Introduction To Business MCQs | MGT211 MCQs | Set 6
Introduction To Business MCQs | MGT211 MCQs | Set 6
MCQs (Multiple Choice Questions)
1) The degree to which a tool or test measures what it is supposed to measure is known as:
a) Validity
b) Reliability
c) Dependability
d) Goodness of fit
Correct Answer:
The correct answer is 'a'.
Explanation:
Validity is the degree to which a tool or test measures what it is supposed to measure. A valid tool or test will accurately measure the construct that it is intended to measure. For example, a valid test of intelligence will accurately measure a person's intelligence.
Reliability is the degree to which a tool or test produces consistent results. A reliable tool or test will produce the same results each time it is used. For example, a reliable test of intelligence will produce the same results for a person each time they take the test.
Dependability is similar to reliability, but it is more specific to the context of the tool or test. A dependable tool or test will produce consistent results over time and across different conditions. For example, a dependable test of intelligence will produce the same results for a person each time they take the test, even if they take the test on different days or in different settings.
Goodness of fit is a statistical measure of how well a model fits the data. It is not directly related to the validity of a tool or test.
Therefore, the degree to which a tool or test measures what it is supposed to measure is known as validity.
______________________________
2) Which of the following would generally have unlimited liability?
a) A limited partner in a partnership
b) A shareholder in a corporation
c) The owner of a sole proprietorship
d) A member in a limited liability company (LLC)
Correct Answer:
The correct answer is 'c'.
Explanation:
In a sole proprietorship, the owner is personally liable for all debts and obligations of the business. This means that the owner's personal assets, such as their home and car, can be seized to pay off the business's debts.
Limited partners in a partnership have limited liability, which means that their liability is limited to the amount of money they invested in the partnership. Shareholders in a corporation have limited liability, which means that their liability is limited to the amount of money they invested in the corporation. Members in a limited liability company (LLC) can have either limited liability or unlimited liability, depending on the structure of the LLC.
Therefore, the owner of a sole proprietorship would generally have unlimited liability.
______________________________
3) What is potentially the biggest advantage of a small partnership over a sole proprietorship?
a) Unlimited liability
b) Single tax filing
c) Difficult ownership resale
d) Raising capital
Correct Answer:
The correct answer is 'd'.
Explanation:
A partnership is a business owned by two or more people. The partners share the profits and losses of the business. In a sole proprietorship, the owner is the only one who owns the business and is responsible for all of the profits and losses.
One of the biggest advantages of a partnership over a sole proprietorship is the ability to raise capital. When there are multiple owners, it is easier to pool resources and attract investors. This can be helpful for businesses that need to expand or invest in new equipment.
______________________________
4) Which of the following enjoys limited liability?
a) A general partnership
b) A Corporation
c) A sole proprietorship
d) None of the given options
Correct Answer:
The correct answer is 'b'.
Explanation:
A corporation is a legal entity that is separate from its owners. This means that the owners of a corporation are not personally liable for the debts and obligations of the corporation. In other words, the owners' personal assets cannot be seized to pay off the corporation's debts.
A general partnership is a business owned by two or more people. The partners are jointly and severally liable for the debts and obligations of the partnership. This means that each partner is liable for the debts of the partnership, even if they were not involved in the transaction that created the debt.
A sole proprietorship is a business owned by one person. The owner is personally liable for the debts and obligations of the sole proprietorship. This means that the owner's personal assets can be seized to pay off the sole proprietorship's debts.
Therefore, a corporation is the only business structure that enjoys limited liability.
______________________________
5) In which type of business entity the entire ownership interest is transferable Most freely?
a) General partnership
b) Limited partnership
c) Corporation
d) Limited liability Company
Correct Answer:
The correct answer is 'd'.
Explanation:
In a limited liability company (LLC), the ownership interest is transferable freely, subject to the terms of the LLC's operating agreement. This means that an LLC member can sell their interest to anyone they choose, without the consent of the other members.
In a general partnership, the ownership interest is not freely transferable. A partner can only sell their interest to another person if the other partners agree to the sale.
In a limited partnership, the ownership interest of a limited partner is freely transferable. However, the ownership interest of a general partner is not freely transferable.
In a corporation, the ownership interest is freely transferable. However, the shares of stock in a corporation can be subject to restrictions, such as a right of first refusal or a right of tag-along.
Therefore, the limited liability company (LLC) is the business entity where the entire ownership interest is transferable most freely.
______________________________
6) Which of the following is/are the component/s of business?
a) Industry
b) Commerce
c) Both industry and commerce
d) Trade and aids to trade
Correct Answer:
The correct answer is 'c'.
Explanation:
Industry is the production of goods and services. Commerce is the buying and selling of goods and services. Both industry and commerce are essential components of business.
Industry creates the goods and services that people need and want. Commerce distributes those goods and services to the people who need them.
______________________________
7) The Hawthorne Studies found:
a) That social and psychological factors could significantly affect productivity
b) That economic factors affect productivity
c) Money to be the primary motivator of female employees.
d) That workers were motivated to produce more when managers left them alone.
Correct Answer:
The correct answer is 'a'.
Explanation:
The Hawthorne Studies found that social and psychological factors could significantly affect productivity.
The Hawthorne Studies were a series of experiments conducted at the Hawthorne Works of the Western Electric Company in the 1920s and 1930s. The studies were originally designed to investigate the effects of different lighting levels on productivity. However, the researchers found that productivity increased regardless of the lighting level.
The researchers eventually concluded that the social and psychological factors, such as the attention that the workers were receiving from the researchers, were more important than the physical factors in affecting productivity.
______________________________
8) _____ is the one who has invested the maximum amount in business.
a) active partner
b) sleeping partner
c) senior partner
d) none of the given options
Correct Answer:
The correct answer is 'a'.
Explanation:
An active partner is a partner who is involved in the day-to-day operations of the business. They are responsible for making decisions, managing the business, and taking on the risks of the business.
A sleeping partner is a partner who does not participate in the day-to-day operations of the business. They only invest money in the business and do not take on any of the risks.
A senior partner is a partner who has been in the business for a longer period of time and has more experience. They may have more authority than the other partners.
Therefore, the partner who has invested the maximum amount in the business is the active partner.
______________________________
9) Which of the following is not the objective of the directors' meeting:
a) To allot the share
b) To recommend dividend
c) To issue debentures
d) To make loans
Correct Answer:
The correct answer is 'd'.
Explanation:
The directors' meeting is a meeting of the board of directors
of a company. The board of directors is responsible for
the overall management of the company. The objectives of
the
directors' meeting include:
- To discuss and approve the company's strategic plan.
- To review the company's financial performance.
- To approve the company's budget.
- To appoint and remove the company's officers.
- To approve the company's dividend policy.
- To approve the company's investments.
Making loans is not an objective of the directors' meeting. This is because making loans is the responsibility of the company's management, not the board of directors.
______________________________
10) Which of the following document contains the name and address of the joint stock company.
a) Articles of association
b) Memorandum of association
c) Prospectus
d) Statement in lieu of prospectus
Correct Answer:
The correct answer is 'b'.
Explanation:
The memorandum of association is a document that is filed with the registrar of companies when a company is incorporated. It contains the basic information about the company, such as its name, address, and purpose.
The articles of association is a document that sets out the rules and regulations of the company. It is not filed with the registrar of companies.
The prospectus is a document that is issued to potential investors when a company is raising capital. It contains information about the company, such as its financial performance, its management team, and its business plan.
The statement in lieu of prospectus is a document that is used by companies that are not raising capital from the public. It contains the same information as a prospectus, but it is not as detailed.
Therefore, the memorandum of association is the document that contains the name and address of the joint stock company.
______________________________
No comments