Chapter No.

2 Ownership of Business
Aalliance School network is therefore it does not have to file public
1 financial statements with government agencies or send out quarterly financial
statements to several thousand owners, as the corporations do.
A A company C A public limited company
B A partnership business D A private limited company
A form of business organization in which has at least one general partner,
2 who assumes (unlimited liability, and at least one limited partner, whose liability is
limited to his or her investment in the business.
A General partnership. C Limited liability partnership
B Limited partnership D None of the above
Sole proprietorships may have to pay. on funds borrowed from banks than do large
3 corporations because they are considered greater risk of default due to or
. (2 options)
A Lower interest rate C Increase in cost of barrowing
B Higher interest rate D Fall in the sales & revenue
A sole proprietorship is a non-registered, unincorporated business run solely by one
4 individual proprietor with no distinction between the business and the owner. With
which of the following
A Sole proprietors must be willing to accept full responsibility for business's performance.
B Sole proprietors must also be willing to work flexible hours.
C They are on call at all times and may even have to substitute for a sick employee.
D All of the above
5 Which of the following are not the benefit of sole proprietorship? (2 options)
A No legal formalities needed to set up as a sole proprietor.
B Any profit made after tax belongs to the owner.
C You have unlimited liability for debts as there's no legal distinction between private and
business assets.
D Your capacity to raise capital is limited.
6 To be successful a sole trader must do which of the following? (2 options)
A All the responsibility for making day-to-day business decisions is yours.
B He must register his business with the government
C He must exhibit strong leadership skills, be well organized, and communicate well with
employees.
D He must share his profits with the individual if any who manages his business
Business organization activities would collectively lead to the completion of common
7 goals and objectives of an entity operated by an individual or group of people. Which
one is odd out of given activities of business.
A Businesses carry out activities such as producing goods or providing services with the
aim of selling them to customers and making a profit.
B The purpose of business activity is to provide goods and services that customers want, at
a price that they are unwilling to pay.
C A business organization is an entity formed for the purpose of carrying on required
activities to achieve its goals and objectives.
D It can be seen as the process of dividing up activities in an efficient and effective manner
to enable a system of co-operative activities of two or more persons.
 People from different backgrounds come to work together; organizations are strongly
8 influenced by the people that form them. Matter is related with
A Diversity C Synergy
B Multicultural D All of the above
When entrepreneurs establish a business, they must decide on the form of business
9 ownership. There are three basic forms of business ownership: Which one is odd
A Sole proprietorship
B Partnership
C D Corporation or the limited liability company. Not for profit organization
Laws and regulations vary between different country, but in certain areas of
10
commercial activities such as banking is accepted
A Regulatory requirements C Management regulation
B International regulation D Trade regulation
A club or a society is an association of people united by a common interest or goal. A
service club, for example, exists for voluntary or charitable activities Instead of profit
11
and loss account, clubs and societies produce to show surplus/deficit of income over
expenditure
A Income statement C Balance sheet
B Income expenditure accounts D All of the above
12 These are not-for-profit organizations that are partly or wholly funded from
A Non-government sources C Charities
B Donors D All of the above
These are that are funded by the government to achieve social indicators of
13
the country (2 options)
A Government organizations C Public limited companies
B Public sector organization D Private limited companies
The organizations voluntarily come together to achieve a common economic end
through the formation of a controlled business organization making equitable
14
contributions to raise capital and accepting a fair share of risks and benefits. These
organizations are known as
A Unions C Cooperatives
B Organizations of bankers D Traders’ Associations
Social and sports clubs areknow as non-profit making institutions termed as "clubs and
15
societies", the main source of their funding of which is
A Government funding C Public fund
B Subscription D All of the above
Clubs and societies are non-profit based organizations and their purpose brings ther
16
members are drawn together
A By common professions C For making profit
B By common class D By common interest
In partnership, dissolution is always difficult because if a partner who owns more than
17 50 % of share of the entity withdraws, dies, or becomes disabled the partnership must
reorganize or end. (2 options)
A Always difficult to decide who is going to acquire the shares of a leaving partner
B If new person is acceptable as partner
C If new person is well qualified
D If new person is belonging to good family and smart
In contrast of combined knowledge and skills, diversity of partners may result in serious
18
disagreements for key business decisions such as (2 options)
A How to run their business, which employees to hire, how to allocate responsibilities, and
 when to expand
B
How to stop their business, which employees to fire, how to allocate charities and
C benevolence
Diversity in personalities and work styles can cause clashes or breakdowns in
D communication.
Similarity in personalities and homogeneity in work styles can cause clashes or
breakdowns in communication.
In sole proprietor liability is unlimited and debt is paid from liquidation of personal
19 assets of entrepreneur due to this it is considered that there can be greater risk of
default. Thus, before borrowing he has to his personal assets
A Pledged C Barrowed
B Sale D Liquidated
In partnership the funds can be raised easily in spite sole proprietorship because
20 partner's combined financial strength also increases the firm's ability to raise funds
A True B False
A limited partnership has , who assumes unlimited liability, and ,
21
whose liability is limited to his or her investment in the business. (2 options)
A At least two general partners C At least one general partner
B No requirement of limited partner D At least one limited partner
In limited partnership, usually the general partner receives a larger share of the profits
22
after the limited partners have received their initial investment back.
A True B False
In an entrepreneurial structure of sole proprietorship becomes physically or mentally ill
23
or dies, the business may come to an end. This means there is
A Lack of continuity C Lack of flexibility
B Lack of growth D Lack of rest
As sole proprietorship there is unlimited liability, hence in case of nonpayment of debts
24
sole proprietor has to pay liability from his
A Sale of native land C Personal assets
B Sale of homeland D Banker’s assets
Despite of convenience in dissolution in sole proprietorship which of the following factor
25
is problem in dissolution of business.
A Legally report for business close C Financial obligation
B Reporting to tax authority D Loss of image
The Securities and Exchange Commission of Pakistan, it confirms the laws and
26 regulations only apply to corporations that issue stock. But in case of sole proprietor the
laws are very (2 options)
A Relaxed C Rigid
B A few D Complex
27 Sole proprietorships is given greater flexibility, why?
A Sole proprietor is responsible to make decisions himself
B Sole business proprietor easily transfers his
C The degree of expansion of business is high
D All of the above
J and K are brothers. J manages K's business and is not entitled to any share of
28
business loss. This is the example of what kind of organization.
A Sole proprietorship C Partnership Limited
B Mutual fund D partnership
 There is separation of ownership and management and it involves placing the
29 management of the firm under the responsibility of professionals who are not its
owners. Matter is related with
A Cooperative C Sole proprietorship
B Public limited company D Partnership
A company, also known as a corporation, is a legal entity, created under the
government regulations, whose assets and liabilities are separate from its owners. As a
30
legal entity, a corporation has many of the rights, duties, and powers of a person, such
as the Which one is wrong
A Right of ownership C Right of friendship
B Right of transfer of ownership D Right of image and brand
A private limited company that needs more money to expand or to take advantage of
31 opportunities may have to obtain financing by “ ”. becoming a public limited
company by selling stock so that it can be traded in public markets.
A Coming to public C Call to public
B Going public D Announce to be public
A sole proprietor does not have discuss his plans with other individuals, hence, has an
32
advantage of .
A Security C Secrecy
B Sincerity D Seniority
Many successful sole proprietors had previous in which they are competing,
33
perhaps competitor's firm. as employee in the
A Work experience in the market C Understanding of environment
B Exposure of market and business D All of the above
A private limited company that needs more money to expand or to take advantage of
34 opportunities may have to obtain financing. Through an , that is, becoming a
public limited company by selling stock so that it can be traded in public markets.
A Initiated Public Offering (IPO) C Initial Public Offering (IPO)
B Initial Power Offering (IPO) D Initial Public Ownering (IPO)
In order for shareholders to hold accountable the director of the company for the
35 financial performance, the companies and (2 options)
A Hold monthly board meeting C Produce annual reports and accounts
B Publish minutes of the meetings D Follow corporate governance principles
Which of the following would a non-executive director of a company charge against
36
services?
A Get shares of the company C A fixed fee or remuneration
B Share in profit D A permanent salary
Calum, Heidi and Jonas are partners in Zip Co. Calum is dealing with all business
activities and Heidi supports him in all this. While Jonas offers only one million to
37 invest in the company and she is doing her job as per routine. Now Zip Co. has gone
bank corrupt. Jonas is of the opinion that she is not liable or responsible for all this.
What is your opinion? In regard of liability and nature of partner. (2 options)
A Jonas is liable C Jonas is limited partner
B Jonas is partially liable D Jonas is not liable
38 A local grocery store and a local clothes store is generally example of
A Limited liability company C Multi-national company
B Partnership D Sole proprietorship
39 Identify the Not - For – Profit organization out of given list
A Public sector organization C Club and societies
B NPOs or NGOs D All of the above
 Which of the following is not an advantage of having non-executive directors on the
40
company board?
A They can provide a wider perspective than executive directors.
B They provide reassurance to shareholders.
C They may have external experience and knowledge which executive directors do not
possess.
D They have more time to devote to the role.

Solution

1 2 3 4 5 6 7 8 9 10
B B C&D D C&D A&C B D D B
11 12 13 14 15 16 17 18 19 20
B D A&B C B D A&B A&C A A
21 22 23 24 25 26 27 28 29 30
C&D A A C C A&B A D B C
31 32 33 34 35 36 37 38 39 40
B C D C C&D C C&D D D D