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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.
| 51. |
Directors take approval from where before issue of shares in capital market:A. GovernmentB. SEBIC. Chamber of CommerceD. None of these |
| Answer» Correct Answer - b.SEBI | |
| 52. |
Which clause of Memorandum defines powers and limitations of a company ?A. Name clauseB. Objective clauseC. Liability clauseD. Domicile clause |
| Answer» Correct Answer - b.Objective clause | |
| 53. |
What do you understand by sole proprietorship ? Outline its three features . |
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Answer» Sole proprietorship means a business owned, financed and controlled by a singleperson who is recipient of all profit and bearer of all risks.It is SUITABLE IN AREAS OF PERSONALISED SERVICE like beauty parlour,hair cutting, saloons & small scale activities like retail shops. Features 1. Single ownership : It is wholly owned by one individual 2. Control : Sole proprietor has full power of decision making. 3. No separate legal entity : Legally there is no difference between business& businessmen. 4. Unlimited liability : The liability of owner is unlimited. In case the assetsof business are not sufficient to meet its debts, the personal property ofowner can be used for paying debts 5. No legal formalities : are required to start, manage and dissolve suchbusiness organisation. 6. Sole risk bearer and profit recipient : He bears the complete risk andthere is no body to share profit/loss with him. |
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| 54. |
Explain the procedure of a formation of a company. |
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Answer» The whole process of company formation can be divided into four stages as given below: 1.Promotion of a Company:The process of business promotion begins with the conceiving of an idea and ends when that idea is translated into action i.e., the establishment of the business enterprise and commencement of its business. 2.Registration of a Company:It is registration that brings a company into existence. A company is properly formed only when it is duly registered under the Companies Act. 3.Certificate of Incorporation: On the registration of Memorandum of Association, Articles of Association and other documents, the Registrar will issue a certificate known as the ‘Certificate of Incorporation‘. The issue of certificate is the evidence of the fact that the company is incorporated and the requirements of the Companies Act have been complied with. 4.Commencement of the Business:A public company can commence its business only after getting the ‘certificate of commencement of business‘. After the company gets the certificate of incorporation, a public company issues a prospectus for inviting the public to subscribe to its share capital. It fixes the minimum subscription. Then it is required to sell the minimum number of shares mentioned in the prospectus. |
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| 55. |
What do you understand by Sole Proprietorship? Outline its features. |
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Answer» Sole proprietorship refers to a form of business organization which is owned, managed andcontrolled by an individual who is the incipient of all profits and bearer of all risks. The word “sole”implies “only” and “proprietor” refers to “owner”. Hence, a sole proprietor is the only owner of abusiness. This form of business is particularly common in small scale business and areas ofpersonalized services. Features of Sole Proprietorship: (i) Formation and Closure :Very few legal formalities are required to start a sole proprietary business,except in the fields where a license is required. Closure of the business can also be done easily. (ii) Unlimited Liability :Sole proprietors have unlimited liability. This implies that the owner ispersonally responsible for payment of debts in case the assets of the business are not sufficient tomeet all the debts. (iii) Sole Risk Bearer and Profit Recipient :The sole proprietor bears the risk of failure of business allalone and also receives all the business profits which are a reward for his risk bearing. (iv) Control and Decision :Making The sole proprietor has the absolute right to run the business andmake all decisions regarding the business without any interference from others. He is the king in allaspects. (v) No Separate Entity :No distinction is made between the sole proprietor and his business in termsof law as business does not have an identity separate from the owner. The owner is, therefore, heldresponsible for all the activities of the business. (vi) Lack of Business:Continuity Sole proprietorship lacks continuity as death, insanity,imprisonment, physical ailment or bankruptcy of the sole proprietor will have a negative effect onthe business and may even cause closure of the business. |
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| 56. |
Enumerate various type of cooperative sociaties. |
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Answer» The main types of cooperative societies are given below: 1. Consumers cooperative societies:Consumers’ cooperatives are formed by the consumer to obtain their daily requirements at reasonable prices. Such a society buys goods directly from manufacturers and wholesalers to eliminate the profits of middlemen. 2. Producers cooperatives:Producers or industrial cooperatives are voluntary associations of small producers and artisans who join hands to face competition and increase production. These societies are of two types.: (a) Industrial service cooperatives (b) Manufacturing cooperatives 3.Marketing Cooperatives:These are voluntary associations of independent producers who want to sell their output at remunerative prices. The output of different members is pooled and sold through a centralised agency to eliminate middlemen. 4. Cooperative Farming Societies:These are voluntary associations of small farmers who join together to obtain the economies of large scale farming. In India farmers are economically weak and their land-holdings are small. 5. Housing Cooperatives:These societies are formed by low and middle income group people in urban areas to have a house of their own. 6. Credit Cooperatives:These societies are formed by poor people to provide financial help and to develop the habit of savings among members. |
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| 57. |
Explain the procedure for registration of partnership firm. What are the consequences of non-registration? |
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Answer» Procedure for registration of partnership firm: 1. Application for Registration 2. Verification of Application for Registration 3. The duly signed copy of the Partnership Deed (which contains all the terms and conditions) must be filled with the registrar 4. Deposit/pay the necessary fees and stamp duties 5. Once the registrar approves the application, the firm will be entered into the records. And the registrar will also issue a certificate of incorporation. Consequences of non-registration: 1. It cannot enforce its claims against a third party in a court of law. 2. It cannot claim adjustment for any sum exceeding Rs. 100. Suppose an unregistered firm owes Rs. 1200 to A and A owes Rs. 1000 to the firm the firm cannot enforce adjustment of Rs. 1000 in a court of law. 3. It cannot file a legal suit against any of its partners. 4. Partners of an unregistered firm cannot file any suit to enforce a right against the firm. 5. A partner of an unregistered firm cannot file a suit against other partners. |
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| 58. |
Name the document by which a company becomes a distinct legal entity . |
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Answer» Certificate of Incorporation A certificate of incorporation is a legal document relating to the formation of a company or corporation. It is a license to form a corporation issued by state government or, in some jurisdictions, by non-governmental entity/corporation. Its precise meaning depends upon the legal system in which it is used. |
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| 59. |
Name the person who manages a Joint Hindu Family Business |
| Answer» Correct Answer - Karta | |
| 60. |
The capital of a company is divided into number of parts , each one of which is calledA. DividendB. ProfitC. InterestD. Share |
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Answer» Correct Answer - D (d)Share is correct answer. |
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| 61. |
Name the Head of Joint Hindu Family Business. |
| Answer» Correct Answer - Karta. | |
| 62. |
The Head of the Joint Hindu Family Business is calledA. ProprietorB. DirectorC. KartaD. Manager |
| Answer» Correct Answer - c.Karta | |
| 63. |
A partner whose association with the firm is unknown to the general public is calledA. Active partnerB. Sleeping partnerC. Nominal partnerD. Secret partner |
| Answer» Correct Answer - d.Secret partner | |
| 64. |
How can Articles of Association be altered? |
| Answer» The Articles of Association may be changed by the shareholders passing a special resolution in a general meeting or by written resolution. A copy of the resolution and the new articles of association must be sent to Companies House within 15 days. | |
| 65. |
State the contents of Memorandum of Association. |
| Answer» A memorandum of association contains a name clause, registered office clause, object (or objective clause), objects clause, liability clause, capital clause, and association clause. An MOA is a type of legal paper that is prepared when forming and registering a limited liability company (LLC). | |
| 66. |
What is a Certificate of Commencement of Business? |
| Answer» The certificate of commencement of business was a mandatory step under Companies Act, 2013. It was mandatory for public companies with share capital. The certificate is issued by the registrar of joint stock companies. | |
| 67. |
State the essential features of a private company. |
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Answer» Features of a private company: 1.No minimum capital required: There was a minimum paid-up share capital requirement of Rs. 1 lac previously, but that is omitted now. 2.Minimum 2 and maximum 200 members: A private company can have a minimum of just two members (but just one is enough if it a One Person Company), and a maximum of up to 200 members. 3.Transferability of shares restricted: Private companies cannot freely transfer their shares to the public like public companies. This is why stock exchanges never list private companies. 4.“Private Limited”: All private companies must include the words “Private Limited” or “Pvt. Ltd.” in their names. 5.Privileges and exemptions: Since private companies do not freely transfer their shares and involve limited interest by members, the law has granted them several exemptions that public companies do not enjoy. |
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| 68. |
Describe the privileges of private company over pubilc company. |
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Answer» Privileges of private company over public company: 1.Number of directors : Only two directors are required in case of a private company whereas a public company requires minimum three directors. 2.Issue of prospectus : A private company does not invite the public to subscribe to its share capital. Hence, it doesn’t issue a prospectus. 3.Allotment of shares : Shares of a private company can easily be allotted without receiving a minimum subscription. However, before issuing the shares to the public at large, a public company must receive minimum subscription. 4.Index of members : There is no compulsion for a ( private company to maintain an index of members. However, it is necessary for a public company to maintain such an index. |
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| 69. |
Discuss the characteristics, merits and limitations of cooperative form of organisation. Also discrible briefly different types of cooperative societies. |
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Answer» According to The Indian Co-operative Societies Act, 1912, “Co-operative organization is a societywhich has its objectives for the promotion of economic interests of its members in accordance withco-operative principles.” Features of a Co-operative Society `(i)` Voluntary Membership :The membership of a co-operative society is voluntary. There is nocompulsion for anyone to join or quit a society after serving a notice procedurally. Membership isopen to all, irrespective of their religion, caste and gender. `(ii)` Legal Status Registration of a co-operative society is compulsory. This accords a separate identityto the society which is distinct from its members. The society can enter into contracts and holdproperty in its name, sue and be sued by others. As a result of being a separate legal entity, it is notaected by the entry or exit of its members. `(iii)` Limited Liability: The liability of the members of co-operative society is limited to the extent of theamount contributed by them as capital. Merits of Co-operative Society: `(i)` Equality in Votes Co-operative society is governed by the principle of ‘one man one vote’. Eachmember is entitled to equal voting rights irrespective of the amount of capital contributed by amember. `(ii)` Limited Liability: The liability of members of a co-operative society is limited to the extent of theircapital contribution and hence, the personal assets of the members cannot be used to repaybusiness debts. `(iii)` Continuity Death, bankruptcy or insanity of the members do not act continuity of a cooperative society. Limitations of Co-operative Society: `(i)` Limited Resources :Capital contributions in a cooperative society are from the members withlimited means. `(ii)` Inefficient Management :The members of co-operative societies are not professionals and arehonorary services on a voluntary basis. `(iii)` Internal Conflicts Internal conflicts arise when personal interests start dominating the welfare. Types of Co-operative Societies `(i)` Consumer’s Co-operative Societies The consumer co-operative societies are comprises to protectthe interests of consumers as its aim is eliminating middlemen to achieve economy in operationsand provide good quality products at reasonable prices. It purchases goods in bulk directly from thewholesalers and sells goods to the members. `(ii)` Producer’s Co-operative Societies These societies are comprise to protect the interest of smallproducers and are set up to provide the supplying of raw materials, equipment and other inputs tothe members and buying their output for sale. Profits among the members are distributed on thebasis of their contributions to the society. `(iii)` Marketing Co-operative Societies Such societies consist to help the small producers who wish toobtain reasonable prices for their output and want to market their products. Its members jointlyperform marketing functions like transportation, warehousing, packaging, etc to sell the output atthe best possible price and profits are distributed according to each member’s contribution to thepool of output. |
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| 70. |
Name the enterprise involving single ownership. |
| Answer» Correct Answer - Sole Proprietorship | |
| 71. |
Briefly explain three activities which can be suitably undertaken by cooperative societies . |
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Answer» Following are the activities undertaken by cooperative societies : (i) A cooperative society may undertake the construction of houses/flats for its members at lower costs and giving the option of paying instalments . (Cooperative housing societies ) (ii) A cooperative society may undertake the provision of easy credit on reasonable terms to the members at low interest rates . (Credit cooperative societies . ) (iii) A cooperative society may undertake the sale of the products of its members at resonable prices . (Marketing cooperative societies) . |
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| 72. |
How many signatories to memorandum of association are required in case of private and public companies? |
| Answer» There must be at least seven signatories in case of Public Ltd. Company and at least two in case of Private Ltd. Company. | |
| 73. |
Mr. Aryan Awasthi is interested in floating a private limited company . Discuss the steps he should undertake . |
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Answer» Following is the procedure for floating a private limited company : 1.OBTAIN DIGITAL SIGNATURE - since now all the documents which are submitted to ROC i.e. Registrar of companies through online mode it is necessary to obtain a digital signature certificate. Hence it is an initial step for the formation of a company to option a digital signature. 2.OBTAIN DIRECTOR IDENTIFICATION NUMBER (DIN) - all the directors of the company who donot have a DIN should apply for the same on the MCA portal in form DIR- 3 3.CHECK AVAILABILITY AND APPLY FOR NAME RESERVATION - Next step is the check that the proposed name of the company is available if it is the file an application for the reservation of the name of the company. The reservation is valid for a period of 60 days.< br>4.DRAFT MOA AND AOA - The next step is to draft the memorandum of association and article of association of the company. 5.FILLING OF EFORMS WITH THE ROC - the next step is to file various eforms with the ROC , it includes forms related to application of incorporation of the company, form related to situation of registered office, form related to appointment of directors and key managerial personnel etc. 6.VERIFICATION AND ISSUE OF CERTIFICATE BY ROC - after verification of various documents a certificate of incorporation is issues by the ROC. This certificate is the proof of incorporation of company. |
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| 74. |
In which business organisation there is separation of ownership and management? |
| Answer» Company form of business | |
| 75. |
When does a company come into existence? |
| Answer» From the date of its incorporation | |
| 76. |
`{:((i) , "A person who lends his name and goodwill for the benefits of a parthership firm" , (A), "Particular partnership"), ((ii) , " A person who contributes capital but does not take part in the business in the firm." , (B) , "Partnership deed"), ((iii) , " A document containing terms and conditions of partnership" , (C) , "Sleeping partner"), ((iv) , "A partnership set up for a specific project." , (D) , "Nominal partner"):}` |
| Answer» (i) -(D) , (ii) -(C) , (iii)- (B) , (iv) - (A) | |
| 77. |
Name and explain the partner who does not have interest in the partnership business but lends his name to the firm . |
| Answer» Nominal partner. It refers to a partner who lends his name but does not contribute capital or participate in the decisions. He/She bears unlimited liability. | |
| 78. |
Name the partner who does not have interest in the partnership business but lends his name to the firm . |
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Answer» Nominal partner This is a partner that does not have any real or significant interest in the partnership. So, in essence, he is only lending his name to the partnership. He will not make any capital contributions to the firm, and so he will not have a share in the profits either. But the nominal partner will be liable to outsiders and third parties for acts done by any other partners. |
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| 79. |
Name the type of cooperative society set up to protect the interest of small producers . |
| Answer» Producers cooperative societies | |
| 80. |
Name the type of cooperative society set up : (a) to help the small producers in selling their products . (b) to provide easy credit on reasonable terms to the members . Also , distinguish between the two on the basis of : (i) members `" "` (ii) activities `" "` (iii) aim. |
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Answer» a) Producer Cooperative society. b) Credit unions/Credit cooperative society Difference between them -1.MEMBERS- In both minimum 10 memebers are required and maximum can vary. 2-ACTIVITIES-Producer cooperative -They perform several activities like processing, marketing & distributing their own products. This helps in lower costs and strains in each area with a mutual benefit to each producer. -CREDIT UNIONS-They provide credit and financial services to the members at competitive prices. Each and every depositor has the right to become a member. Members attend the annual meeting and are given rights to elect a board of directors. 3.AIM-Producer cooperative society-To protect the interest of small producers, these societies are set up. The co-operative society members may be farmers, landowners, owners of the fishing operations. To increase the marketing possibilities and production efficiency, producers decide to work together or as separate entities. CREDIT UNIONS-Credit unions are generally member-owned financial cooperatives. Their principle is of people helping people. They provide credit and financial services to the members at competitive prices. |
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| 81. |
Distinguish between consumers cooperative societies and and producers cooperative societies on the basis of : (i) Estalishment `" "` (ii) Functions (iii) Objectives `" "` (iv) Distribution of profits . |
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Answer» Producers’ Cooperative Society – Producers or industrial cooperatives are voluntary associations of little producers and artisans who join hands to face opposition and augment production. Nature of Business: It is built by the collection of same products producers. Objective: To protect the producer’s right in the way of producing the products regularly with the proper distribution. Functions: It’s restated to the productions activities distribution of profit: Profit is distributed according to the payment of capital to the members. Consumers’ Cooperative Society – Consumers’ cooperatives are created by the consumers to get there on daily basis requirements at evenhanded prices. Such a society buys goods directly from manufacturers and wholesalers to get rid of the profits of middlemen. Nature of Business: Purchasers or consumers of the different products establish these organizations. Objective: To supply the necessary goods at a reasonable price is the main objective. Functions: Products distribution is the main function among the members. distribution of profit: Profit is distributed according to the total purchase of the members. |
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| 82. |
Name the cooperative society set up to provide easy credit on reasonable terms to the members . |
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Answer» Credit cooperative society These societies are formed to provide credit facilities to their members at reasonable terms and conditions. The members are the persons who need financial assistance in the form of loans. Loans are provided out of the amount collected from the members as capital and deposits. The main aim of the society is to provide loans to the needy members at low rate of interest. |
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| 83. |
Name the type of cooperative society set up to help the small producers in selling their products . |
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Answer» Marketing cooperative society . These societies are formed to help the small producers in selling their products. Its members are the producers who want to obtain reasonable price for their output. The main aim of such a society is to eliminate middlemen and to provide a secured and favourable market for the products. The society also performs various marketing functions like transportation, warehousing, grading, etc. It ensures the sale of output at the best price." ’ |
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| 84. |
A Firm Manufacturing Spice adultrate spices and sell at low price to various restaurants, hotels and shops. What values are being violeted? |
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Answer» 1. Harming the health of people who consume dishes made with those spices. 2. Violation of anti-adultration law. 3. Providing false information to buyer. |
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| 85. |
"Arora Brothers is a firm formed for the construction of a shopping mall" . Identify this type of partnership . |
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Answer» Particular partnership It is the partnership which is formed for completing only a particular project or any activity to be carried on for a specified period of time only. This partnership is automatically dissolved on completion of the project or activity |
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| 86. |
In a cooperative society , the principle followed isA. One share one voteB. One man one voteC. No voteD. Multiple votes |
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Answer» Correct Answer - B Principle followed in a cooperative society is one man one vote.Therefore option b is correct. |
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| 87. |
According to Partnership Act, 1932, it is not compulsory for a partnership firm to get itself registered, then why do partners prefer to get the firm registered? |
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Answer» Legally, it is not compulsory for a partncrship firm to get itself registered, but then also partners prefer to get the firm registered due to the drawbacks and limitations of an unregistered firm, To overcome the following drawbacks the partners prefer to get the firm registered 1. The partner of an unregistered firm cannot file a suit against any other partner to settel the disputes. 2. The partners of an unregistered firm cannot file a suit against the partnership firm. 3. The partner of an unregistered firm cannot file a suit against an outsider or third party for recovery of claim. 4. The outsiders can file a suit on unregistered firm. |
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| 88. |
Name the type of cooperative society set up: (a) To help the small producers in selling their products. (b) To provide easy credit on reasonable terms to the members. Also, distinguish between the two on the basis of: (i) Members (ii) Aim. |
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Answer» (a) Producer Cooperative (b) Credit Cooperative |
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| 89. |
Name the following: (a) A person who lends his name and goodwill to benefit a partnership firm. (b) A business organization with the least legal formalities. ( c ) An organization where members assciate together to promote mutual goals and welfare of consumers. (d) A type of industry to which manufacturing battery operated cars, belongs to. |
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Answer» (a) Nominal Partner (b) Sole Proprietorship ( c ) Cooperative organisation (d) Joint Stock Company |
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| 90. |
The Karta in Joint Hindu Family business hasA. Limited liabiltyB. Unlimited liabilityC. No liability for debtsD. joint liability |
| Answer» Correct Answer - d.Joint liability | |
| 91. |
Which form of business is suitable for following types of business and why? 1. Beauty parlour 2. Small retail outlet 3. Hotels 4. Shopping malls 5. Medium size trading concern. |
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Answer» 1. Sole proprietorship as it requires personal touch. 2. Sole proprietorship as less capital is involved. 3. Private company as it requires more capital and managerial skill. 4. Public company as huge capital outlay is needed. 5. Partnership as it requires involvement of more persons. |
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| 92. |
"Karta is the most active member in a Joint Hindu Family Business . He is too powerful to ruin the business ." Comment . |
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Answer» Karta is the most active member in a Joint Hindu Family Business . The right to manage the business vests in Karta alone . He has the implied authority to obtain loans through mortgages etc . For the purpose of the business . His decisions are binding on other members . Other members have neither any right to manage the affairs of business nor any right to take loans on mortagage of business property. But if Karta is inefficient and incapable for managing the business , he may ruin the business . The decisions of such a person (Karta) may not be acceptable to other members , which may cause conflicts , resulting in the break-down of the family business . |
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| 93. |
A Joint Hindu Family Business is based on a contract between co-parceners. True/False ? Give reason. |
| Answer» False : It is not based on any contract between members . There must be at least two members and an ancestral property for a Joint Hindu Family Business . Membership is by birth . | |
| 94. |
The sole proprietorship concern sinks or swims with its proprietor . True/False ? Give reason . |
| Answer» False : If there are losses , he alone has to bear them . If there is profit , he is its sole recipient . | |
| 95. |
What is the liability of Karta in Joint Hindu Family Business? |
| Answer» Correct Answer - Unlimited | |
| 96. |
The karta in Joint Hindu Family Business hasA. Limited liabilityB. Unlimited liabilityC. No liability for debtsD. Joint liability |
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Answer» Correct Answer - B (b)unlimited liability is a correct answer since karta liability is unlimited. |
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| 97. |
What is the liability of Karta in Joint Hindu Family Business ? |
| Answer» Unlimited liability . | |
| 98. |
What happens to Joint Hindu Family Business if Karta or any other member dies ? |
| Answer» Business will continue . The next elder member will become karta and his liability will be unlimited rest others liability will be limited and business will continue. | |
| 99. |
Name the document which authorises a public company to start its business . |
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Answer» Certificate of commencement of business :A private limited company can commence business on receipt of certificate of incorporation. A public company has, however, to wait to commence business till a certificate of commencement of business is received from the registrar of the joint stock companies |
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| 100. |
Describe the legal status of a promoter. |
| Answer» The company law has not given any legal status to promoters. A promoter is neither an agent nor a trustee of the company because it is a non entity before incorporation. Some legal cases have tried to specify the status of a promoter. He stands in a fiduciary position. The promoter moulds and creates the company and under his supervision it comes into existence. It is the duty of the promoter to get maximum benefits for the company. He should not get secret profits from the company. If he sells his property to company, then he should explain his interest in such property. | |