Here are five assertion-reason questions based on Chapter 3 of Class 11 Business Studies (BST). These questions explore key concepts and require an understanding of the material.
Question 1
Assertion: A sole proprietorship is easy to establish.
Reason: It requires minimal legal formalities and paperwork to start.
- The assertion is true as sole proprietorships can be started with little capital and do not have complex regulations.
- The reason supports the assertion effectively because the simplicity of establishment is one of the main advantages.
Question 2
Assertion: Partnerships have unlimited liability.
Reason: This means partners are personally responsible for business debts.
- The assertion is true; partnerships indeed have unlimited liability, which can pose risks to personal assets.
- The reason accurately explains the implication of unlimited liability, reinforcing the assertion.
Question 3
Assertion: A company has a separate legal entity from its owners.
Reason: This allows a company to own property and enter into contracts in its name.
- The assertion is correct; a company is recognized as a legal person distinct from its shareholders.
- The reason provides a valid explanation of why a company's separate legal entity is significant.
Question 4
Assertion: Cooperatives are formed to serve the needs of their members.
Reason: They operate on the principle of one member, one vote, ensuring democratic management.
- The assertion is true, as cooperatives are designed to meet the collective needs of their members.
- The reason supports the assertion by highlighting the democratic nature of cooperative governance.
Question 5
Assertion: Limited liability companies protect owners' personal assets.
Reason: Owners are only liable for the amount they invested in the company.
- The assertion is true; limited liability companies shield personal assets from business liabilities.
- The reason correctly explains this protection by emphasizing the investment limit as the extent of liability.
These questions help deepen your understanding of the characteristics and implications of various business structures, which is essential for effective decision-making in the business environment.