Short Type Questions - Entrepreneurial Planning, Entrepreneurship, Class 12 | Additional Study Material for Commerce PDF Download

Q1. Explain economic activities with the help of examples. (4 marks)
Ans. Activities which are undertaken by people with the object of earning money are known as economic activities. These activities are concerned with production, exchange and distribution of goods and services. The purpose of economic activities should be expectation of money income which is used for further creation of wealth or assets.
Examples : Production of goods in a factory, distribution of goods by a retailer, working as a teacher in a school, etc.

Q2. Explain the types of economic activities. (3 marks)
Ans. Economic activities are divided into three categories :
(i) Business
(ii) Profession
(iii) Employment
(i) Business : Business refers to those activities which are connected with production, purchase, sale or distribution of goods or services with the main object of earning profit.
(ii) Profession : Profession refers to the activities which require special knowledge and skill to be applied by an individual in his work to earn a living.
(iii) Employment : Employment refers to an activity in which an individual works regularly for another person and gets remuneration in return.

Q3. Explain Non-Economic Activities and give examples. (4 marks)
Ans. The activities which are undertaken by an individual with a motive of getting psychological satisfaction are known as non-economic activities. The end result of non-economic activities is not-earning profit or creation of wealth but is self-satisfaction.
Examples : Charity, production for self consumption, etc.

Q4. What are the activities involved in business ? (4 marks)
Ans. Following are the activities involved in business :
(i) Creating a customer.
(ii) Converting economic resources into goods and services keeping in mind the preferences of customers.
(iii) Innovating new products of services.
(iv) Marketing the innovating products and services so that they can reach the customer.

Q5. What are the forms of private sector enterprises. (3 marks)

Ans.
(i) Sole properietorship.
(ii) Joint Hindu Family Business.
(iii) Partnership.
(iv) Co-operative society.
(v) Joint stock company.

Q6. When is sole proprietorship form of business suitable ? (3 marks)
Ans. Sole proprietorship form of business is suitable when :
(i) Capital requirement is limited.
(ii) Secrecy is very important.
(iii) There is only local market.
(iv) Goods involved in business are of customized nature.
(v) Business demands quick decision.
(vi) The size of venture is small.

Q7. Is it mandatory to get a partnership firm registered ? What are the consequences of non-registration of a partnership firm ? (4 marks)
Ans. It is not mandatory to get a partnership firm registered. However, an unregistered partnership firm is denied of the following rights :
(i) A partner cannot file a suit in any court against the firm or other partners for the enforcement of any right arising from a contract or right conferred by the Partnership Act.
(ii) A right arising from a contract cannot be enforced in any court by or on behalf of the firm against any third party.
(iii) The firm or any of its partners can not claim a set off (i.e., mutual agreement of debts owned by the disputant parties to one another) or other proceedings in a dispute with a third party.

Q8. Explain the procedure for registration of a Partnership Firm ? (4 marks)
Ans. A Partnership Firm can be registered any time. To get the firm registered partners have to apply to the Registrar in a prescribed form along with the registration fees. Along with the application following information must be supplied :
(i) Name of the firm.
(ii) Principal place of the business of the firm.
(iii) Date of admission of partners in the firm.
(iv) Names and address of all the partners.
The application must be signed by all the partners. The Registar will verify the above said information and if satisfied, he will issue a Certificate of Registration.

Q9. Mention one usefulness of Information Technology Act, 2000. (3 marks)
Ans. The Information Technology Act, 2000 provides for use of Digital Signatures on the documents submitted in electronic form in order to ensure the security and authenticity of the documents filed electronically.

Q10. Every business entity needs to select an appropriate legal structure or framework to work in. Why ? (4 marks)
Ans.
(i)  Setting up a business is not an easy task.
(ii) An enterprise is a seperate and distinct unit, institutionally arranged to conduct any type of business activity.
(iii) It needs to combine the necessary things being material, tools, equipments, working space and appurtenances, brought together in a systematic and effective manner to accomplish the entrepreneur’s desired objective.
Thus, every business activity needs to select an appropriate legal structure as framework.

Q11. Describe an example of successful SOLE PROPRIETORSHIP/ONE MAN SHOW. (3 marks)
Ans. In 1960, Monaghan and his brother Jim borrowed $900 and bought a foundering Pizzeria in Ypsitanti, Michigan, Jim left within a year, but Tom hung on, survived two wear bankruptcies and a fire. Monaghan worked for eighteen hours of all seven days a week, that too wholeheartedly making Domino’s Pizza—A GIANT MNC world over a house hold name. Started as a sole proprietor and today a MNL—a long successful journey of ‘one big man’.

Q12. What are public sector enterprise ? What are its form ? (3 marks)
Ans. When business enterprises are owned, controlled and operated by public authorities, with welfere as primary and profit as secondary objects, they are called public sector enterprises.
These enterprises have the following forms of organization :
(i) Departmental undertaking.
(ii) Public Co-orporations.
(iii)  Government Companies.

Q13. What is Excise Duty ? How it is different from sales tax ? (3 marks)
Ans. Exise Duty is a tax levied by the Central Government on the manufacture or production of goods.

Sales Tax is different from the Excise Duty as excise is a tax on the act of manufacture or production of goods while the sales tax is a tax levied on the act of sale.

Q14. How is follow-up helpful to an entrepreneur ? (3 marks)
Ans. Follow-up element helps the entrepreneur in the following ways :
(i) Developing Ways : Developing ways to review the present situation with regard to materials, work-in-progress and finished goods.
(ii) Evolving Ways : Evolving ways to control the performance to those departments which lag behind.
(iii) Removing Obstacles : Removing obstales in the way of production, suggesting measures.

Q15. What is PAN ? Why is it required ? (3 marks)
Ans. Permanent Account Number (PAN) is a ten-digit alphanumeric number issued by the Income Tax Department.
It is required because it enables the department to link all transactions of the enterprise with the department.
These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, etc.

Q16. What categories of persons are required to obtain registration with the Central Excise Department ? (4 marks)
Ans. Following categories of persons are required to get themselves registered with the Central Excise Department :
1. Every manufacturer of dutiable excisable goods.
2. First and second stage dealers or importers desiring to issue cenvatable invoices.
3. Persons holding bonded warehouses for sharing non-duty paid goods.
4. Persons who obtain excisable goods for availing end-use based exemption.

Q17. Employees Provident Fund is applicable to which establishments ? (4 marks)
Ans. The Employees Provident Fund and Miscellaneous Provisions Act, 1952 applies to the whole of India except Jammu & Kashmir.
Employee’s Provident Fund and Miscellaneous Provisions Act, 1952 is applicable to : Every establishment which is engaged in any one or more of the industries specified in Schedule I of the Act or any activity notified by the Central Government in the Official Gazzet, employing 20 or more persons.

Q18. How to register a Limited Liability Partnership (LLP) ? (4 marks)
Ans. To register a Indian LLP following is to be followed :
(i) Apply for DPIN : Firstly apply for a Designated Partner Identification Number (DPIN), which can be done by filing a form for acquiring the DIN (Direction Identification Number) or DPIN.
(ii) DSC : Acquire the Digital Signature Certificate. DSC is required to file the form.
(iii) Register : Register the DSC on the MCA (Ministry of Corporate Affairs) portal.
(iv) LLP name : Thereafter, the Designated Partners needs to get the LLP name approved by the Ministry.
Once the LLP name is approved, the partners can register the LLP by filing the incorporation form.

Q19. What documents are to be provided while opening a current account by a Trust ? (4 marks)
Ans. Documents to be filed for opening a current account by a trust are :
(i) Copy of the Trust Deed.
(ii) Copy of the Registration Certificate.
(iii) Copy of the resolution passed by the trustees authorising the members concerned to open and operate the account.
(iv) List of Trustees with residential addresses.
(v) Bye-laws of the association or club.
(vi) Photographs of the members operating the account.

Q20. What is LLP ? (4 marks)
Ans. Limited Liability Partnership popularly known as LLP. It combines the advantage of both the company and partnership into a single form of organization. In LLP, all partners have a form of limited liability for each individual’s protection within the partnership.

LLP has a seperate legal entity liable to the full extent of its assets, The liability of the partners would be limited to their agreed contribution in the LLP.

LLP business organization has been regulated by Limited Liability Partnership Act, 2008.