Introduction To Business MCQs | MGT211 MCQs | Set 4
Introduction To Business MCQs | MGT211 MCQs | Set 4
MCQs (Multiple Choice Questions)
1) All of the following are true except:
a) It must be a business for profit
b) There may be more than 10 partners
c) The partners entered in a partnership contract with their mutual consent
d) None of the given options
Correct Answer:
The correct answer is 'b'.
Explanation:
In a general partnership, the number of partners is often limited to a certain reasonable number, and this number varies by jurisdiction. Typically, there is a maximum limit on the number of partners, and it's not necessarily the case that there can be "more than 10 partners." Therefore, option (b) is not always true for all partnership agreements.
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2) Which of the following business type can avail some concessions from the Government:
a) Sole proprietorship
b) Partnership
c) Joint stock company
d) Cooperative society
Correct Answer:
The correct answer is 'd'.
Explanation:
Cooperative societies can often avail some concessions and benefits from the government. These concessions might include tax incentives, subsidies, and other forms of support, as cooperatives are considered to be community-driven organizations that promote collective ownership, participation, and social welfare. Other business types like sole proprietorship, partnership, and joint stock companies might not necessarily have the same level of government support and concessions, although they may also be subject to certain regulations and benefits depending on the specific laws and policies of the region.
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3) Which of the following would generally have unlimited liability:
a) A limted person in partenrship
b) The owner of sole proprietship
c) A shareholder in a corporaton
Correct Answer:
The correct answer is 'b'.
Explanation:
The owner of a sole proprietorship generally has unlimited liability. This means that the owner is personally responsible for all the debts and liabilities of the business. If the business cannot meet its financial obligations, the owner's personal assets can be used to satisfy the business debts. This is a significant characteristic of sole proprietorships and is one of the reasons why individuals might consider forming other business entities with limited liability, such as partnerships (a) and corporations (c). In a limited partnership (a) or a corporation (c), the liability of individual partners or shareholders is limited to their investment or contribution to the business.
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4) In which type of business usually the risk factor is very high on the part of owner:
a) Partnership
b) Corporation
c) Sole proprietorship
d) Joint stock company
Correct Answer:
The correct answer is 'c'.
Explanation:
In a sole proprietorship, the risk factor is typically very high on the part of the owner. This is because the owner has unlimited liability, meaning they are personally responsible for all the debts and obligations of the business. If the business faces financial difficulties or legal issues, the owner's personal assets can be at risk to cover those liabilities. As a result, the sole proprietor bears the full brunt of the business's risks and liabilities.
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5) Which of the following is excluded from factors that can affect the business?
a) Demographic Factors
b) Economic and social factors
c) Natural factors
d) None of the above
Correct Answer:
The correct answer is 'd'.
Explanation:
All of the factors mentioned—demographic factors, economic and social factors, and natural factors—can indeed affect a business. Demographic factors like population trends, age distribution, and cultural diversity can impact consumer preferences and demand. Economic and social factors such as economic growth, inflation, income levels, and social trends can influence purchasing power and market conditions. Natural factors like environmental changes, weather patterns, and resource availability can affect supply chains and operations.
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6) The formation of ___________does not require any legal formality like registration.
a) Company
b) Cooperative society
c) Partnership
d) Sole proprietorship
Correct Answer:
The correct answer is 'd'.
Explanation:
The formation of a sole proprietorship does not usually require any formal registration process. In many jurisdictions, a person can start operating a business as a sole proprietor without having to complete any specific legal formalities. However, depending on the local regulations and the nature of the business, there might be certain licenses or permits required to operate legally. Cooperative societies (b), partnerships (c), and companies (a) often require more formal registration and legal processes.
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7) Which of the following is a disadvantage of partnership?
a) Distribution of work
b) Sufficient capital
c) Prime credit standing
d) Profit sharing
Correct Answer:
The correct answer is 'd'.
Explanation:
A disadvantage of partnership is profit sharing. In a partnership, profits are typically shared among the partners according to the terms outlined in the partnership agreement. While profit sharing can encourage collaboration and align interests, it can also lead to conflicts if partners have differing expectations or if the profit distribution is not equitable. Other options listed, such as distribution of work (a), sufficient capital (b), and prime credit standing (c), are not typically considered disadvantages of partnerships but rather aspects that can be advantages or challenges depending on the circumstances.
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8) In partnership deed, profit and loss is distributed among the partners:
a) In equal percentage
b) As per percentage of capital invested
c) As per agreed ratio in partnership deed
d) None of the given options
Correct Answer:
The correct answer is 'c'.
Explanation:
In a partnership, the distribution of profit and loss among the partners is determined based on the agreed ratio outlined in the partnership deed. This ratio is often established at the beginning of the partnership and is based on factors like the capital invested by each partner, their contribution to the business, or any other terms that the partners have mutually decided upon. This agreed-upon ratio guides how the profits and losses of the business will be allocated among the partners.
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9) The powers of the Board of Directors to borrow from the bank are mentioned in:
a) Article of Association
b) Memorandum of Association
c) Special Resolution
d) None of the given options
Correct Answer:
The correct answer is 'a'.
Explanation:
The powers of the Board of Directors to borrow from the bank are typically mentioned in the company's Article of Association. The Article of Association is a legal document that outlines the internal rules, regulations, and governance of the company. It includes details about the powers of the Board of Directors, the procedures for borrowing money, and other operational matters. The Memorandum of Association (b) outlines the company's objectives and the scope of its activities, while a Special Resolution (c) is a formal decision made by the company's shareholders that requires a specific majority vote for approval.
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10) Which of the following should be considered when designing a business plan?
a) Objectives of the business
b) Marketing components of the
business
c) Financial components of the business
d) All of the given options
Correct Answer:
The correct answer is 'd'.
Explanation:
When designing a business plan, all of the mentioned options should be considered:
a) Objectives of the business: Clearly defining the objectives and goals of the business is a fundamental aspect of a business plan. This helps guide the overall direction and strategy of the business.
b) Marketing components of the business: Marketing strategies, target audience, branding, promotion, and sales tactics are important elements of a business plan. How the business plans to attract and retain customers is crucial for its success.
c) Financial components of the business: Financial
projections, budgeting, funding sources, expenses, and
revenue forecasts are critical for demonstrating the
financial feasibility and
sustainability of the business.
A comprehensive business plan incorporates all these aspects to provide a detailed and well-rounded understanding of the business's potential and its path to success.
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