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    254 | [Solved Scanner CA Foundation Paper - 4B (New Syllabus)] INTRODUCTION To BUSINESS AND BCK {Marks of Objective, Short Notes, Distinguish Between, Descriptive & Practical Questions Legend a 2012 - DECEMBER 4 Objective g Short Notes 3s Distinguish Noescrntve FES practic 1 is a feature of partnership form of business. 7 (a) Separate legal entity from the firm, {oF Limited scope tor raising finance . | Tass Ra of @ partner is limited to his contribution to capital (d) Registration of partnership is compulsory Answer: (b) Following are the essential features of a partnership form of | business: \ () Can be started by minimum 2 persons. Can have maximum 10/20 persons. Scope for raising finance is limited. Formed for earning profit, Liability of all partners is unlimited, Registration is voluntary. Det Jrets OectS drew) Det are ony WM (vil)_ There exist a principal-agent relationship. Serretcre Thus, among the given options "limited scope for raising finance” isa feature of partnership form of business. form of business is/are appropriate for retail business. 2] (@) Sole proprietorship (0) Partnership (©) Company 487-Both (a) and (b) i; aaa ysis Login at wiww.scannerclasses.com Answer: for registration and password see first page of this book. (4) Business providing direct services like retail business should be set UP as sole proprietor; businesses requiring pooling of skills and funds should be sot up as partnership, while manufacturing ; Concerns of large size should be set up as companies Thus, both sole proprietorship and partnership form of business : 259 are appropriate for retail business. [Chapter ~ 1] introduction to Business and BCK|m[ 4.255 4.256 | @ [Solved Scanner CA Foundation Paper - 4B (New Syllabus)] [3] Which one of the following does not have perpetual succession? (a) Company (b) Statutory Corporation (©) Sole Proprietorship (6) Co-operative Society Answer: (c) Perpetual succession means that the death / insolvency of any member of a concern does not affects its continuity. Thus, its legal entity is separate from its members. All except sole proprietorship are formed like a corporate form of organisation and thus, have perpetual succession. [4] In a Hindu Undivided Family, liabi ity of is unlimited. (ar Karta (b) Co-parceners (©) Botha andb (¢) Neither a and b Answer: . (a) In HUF, liability of all the co-partners is limited except Karta, thus, enabling more efficient management. ‘Thus, the liability of Karta ted. {5] In relation to business organisation structure, which one of the following is easy to form and wind up? - (a) A company (c) Statutory corporation Answer: (b) One of the advantages of sole proprietorship form of business is that no legal formalities are required for its formation. It can be started with a small amount of capital. Similarly, its winding up also is completely depengant upon sole proprietor. Thus, sole proprietorship form of business have easy formation and winding up. . ey A sole proprietorstiip 7 (a) Public enterprises. [6] Which is not a feature of LLP? (a) Separate legal entity ~ ibYKil LLP have existence for fixed period. (c) Partners in an LLP are required fo turn into an agroement ~ (d) Inan LLP, partners are not liable for the act of olher partners.~ Answer: “ (b) Following are the features of a \y partnership: (i) Body corporate. Separate Legal Entity Perpetual Succession. Easy formation. Flexible operations. (vl) No minimum capital contribution. (vil) Easy dissolution. (viii) Low cost of formation. (ix) No partner liable for other partner's act. (x) No restriction on maximum number of partners. (xi) Mutual rights and duties of partners are governed by an LLP agreement Thus, among the given options, option Bie. "All LLP have existence {or fixed period" is not a feature of LLP. [7] Gas Authority of india Limited is an example of: (a) Limited liability partnership (b)_ Private limited company (Public enterprise (d) None of the above. Answer: “ (c) Public enterprises refers to business organisation owned, managed and controlled by local, central or State Government. Whole or most of the investment is made by government itself. Example: Gas Authority of India Limited, Hindustan Machine Tools, etc. 2013 - JuNE [8] Which one of the following is treated as a separate legal entity differen from its members? {a) Sole proprietorship (b) Hindu undivided family (©) Partnership {d}Cimited liability partnership. 4.257 Answer: (d) Lented Liability Parnership has 2 separate legal entity, lable to the {ul extent of fs assets. The liability of the partner would be limited to their agreed contribution in the LLP. ‘Thus. Limited Liability Partners! =] The choice of en appropriate form of business organisation largely depends upon: 1. Ease of formation — IL Continuity and stability Ul. Liabity aspects Correct option is — (2) land! (b) Handi {c) land AeT Mand Answer: (6) Betore selecting eny form of business organisation, one must consider the following lactors: @ Easy formation (©) Lzbity of owner (=) Continuity and stability (4) Capital Adequacy {v) Flexibility of operations (vi) Relationship between ownership, contro! & management. Thus |, Il and Ill i.e. Ease of formation, continuity and stability and Fability aspects, all are considered while making choice of an appropriate form of business organisation. “4.256 | m [Soloed Scanner CA Foundation Paper - 48 (New Syllabus)| ich form of business organisation has a separate legal entity? (a) Hindu Undivided Family (HUF) 4e7 Co-operative society — (c) Partnership (0), Sole propretorship. Answer: (b) Co-operative society possess the following characteristics— (0) Voluntary Association i) Separate legal entity Democratic management Service motive Utilisation of surplus Cash Trading Fixed Rate of Return Government control Share Capital Thus, co-operative society has a separate legal entity. | 2014 - June . [11] What is the liability of each partner under LLP? Brtimited (b) Unlimited (C) Partially Limited (6) None of the above Answe' (a) Under Lmitad Liability Partnership, as the name represents all the Partners have a form of limited liability for each individual's protection within the partnership [12] Which of the following is not 4 form of organisation? {a) Partnership {b) Company er Partners (9) Sole Propriotorship Answer: (c) Partnership, Company, Sole proprietorship are forms of organisation While partners are the members of a partnership firm and not a form of business organisation. 4.259 | (Chapter = 1] Introduction to Business and BCK] @ 4.260 | m[ Solved Scanner CA Foundation Paper - 4B (New Syllabus| [13] Who can be the head of Joint Hindu Family business? dayKarta (b) Co-parcener (c) Manager (¢) Director Answer: {a) According to the Hindu Law of Society, only Karta i.e. the eldest male member of the Hindu family can be the head of Joint Hindu Family Business, Hence option (a) is correct. [14] Members of HUF are known as (a) Partners (b) Shareholders (c) Members {dy-Co-parceners Answes (4) HUF is a most peculiar form of business organisation in which the family possesses some inherited property. lis members are known as Co-parceners. [15] Which amongst the f (e}Geparate legal entity (c) No peroetual succession Answer: {a) Following are the features of a LLP : (i) Body corporate. (i) Separate legal entity Perpetual succession (iv) Easy formation (v) Flexible operations (vi) No minimum capital contributions (vi) Easy dissolution (vil) Low cost of formation (ix) No partner liable for other partner's act, (x) Ne restriction on maximum number o! partners. (xi) Mutual rights and duties of partners are governed by an LLP agreement. Thus, among the given options, option (a) le. Separate legal entity is a feature of LLP, lowing is a feature of LLP? (b) Unlimited tiability {d) Not a body corporate [16] Head of HUF is known as fa)-Karia (b) Co-parceners (c) Manager () Head Answer: (a) HUF is the most peculiar form of business organisation in which the possesses some inherited property and the head of the , known as Karta, who manages its attalrs. [17] In case of HUF what are liabilities of Co-parcener and Karta (a) Both have untimited lia (b}-Co-parcener's liability is ted while Karta’s liability is unlimited, (©) Karta's, le Co-parcener's liability is unlimited. (d) Both have I Answer: 7 (b) In HUF, tiability of all the co-parceners is limited except Karta, thus enabling more efficient management Thus, lability of Karta is unlimited and co-parceners is unlimited. | 2014 - Decenser [18] To form a partnership, the minimum capita contribution should be (a). LLakn “fT There is no minimum limit, (©) 1 Crore (6) &5 Lakh, Answer: (b) Ina partnership, there are no complicated legal formalities inv the establishment of partnership business. The partners entered into a partnership agreement can start their business, thare is no such any minimum capital contribution limit. Howover, in cas® of sole proprietorship, the capital is limited to the savings o! one owneror his borrowing capacity. Hence, option B is correct. [Chapter = 1] Introduction to Business and BCK|m[ 4.261 '8) The Karta in Joint Hindu Family businoss has: {S)-UFiimited habitty {c) Limted liability Answer: (2) The liabiity of the co-parceners is limited, except for that of the Karta, This makes the Karta lo manage the business in the most" efficient manner. Thus, the Karta in Joint Hindu Family business has unlimited liability, ity for debts. 20] Wnicn corporation has both characteristics ie. of a partnership’and o! » 2 Separate legal entity? ar Lmtd Liability Partnership (LLP) (2) Company (c) Partnership {¢) Statutory Body. Answer: r ) A Limted Liability Partnership, popularly known as LLP combines ‘tno edvantages of both the company ie. soparate tagal ently and parnersnip into a singlo form of organization, 2015 - Deceeecr What is Karta's tisbatty in HUF? (a) Linted (by -Untimntod (©) Umted by quarantea (a) Nona of these Answer: (bv) The tabiey of tne co-parconurs ts 4, excapt for inal of the Karta This make thy Karta to manage the businass in the most efficient mannor Thus, the Karta in Joint Hindu busingss has untimited tstiity 4.262 | m [Solved Scanner CA Foundation Paper - 4B (New Syllabus)| [22] Liability of other Co-parconers are: fa} tiited upto the extent cf share except Karta (0) Unlimited upto the extent of share except Karta (©) Unlimited . (d) Limited Answe (a) The liability of each member of the hindu undivided tamily business is limited to the extent of his share in the business while karta has unlimited liability, [23] Tho tiapility of each member of the Hindu Undivided Family business is: {a} Limited to a sum as deciared by him in general public {o) Uniimitea de}-Timited to the extent of his share in the business except karta (2) Limited to the extent of his share in the business including that of arta Answi (c) Tho tiabitty of each member o! the Hindu Undivided Family business is limited to the extent of his share in the business except karta, This makes the Karta to manage the business in the most ofticiant manner. (24] Tho attairs of a company Is overseen by: {a) Shareholders (b) Employees -(o}- Boar of Directors (8) Dividend Holders. (Chapter = 1] Introduction to Business and BCK]™[ 4.263 4.264 | [Solved Scanner CA Foundation Paper - 48 (New Syllabus) Answer: {e) A company is a voluntary association of people carrying on businoss. It is a Artilicial Legal porson whose management is soparated from ownorship. Ownorship lies with shareholders who contribute share capital and management lies with the Board of Directors who ovarsoo the alfairs of company. [25] In caso of Hindu Undivided Family, tho individual share o! each co- parcener: _ {a)_ depends upon his elficiency 0098 changing on the death or birth of co-parcener ef is fixod {d) keeps changing annually Answer: (c) In a Hinda Undivided Family Business, the share of each Co- parcener is fixed but is liable to change due to dealh or birth of any momber in the family. [26] The size ang structure of businass depend on many factors which (are): 427 in the control of enterprises (0) Arbitrary nd random (©) Range trom internal to external factors which are beyond the contro! of enterprises (¢) Beyond the contro! of enterprises. Answer: (a) The Size and Structure of Business depend upon factor such as: (a) District Ownership (b) Lawful Business (c) Separate Status (d) Deals in Goods and Services (@) Risk involvement They are all in the control of enterprise. [27] Limited Liability Parinership is constituted under__. (a) The Companies Act, 2013 imited Liabilty Partnership Act, 2008 (c) Parinership Act, 1832 (4) None is applicable. Answer: : (b) Limited Liability Partnership, the world wide tecognized form of business organisation has been introduced in India by the way of Limited Liability Partnership Act, 2008. 2017 = June [28] Sole proprietary business is suitable when market is: (a) Non Existent {b) National (Local (d) Global Answer: (c) The sole proprietorship business is most suitable where the mark for the product is small and local, where the capital requirement is small and the risk involvement is not too heavy. Thus, Option Cs correct. [29] Limited liability partnership is constituted under. (2) Companies Act, 2013 Limited Lial 2008 (d) None is applicable y Partnership Act (c) Partnership Act, 1932 Answer: (b) Limited Liability Partnership Act, 2008 came into effect by notification dated 31" March, 2009. Thus it is governed by Limited Liability Partnership Act, 2008. 2018 - May [30] CSA stands for: (a) Cash Security Ratio {b) Cash Supply Ratio ef Corporate Social Responsibility (d) Consumer Satistaction Ratio [Chapter ~ 1] Introduction to Business and Bk 4.266 |m [Solved Scanmer CA Foundation Paper - 4B (New Syllabus) a (4.265 Answer: {e) CSR stands for “Corporate Social accountability of the mana [si] LLP has: (a) Liability of Partners is Limited ® 7 case of fraud, liability of partners becomes unlimited (c) It was incorporated under LLP Act, 2009 4dFATOl the above. Answer: (d) LLP is a hybrid model which contains features of both company and partnership firm. It is a limited liability association where liability of Pariner's is limited. In case of fraud by LLP, the liabi ity of partners becomes unlimited. LLP must be incorporated under LLP. Act,2009 Hence, all the above are its features. [22] Which of the following is correct? (a) Max. no. of members is 50 in case of private limited company. (b) Freely transferable sHiares in case of private limited company -42)-Max. no. af members - 200 in case of private limited company. (0) None of the above (1marky Answer: (c) Incase of Private Limited Co. the maximum no. of members can be 200. Shates in a private co. are not freely transferable but subject to certain restrictions. (32) In HUF: (@) .Liability of Karta is limited —(b) No (}-Biattity of Karta is unlimited (d) Liability of everyono eur ert Answer: * () In case of HUF, the liability of Karta is unlimited and that of co- parcener is limited. Responsibility” i.e. gement towards the stakeholde (1 mark) 2018 - NovenBeR [33] The Logo of Institute of Chartered Accountants of India (ICAl) is suggestive of . {a) Integrity wtoy Vigilance (c) Professional (0) None of these ’ Answer: (b) The logo of the institute trom the Institute of Chartered Accountants. of India (ICAl) is suggestive of the vigilance expected from the CAs [34] When FERA is converted into a FEMA: (a) 1934 (b) 1928 er 1999 (d) 1997 Answer: (c) Foreign Exchange Management Act (FEMA), 1999 that replaced the Foreign Exchange Regulation Act (FERA), 1973. [35] Which is not a merit of LLP? (a) Designated partners have to do all compliance {b) Separate Legal entity (c) Both (a) & (b) {a}-None of the above. Answer: {a) Designate Partner ie. ensure the compliancos howover comparison with the companies, the com simpler is the limitation of the LLP (1 mark) (1 mark) (1 mark) in pliances are fewer and Solved Scanner CA Foundation Paper - 4B (New Syllabus) | | [Chapter = 1] Introduction to Business and BCK]@[ 4.267 4.268 | [36] Income tax Act, HUF cannot card which type of [40] Economic activities do not include (a) Profit (a) Profit earning ySalary o}-Emotional sentimental {c) House Property {0) Other Sources. (1 mark) (1 mark) Answer: (b) According to Income Tax Act, HUF cannot earn salary of any kind. (37] HUF ___be formed by a group of people who do not constitute a family, Ual cannot Kean (c) should not (d) may Answer: (a) HUF, cannot be formed by a group o! people who do not con: a family. tt can only be formed by a family Nos directors in a private company. 2 (b) 3 () 5 (7 Answer: (a) There are only 2 directors in every private company and as in every public company. [39] Economic, Activities are driven cause of . 2 Lay Selt-interest (b) Self-less motive (c) Human welfare (B) Selt satistaction Answer (2) Economic activities are said to be driven by rationality or self interest and non-economic activities are driven out by human weltare therefore, human welfare is not included in economic (1 mark) te 138) (1 mark) (1 mark) Answer: (b) Economic activities Involves act worth therefore it will not include emotional sentiment as itis done jas done for money or money's ‘out of love and affection. [41] The choice of an appropriate form of business organisation depends upon: (i) Ease of formation (a) Only! (b) Only it () (1 mark) Answer: (d) The choice of an appropriate form of business organisation depends upon: 1. Ease of formation 2. Liability aspects 3. Capital structure “Therefore I, Il, and | all the characteristics are f 2019 - May [42] The Companies Act, 2013 provides registration tor (a) One person company (b) Small company (c) Defunct company

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