Forms Of Business Organisations - 2 - Free MCQ Practice Test with solutions,

Life of sole proprietorship business is unstable because in sole trade only one person do all task of business but in situation of death of partner business will shut down completely.And sole trade have many limitation like unlimited liability, lake of resources, improper management etc. So it is unstable.

The Hindu Succession Act, 1956 is an Act of the Parliament of India enacted to amend and codify the law relating to intestate or unwilled succession, among Hindus, Buddhists, Jains, and Sikhs. The Act lays down a uniform and comprehensive system of inheritance and succession into one Act.

This type of entity limits the owner's liability to their ownership stake and restricts shareholders from publicly trading shares. Members: You can start a private limited company with a minimum of only 2 members (and maximum of 200), as per the provisions of the Companies Act 2013. Minimum 2 and Maximum 20 can only be a part of partnership firm while for private limited company, 2 to 50 members in case of Private Company and Minimum 7 members in case of Public Company can be a part and in LLP's there has to be minimum 2 partners and there is no limitation of maximum number of partners.

A Company is required to be registered under The Companies Act, 2013, only after that it will get recognition in the market.

It is required to appoint only 2 directors. All its directors can be permanent life directors; the requirement of retirement by rotation does not apply. The special 14 days notice required by the section 257(1) for the appointment of a new director in place of a retiring one does not apply to the case of a private company. It can even increase the number of directors beyond the permissible limit.

Partner by holding out (Section 28)

Partnership by holding out is also called as a partnership by estoppel. This is when an individual holds himself out as a partner or allows others to do so, the person is then stopped from denying the character he has assumed and upon the faith of which creditors may be presumed to have acted. When an individual represents himself or knowingly permits himself, to be represented as a partner in a partnership firm (when in fact he is not) he is liable, like a partner in the firm to anyone who on the faith of such representation, had given credit to the firm.

Nominal Partner: A person who is of great reputation in the market and lends his name to the firm is known as Nominal Partner. Such a partner neither contributes capital nor takes part in the management of business of the firm.

A corporation is a large structure of organization which has all the legal rights of an individual, except for the right to vote and certain other limitations. A corporation out of all given choices is the largest amongst them, so definitely a corporation has the largest sales volume.
And multinational is a form of a corporation only, therefore, corporation will be the most suitable answer here.

• Partnership at will: In this type of partnership, partners agree to carry on the business without any specific time limit or duration. The liability of partners is generally limited.


• General Partnership: In a general partnership, all partners have unlimited liability. This means that each partner is personally responsible for the debts and obligations of the partnership.


• Limited Partnership: In a limited partnership, there are two types of partners: general partners and limited partners. The general partners have unlimited liability, while the limited partners have limited liability. Limited partners are only liable up to the amount of their investment in the partnership.


• None of these: This option is incorrect because the correct answer is C, Limited Partnership.

According to partnership act ,1932 .if the partner become die ,insolvency ,and retirement. Then the partnership agreement again signed by the partner who want to continue this partnership.They do not continue old partnership because new ratio will be determined in which profit and loss distributed.

According to Partnership Act 1932,  A Partnership Firm can be formed by two or more persons with (or) without registration of the firm. If the firm is registered with the consent of all the partners they have to publish their accounts and submit its report to the registar of firms of that particular state. In case if the firm is not registered  then they don't need to submit their accounts to the legal authority.

Sole Proprietorship, first of all, is not a company. It is an unincorporated business type, and needs no registration to be created. The biggest disadvantage of a Sole Proprietorship is Unlimited Liability. As it is not considered to be a separate entity in the eyes of the law, the owner bears complete responsibility towards any debts or damages caused with respect to the business; even at the stake of your personal assets.

MUTUAL AGENCY IN A PARTNERSHIP The fifth element in the definition of partnership provides that the business must be carried on by all the partners or any (one or more) of them acting for them all, i.e. there must be a mutual agency. Thus, every partner, is both an agent and principal for himself and other partners, i.e. he can bind by his acts the other persons and can be bound by the acts of other partners. The importance of the element of mutual agency lies in the fact that it enables every partner to carry on the business on behalf of others.