Forms of Business Organisation
Q. Write down the
advantages of registration of firms.
Ans. The advantages of
registrationof firms are:
(1) Advantage to the Firms: A registered firm, or any
of its partners can file a suit against a third party.
(2) Advantage to Partners: When a firm is registered, the partners
can file a suit against the firm or against their partners and take the course
of law to claim their rights.
(3) Advantage to creditors: The rights ofcreditor is safeguarded
by registration of the firm. The creditors can sue any partner whose name is in
the Registrar of Firms to realise their money.
(4)Advantage to Incoming Partners: An incoming partner can claim
his share and depend on the integrity of other partners in an unregistered firm
Q. What are the
advantages of a Private company?
Ans. Main advantages of
private company are as follows:-
Like partnership firm, a private company is easy to form, as two or more
persons are required to form it.
Lesser Legal Formalities-
A private limited company can start its business immediately after its
incorporation as it need not obtain the certificate of commencement of
business. Company law does not prescribe any restrictions on the allotment of
shares or appointment of directors by the private limited company.
A private limited company does not have to show or present its accounts and
financial statements before the Registrar of Companies or the public. This
ensures secrecy in the business.
Policy decisions can be taken up more quickly in case of private limited
company as compared to public companysincethere is lesser number of people to
be consulted for every decision.
Q. What is partnership
Deed? List out the contents of Partnership
Ans. Partnership deed. It
is a written agreement between the partners of a firm. It contains several
clauses regarding name and address of partners, nature of business, Capital,
profit sharing ratio etc.
Contents of Partnership Deed: -
1. Names and address of partners
2. Nature and scope of business
3. Duration of partnership
4. Contribution of capital by the partners
5. Sharing of profit or loss
6. Loans to and by the partners
7. Commission and salary of partners
8. Amount of drawings and interest on drawings for each partner.
9. Rights, duties and liabilities of partners
10. Admission and retirement of partners
11. Goodwill of the business
12. Dissolution of partnership
13. Death of a Partner
14. Breaking relationship with partnership
15. Audit of books of accounts
16. Arbitration clause
Q. Find out the Demerits
or Limitations of Co-operative Societies.
Ans. The following are the
disadvantages or the limitations of a co-operative organisation:-
Capital: Co-operative societies are generally formed by the weaker section of
the society. The members can invest only a limited capital.
ofCompetent Management: Co-operative societies are managed by the elected
representatives of the members who generally possess neither the experience,
nor the technical and professional qualification to run a business
of Secrecy: The affairs of a co-operative society are openly discussed in the
meetings of the members. This makes it very difficult for the societies to keep
their secrets closely guarded.
and Infighting: The members of a society generally belong to the same locality
or occupation; they have their own personal prejudices and professional
jealousies against each other.
of Motivation: Laws governing the co-operatives prescribe a ceiling on the vote
of return. This may dampen initiative and efforts on the part of members.
Government Interference: The functioning of the co-operatives is adversely
affected by the large number of regulations, supervision and government
Q. What are the merits
and demerits of a company?
merits and demerits of a company.
of a company)
Transferability of shares
Scope for expansion
Wider distribution of risk
of a Company)
Difficulties in formation
Excessive government regulations
Lack of secrecy
Slow decision making
Lack of Personal touch
Conflicts among shareholders
Fraudulent practices by promoters /directors
Difficulty in winding up