What are the key features of a sole proprietorship?

The key features of a sole proprietorship include: easy to form and close, liability rests solely on the owner, the owner bears all profits and losses, full control by the owner, no separate legal entity, and lack of business continuity.

Fill in the blank: A sole proprietor has ___ liability, which means their personal assets are at risk if the business incurs debt.

Unlimited

True or False: A sole proprietorship is a business structure that allows for multiple owners.

False. A sole proprietorship is owned and managed by a single individual.

What is one major demerit of a sole proprietorship?

One major demerit is limited resources, as financing often depends on the owner's personal savings or loans from family and friends.

Riddle: I am a business type that's easy to start, but my life depends on one heart. What am I?

A sole proprietorship.

Joint Hindu Family Business allows participation from how many generations?

Up to three consecutive generations.

List one merit of a sole proprietorship.

One merit is quick decision-making, as the owner can make immediate decisions without needing approval from others.

Fill in the blank: One of the main advantages of a sole proprietorship is the direct incentive of receiving all ___ generated by the business.

Profits

What is the primary risk associated with unlimited liability in a sole proprietorship?

The primary risk is that if the business fails and cannot repay its debts, the owner's personal assets can be seized to cover those debts.

True or False: A Joint Hindu Family Business is solely managed by the eldest family member.

False. It can involve multiple family members and is not limited to just the eldest member.

What is the primary governing act for the establishment of a Hindu Undivided Family (HUF)?

The Hindu Succession Act, 1956 governs the establishment of a Hindu Undivided Family.

In a Hindu Undivided Family business, who has unlimited liability?

The 'Karta' has unlimited liability, putting their personal property at risk.

Fill in the blank: Membership in a Hindu Undivided Family organization is automatic at birth for ___ family members.

Minor

True or False: All family members in a Hindu Undivided Family have unlimited liability.

False. Only the Karta has unlimited liability; other members have limited liability.

What does the term 'Karta' refer to in a Hindu Undivided Family?

The 'Karta' refers to the head of the family who has sole control over the business activities.

Riddle: I am the sole decision-maker in a family business but bear all the risk for my actions. Who am I?

The Karta.

What is a key advantage of having a Karta in a family business?

The Karta facilitates effective decision-making and maintains continuity in business operations.

Fill in the blank: Discontinuation of a family business requires ___ agreement from all family members.

Unanimous

According to the Partnership Act of 1932, what is the primary characteristic of a partnership?

A partnership is an association of individuals who agree to share profits from a business conducted by any one of them.

True or False: In a partnership, each partner has the right to independently conduct business on behalf of the partnership.

True. Partners can conduct business either on behalf of all or independently.

Riddle: We share our profits but are not a family. We can be dissolved easily, who are we?

Partners in a partnership.

What is a major drawback of a Hindu Undivided Family in terms of financial resources?

Funding is primarily derived from ancestral property, which restricts financial resources.

Fill in the blank: The 'Karta' may lack the knowledge and expertise required for all functions performed in the business, leading to ___ managerial skills.

Limited

What ensures the loyalty and cooperation among members of a Hindu Undivided Family business?

The strong sense of belongingness and shared goals among family members fosters loyalty and cooperation.

What is the primary legal framework that governs the formation of a partnership in India?

The Partnership Act of 1932.