Q1: Explain the important characteristics and differentiate between the various types of business enterprises.
Ans: Characteristics of Business Enterprises:
The main characteristics of various types of business enterprises are given below –
Their characteristics are as follows:
(a) State ownership: Public enterprises are owned by the government. Even where private entrepreneurs are permitted to invest capital, more than 50 percent of capital is in government hands.
(b) Government control: The management and control of public enterprise exclusively risk with the government. Parliamentary control is exercised over public enterprises.
(c) Service motive: The public welfare or service is the main objective of public enterprise though it may also earn profits. There is usually benevolent management in public enterprises.
(d) Public accountability: The capital of public enterprise is supplied from the public exchequer or government department in charge of public money. Therefore, public enterprises are accountable to the general public.
Private Sector Enterprises: The characteristics of private sector enterprises are as follows:
(a) Private ownership: It is owned and managed by a private enterprise or group of individuals. The entire share capital is provided by these businessmen.
(b) No state participation: There is no participation by the Central or state governments in the establishment and ownership of a private-sector enterprise.
(c) Independent management: The management and control of a private-sector enterprise are vested in the hands of one or more private businessmen.
Management is accountable to the owners (their elected representatives). There is no interference by the government in internal management.
(d) Profit motive: The main object of a private-sector enterprise is to earn profits rather than to render service to society.
Joint Sector Enterprises: The characteristics of joint sector enterprises are as follows:
(a) Mixed ownership: The government, private entrepreneurs, and the investing public jointly own a joint sector enterprise.
(b) Combined management: The management and control of a joint sector enterprise lie with the nominees or representatives of the government, private businessmen, and the public.
(c) Share capital: The shares of the government, private businessmen and the public in the capital are 26 percent, 25 percent, and 49 percent, respectively. The aim is to pool the financial resources and technical knowledge how of the state and the private individuals.
Comparison Between Private, Public, And Joint Sector Enterprises:
Q2: What is the scope of setting small business and also give reasons for considerable scope of setting small scale businesses in our country?
Ans: Scope of setting up small business enterprises:
There is considerable scope for setting up small scale units due to the following reasons –
Q3: Discuss the main types of partners.
Ans: A partnership firm can have different types of partners with different roles and liabilities. There can be the following types of partners:
Active Partner: Those partners who contribute capital and also takes an active part in the management of the firm are called active partners. These partners act as agents of the firm and have unlimited liability. All other partners are responsible for their deals.
Sleeping or dormant partner: Those partners who contribute capital only but do not take an active part in the affairs of the business are called sleeping partners. They have shared in the profit loss of the firm and also have unlimited liability. But they do not come face to face with the third party.
Secret Partner: This type of partner contributes capital and takes an active part in the management of the firm’s business. He shares in the profit and losses of the firm and has unlimited liability. However, his connection with the business of a partnership firm is not known to the outside world.
Nominal Partner: Those partners who neither invest money nor have shared in the profit and loss and also have no role in the administration of the firm. The firm makes them partners to gain from their personal goodwill. They have unlimited liability also.
Partner by estoppel: A person who by his words or conduct, represents himself as a partner becomes liable to those who advance money to the firm on the basis of such representation. He cannot avoid the consequences of his previous act.
Partner by holding out: When a person is declared as a partner and he does not deny this even after becoming aware of it, he becomes liable to third parties who lend money or credit to the firm on the basis of such a declaration.
Minor Partner: A minor is a person who has not completed 18 years of age. Minor may be admitted as a partner only for the benefits of the partnership with the mutual consent of all the partners. On being so admitted, a minor can impact and copy the books of accounts but could not take an active part in the management. His liability is limited to the intent of his share in the capital and profit of the firm.
Q4: Explain the various types of partnerships.
Ans: A partnership can be classified on the basis of two factors:
On the basis of duration, there can be two types of partnership:
On the basis of liability, the two types of partnership are:
On the basis of Duration:
On the basis of liability:
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