommencementB. Incorporation. Capital Subscription, Commencement of Business, PromotionC. Promotion, Incorporation, Capital Subscription, Commencement of BusinessD. Capital Subcription, Promotion, Incorporation, Commencement of Business |
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Answer» b.Incorporation. Capital Subscription, Commencement of Business, Promotion |
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| 45. |
Preliminary contracts are signedA. Before the incorporationB. After incorporation but before capital subscriptionC. After incroporation but before commencement of businessD. After commencement of business |
| Answer» a.Before the incorporation | |
| 46. |
A company can enter into contracts , file suits against others , and hire persons . True / False ? Give reason. |
| Answer» True : A company is created by law . It has a separate legal status . | |
| 47. |
Explain the meaning and features of Joint Hindu Family Business. |
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Answer» The Joint Hindu Family Business is a distinct form of organisation peculiar to India. Joint Hindu Family Firm is created by the operation of law. It does not have any separate and distinct legal entity from that of its members. Features: (1) Formation: Joint Hindu Family cannot be formed or created by any contract or agreement because this organization came into existence by the operation of the "Hindu Law". It is not formed by any agreement like partnership firm. Whenever, there is Hindu Undivided Family, there is the scope for Joint Hindu Family Business. (2) Registration: It is not at all compulsory to register this organization because it is the result of Hindu Law. (3)) Membership: There are two types of members i.e Karta and Co-parceners. Karta is the elder male member of the family who controls and manages the business. The other family members are called as the co-parceners. There is no limit on membership because the membership is by birth. (4) Management: The head of the family has full responsibility of the management of Joint Hindu Family Business. He is free to take any decision without any interference of any co-parceners but he can take advice and help from the family members. (5) Liability: The liability of Karta is unlimited because he is the only deciding authority whereas the liability of co-parceners is limited up to their share in the capital of the family. |
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| 48. |
Describe various types of partners. |
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Answer» Types of partners. 1. Active Partner:A Working Partner is one who contributes capital to the business and takes active part in its management. Hence, he is called active partner. 2. Sleeping Partner: A Sleeping Partner is one who contributes only capital to the business, but does not take part in its management. He is also called dormant partner or financing partner. 3. Nominal Partner:A Nominal Partner does not contribute capital. Neither does he take active part in the management. His contribution in a partnership is limited to allowing the other partners to make use of his name. 4.Secret Partner:A Secret Partner is actually a partner of the firm. But he does not hold out to the public as a partner of the firm but keeps his existence as secret. His liability is also unlimited. |
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| 49. |
Explain the difference between the cooperative organisations and company form of business. |
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Answer» Difference between the cooperative organisations and company form of business: 1. Objectives:There is a difference in basic objectives of cooperatives from companies. The basic objective of a cooperative organisation is to provide essential service for the benefit of members.On the other hand, a company is a business organisation with the objective of earning profit. 2. Membership:The membership of a cooperative society is generally drawn from a particular locality while the shareholders of a company are drawn from all over the country. The minimum number of members required for the registration of a cooperative is 10 while the Companies Act requires at least 7 persons for the formation of a public limited company and at least 2 persons for the formation of private limited company. 3. Members’ Liability:The liability of members of a company is limited but the liability of the members of cooperative society is generally unlimited. 4. Capital:A cooperative society may or may not have share capital. A member cannot transfer the shares of the society. On the other hand, a company must have capital divided into shares by its shareholders. The shares of a company are freely transferable. 5. Surplus:In a company, the profits are distributed among members by way of dividend which varies according to the amount of capital by individual members. But a cooperative society does not distribute its profit according to the capital held by the shareholders. The surplus or profit earned by a cooperative is given away to the members on tine basis of the purchase made by them. |
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| 50. |
List the factors that help im selecthing a suitable form of organisation. |
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Answer» Factors determining Choice of a Business Form The following are the factors that determine the choice of a business organisation. (a) Nature of business activity: Any individual first needs to decide upon the nature or kind of businessactivity that he or she desires to undertake. In case the business type requires direct personal contactwith customers, then the sole proprietorship form of business proves beneficial. On the other hand, ifdirect personal contact is not required, then a partnership or a company form of business is moresuitable. (b) Degree of control: The choice of a business form also depends on the degree of control that abusinessperson wants to exercise over its management. If a businessperson aims to have directcontrol over all the business operations, then sole proprietorship may be considered appropriate.However, if he or she does not mind sharing the decision-making powers with others, then apartnership or company form of business would be more suitable. (c) Degree and specialisation of managerial abilities: If the business operations are large and requirespecialised and skilled professionals for managing them, then a company form of business may be selected.However, if the business operations are not very complex and the scale of operations is also not very large, then sole proprietorship proves to be better alternative. |
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