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TS Inter 1st Year Maths 1B Important Questions with Solutions Pdf 2022 | Maths 1B Important Questions 2022 TS

TS Inter First Year Maths 1B Important Questions | Maths 1B Important Questions Pdf 2022 TS

1. Maths 1B Locus Important Questions
2. Maths 1B Transformation of Axes Important Questions
3. Maths 1B Straight Lines Important Questions
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4. Maths 1B Pair of Straight Lines Important Questions
5. Maths 1B Three-Dimensional Coordinates Important Questions
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   • Limits and Continuity Short Answer Questions
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10. Maths 1B Applications of Derivatives Important Questions
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TS Inter 1st Year Maths 1A Important Questions with Solutions Pdf 2022 | Maths 1A Important Questions 2022 TS

TS Inter First Year Maths 1A Important Questions | Maths 1A Important Questions Pdf 2022 TS

1. Maths 1A Functions Important Questions
2. Maths 1A Mathematical Induction Important Questions
3. Maths 1A Matrices Important Questions
4. Maths 1A Addition of Vectors Important Questions
5. Maths 1A Products of Vectors Important Questions
6. Maths 1A Trigonometric Ratios up to Transformations Important Questions
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8. Maths 1A Inverse Trigonometric Functions Important Questions
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10. Maths 1A Properties of Triangles Important Questions

Telangana TSBIE TS Inter 1st Year Commerce Study Material 3rd Lesson Sole Proprietorship, Joint Hindu Family Business and Cooperative Societies Textbook Questions and Answers.

TS Inter 1st Year Commerce Study Material 3rd Lesson Sole Proprietorship, Joint Hindu Family Business and Cooperative Societies

Long Answer Questions

Question 1.
Define Sole proprietorship and state its features.
Answer:
Sole proprietorship is the oldest form of business organisation in which a single individual introduces his / her own capital, skill and intelligence in the management of its affairs and is solely responsible for the results of its operations. It is also known as Individual Proprietorship or Single Entrepreneurship.

A sole proprietor contributes and organizes the resources in a systematic way and controls the activities with the objective of earning profit.

Definition:
J.L. Hanson: “A type of business unit where one person is solely responsible for providing the capital and bearing the risk of the enterprise, and for the management of the business”.

Features of Sole Proprietorship: The following are the important features of sole proprietorship business organisation.
a) Individual Initiative: The sole proprietorship business is started by the initiative of a single person who wishes to start the business. The profits or losses of the business are taken by the individual.

b) Single Ownership: The sole proprietorship form of business organisation has a single owner who himself / herself start the business by bringing together all the resources.

c) Less Legal Formalities: The formation and operation of a sole proprietorship involves less legal formalities. Thus, its formation and winding up is quite easy and simple.

d) Unlimited Liability: The liability of the sole proprietor is unlimited. In case of loss, if his / her business assets are not enough to pay the business liabilities, his personal property can also be utilised to pay off the liabilities of the business.

e) Ownership and Management Exist Together: The owner himself / herself manages the business as per his / her own skills and intelligence. There is no separation of ownership and management. The business is dissolved if the owner dies, becomes insolvent or removed from the business.

f) Motivation: The sole proprietorship enjoys all the profits and at the same time bears the losses, if any. No other person shares the profits and losses of the business. It he works more, he will earn more.

g) Secrecy: All the important decisions are taken by the sole proprietorship himself / herself. He / she keeps all the business secrets only with himself / herself.

h) No Separate Entity: The sole proprietor and the business enterprise are one and the same. The sole proprietor is responsible for everything that happens in his / her business unit.

i) One-Man Control: The management and controlling power of the sole proprietorship business always remains with the owner. He / she runs the business as per his / her own will.

j) Limited Area of Operations: As the sole proprietor has limited resources and managerial abilities, sole proprietorship business has usually limited areas of operations.

Question 2.
Write the advantages and disadvantages of Sole Proprietorship.
Answer:
Advantages of Sole Proprietorship: The following are the basic advantages of sole proprietorship business.
a) Easy to Form and Wind Up: It is very easy and simple to form a sole proprietorship form of business organization as it require less legal formalities and less time. Any person wishing to start a sole-trade business can start without loss” of time. The proprietor can be wind up business at any point of time.

b) Quick Decision and Prompt Action: Nobody interferes in the affairs of the sole proprietary business. Hence, he / she can take quick decisions on the various issues relating to business and accordingly prompt action can be taken.

c) Flexibility in Operations: A sole proprietorship concern generally runs on a small scale basis. If any change in operation he can adjust its production according to the changing demand patterns.

d) Direct Motivation: In sole proprietorship concern the entire profit of the business is enjoyed by the owner himself / herself. This motivates and encourages the proprietor to work hard and run the business effectively and efficiently.

e) Maintenance of Business Secrets: The business secrets are known only to the proprietor. He / she is not required to disclose any information to others.

f) Personal Contact with Customers: The proprietor maintain good personal contacts with the customers and employees. By knowing the likes, dislikes and tastes of the customers, the proprietor can adjust his operations accordingly.

g) Easy to Raise Finance: The sole proprietor is able to create goodwill for his business by his hardwork. This helps him / her to establish the creditworthiness in the market.

h) Socially Desirable: Large number of sole traders have entered different types of business which helps in avoiding concentration of wealth. The consumers will not depend on big businesses. Thus, sole-trader business is socially desirable.

i) Self Employment: The sole proprietorship form of business offers the means of self-employment. To earn livelihood, the individuals can easily start small scale business as a sole trader.

j) Inexpensive Management: As the sole proprietor is the owner, manager and controller of his business, there is no need to appoint specialized employees for various functions of business. Thus, management expenses can be saved to a larger extent.

Disadvantages of Sole Proprietorship: Sole proprietorship business is suffering from the following disadvantages.
a) Limited Resources: The resources of a sole proprietor are always limited. Being the single owner, it is not always possible to arrange sufficient funds from his own sources. So, the proprietor has a limited capacity to raise funds for his business.

b) Unlimited Liability: The liability of a sole proprietor is unlimited. His / her private properties can also be used for meeting business losses and obligations.

c) Limited Managerial Ability: A sole proprietorship form of business organisation always suffers from lack of managerial expertise. A single person may not be an expert in all fields like purchasing, selling, financing etc.

d) Lack of Continuity: The sole trade business continues as long as sole proprietor lives. The continuity of the business is linked with the life of the proprietor. Illness, death or insolvency of the proprietor can lead to closure of the business.

e) Not suitable for Large Scale Operations: As the financial resources and the managerial abilities of a sole proprietor are limited, this kind of business organisation is not suitable for large-scale businesses.

f) Wrong Decisions: A sole proprietor has to take all the decisions by himself / herself. He cannot consult experts to have proper knowledge about various aspects of the business. So, there is a possibility of taking wrong decisions which may lead to loss.

Question 3.
“One man management is the best in the world provided one man is big enough to take care of everything”. Discuss.
Answer:
In his book “The organisation of modem business” William R. Basset said that, “one man control is the best in the world if that man is big enough to manage everything.” One man controlled business is the best provided. That man is able to manage all the activities efficiently and effectively.

The sole proprietor is motivated to work more as there is direct relationship between efforts and reward. He can take prompt decisions and implement them immediately to avail of business opportunities. This type business is easy to form because there are no legal formalities to be observed. The capital required to start this business is less. The sole proprietor has direct contact with the customers and caters to their individual tastes. The incidence of taxation is lowest on this type of business. The proprietor should avoid risky and speculative transactions because of his unlimited liability.

All the above advantages of sole proprietorship can be availed only if the sole proprietor is intelligent, capable of taking quick decisions, able to manage the business properly and dynamic in nature. The pre-condition is that the man should be big enough to control every thing. That is, the sole proprietor is outstanding and is able to cope up with the work.

The sole trading form of business is suitable in the following cases:

• Where the capital required is small.
• Where the risk is not heavy.
• Where the decisions are to be taken quickly.
• Where the customers require personal attention.
• Where market is local.
• Where business is of speculative nature.
• Where production of artistic goods to be carried on.

Question 4.
What is Joint Hindu Family Business? Discuss its main features.
Answer:
Meaning:

• “A business, which continues from one generation to another generation is known as “Joint Hindu Family Business”. This is special form of business organization, which now exists only in India. And the business is within the family.
• The head of the family is the head of the business also. He is also known as “Karta” and the members are known as “co-parceners”.

Features of Joint Hindu Family Business: The essential features of the Joint Hindu Family Business are as follows.
a) Formation: In Joint Hindu Family business there must be atleast two members in the family, having some ancestral property. It is not created by an agreement but by operation of law.

b) Governed by Hindu Law: The JHF business is a jointly owned business. The management and control of the JHF business is done according to Hindu Succession Act, 1956.

c) Membership: The membership of the family can be acquired only by birth. Unlike other business, outsiders are not allowed to become the coparceners in the JHF business. However, by adoption and Marriage with male member also confers membership.

d) Management: The business is managed by the senior most member of the family known as ‘Karta’ or ‘Manager’. Other members do not have the right to participate in the management. The Karta has the authority to manage the business as per his own will. His ways of managing cannot be questioned.

e) Profit Sharing: The Joint Hindu Family business is jointly owned by all the members. All the coparceners have equal share in the profits of the business.

f) Liability: All the members in a Joint Hindu Family have limited liability to the extent of property. The self acquired property of any member cannot be taken to pay the liabilities of the family. But the liability of the Karta is unlimited. His personal property can also be utilised to meet the business liability.

g) Continuity: Death of any coparceners does not affect the continuity of business. Even on the death of the Karta, it continues to exist as the eldest of the coparceners takes position of Karta.

h) Accounts: The accounts are maintained by Karta. Karta is not accountable to any member and no member is supposed to ask what are the profits and losses of business.

Question 5.
State the advantages and disadvantages of Joint Hindu Family Business Organisation.
Answer:
Advantages of Joint Hindu Family Business: The important advantages of a Joint Hindu Family business are as follows:
a) Centralized and Efficient Management: The management of Joint Hindu Family firm is vested in the hands of Karta only. This results in the unity command and disciplined management.

b) Continuity: It is not dissolved by the death of a coparcener. Even on the death of the Karta, it will be continued as the eldest of the family members assumes the charge of Karta.

c) Unlimited Membership: By birth every coparcener will automatically become a member in Hindu Undivided Family. Minors can also become members of the Joint Hindu Family. Hence there is no limit to membership.

d) Better Credit Facilities: The credit worthiness of the Joint Hindu Family business is better than that of the Sole Trader. There are more credit facilities are available to the JHF business.

e) Quick Decision: In Joint Hindu Family business, as Karta is the only decision maker, he can take very quick decisions.

f) Secrecy: As in Joint Hindu Family firm only Karta is to manage the affairs of busi-ness. He can keep business matters secret even from the members of the firm.

Disadvantages of Joint Hindu Family Business: The important disadvantages of a Joint Hindu Family business are as follows:
a) No Direct Reward for Efficiency: Karta alone looks after the business of Joint Hindu Undivided Family. But benefits are shared among all coparceners. The persons who work more efficiently and dedicatedly are not rewarded for their work.

b) Limited Managerial Ability: In Joint Hindu Family as an eldest of person only Karta has to manage business. The management and control of all the business affairs becomes difficult for Karta alone. Thus, expansion and growth of the business is difficult, as Karta has limited managerial ability.

c) Suspicion among Members: The Karta is empowered with vast power of secrecy and he / she can keep business affairs secret members. This leads to suspicion among the members themselves which even lead to disastrous for the Joint Hindu Family business.

d) Limited Capital and Financial Resources: The capital and financial resources of the Joint Hindu Family business are limited as compared with that of Partnership and Joint Stock Company.

Question 6.
Define the Co-operative Society. Explain its features.
Answer:
Meaning: The term “cooperation” is derived from the Latin word “co-operari”. The word “Co” means “with” and “operari” means “to work”. Thus the term cooperation means working together. Co-operative society is a voluntary association of persons who work together to promote their economic interest.

Definition: The Indian co-operative societies Act 1912, section (4) defines co-operative society as “a society, which has its objectives for the promotion of economic interests of its members in accordance with co-operative principles”.

Features:
1) Voluntary Association: A co-operative society is a voluntary association of persons. That means, persons can join and leave the society when they want.

2) Open Membership: The Membership is open to all persons having a common economic interest. Any person can become a member irrespective of his/her caste, creed, religion, colour, sex etc.

3) Number of Members: A Minimum of ’10’ members are required to form a co-operative Society. In case of multi-state co-operative societies, the minimum number of members should be ’50’ from each state.

4) Registration of the society: In India, co-operative societies are registered under the co-operative Societies Act, 1912 or, under the State co-operative Societies Act.

5) State control: Every co-operative society comes under the control and supervision of the Government. Every society has to get its accounts audited from the co-operative Department of the government.

6) Capital: The capital of the co-operative society is contributed by its members, it often depends on the loans and grants from state and central Government.

7) Democratic set up: The co-operative societies are managed in a democratic manner. The Management of a co-operative society is control by managing committee elected on the basis of “one-man one-vote” irrespective of the number of shares held by any member.

8) Service Motive: The primary objective of all co-operative societies is to provide services to its members, rather than to earn profits.

9) Return on capital Investment: The members of co-operative society get returns on their capital investment in the form of dividend. The multi cooperative societies registered under the state cooperative societies Act, 2000.

10) Distribution of surplus: After giving dividends to the members of the society, the surplus profit is distributed among the members in the form of bonus.
The multi co-operative societies registered under multi state co-opeerative societies Act, 200.

Question 7.
A co-operative society form of oganisation is a method of ‘Self Help’- Discuss.
Answer:
The co-operative movement has been necessiated to protect the interests of weaker sections of society. The primary objective of this movement is how to protect economically the weaker sections of the society from the oppression of economically strong segment of the society. In all forms of business organisations, be it a sole trade, partnership or joint stock company, the primary motive is to increase the profits. The businessman tries to promote his own interests through all positive means including exploitation of consumers. The cooperative form of organisation is a democratic set up run by its members for serving their own interests. It is self help through mutual help. The philosophy behind cooperative movement is all for each and each for all’.

In the words of Dr. H.N. Kunzen co-operative is self help as well as mutual help. It is a joint enterprise of those who are not financially strong and cannot stand on their legs and therefore, come together not with a view to get profits but to overcome disability arising out of the want of adequate financial resources.

Co-operative society is a voluntary association of persons who work together to pro-mote their economic interests. It works on the principle of self-help and mutual help. The primary objective is to provide support to the members. The motto of co-operative society is “Each for all and all for each”. People come forward as a group, pool their individual resources, utilise them in the best possible manner and derive some common benefits out of it.

Question 8.
Discuss the advantages and disadvantages of Co-operative Societies.
Answer:
Advantages of co-operative society:
1) Simple formation: It is easy to form a co-operative society as the legal formalities are not many. It is economical as it need not pay stamp duty, registration fees.

2) Democratic management: The management is done in a democratic way. Every member has one vote irrespective of the number of shares held by him. So, every one has an equal voice in the management.

3) Limited liability: The liability of the members is limited. He is not personally liable.

4) Stability and continuity: A co-operative society has perpetual existance. It need not be dissolved on the death, lunacy, insolvency of its members.

5) Economy in operation: Some of the members may voluntarily offer their free services. Therefore, some of the management expenses are saved.

6) Cheaper and better commodities: A co-operative society aims at service rather than profit. The consumers can get goods of better quality at reasonable price.

7) Priviliges state patronage: The government has granted several priviliges to cooperative societies. The government provide finance at concessional rates of interest.

8) Elimination of middlemen: A cooperative society purchases goods directly from the producers and sells directly to its members. Hence middlemen are eliminated.

9) Aim at mutual prosperity: Cooperates function on the principle of “Each for all and all for each” with the aim of mutual prosperity.

Disadvantages of Co-operative Society:
1) Inefficient management: The members of the managing committee are elected persons. Hence inexperience and unscrupulous persons may be elected. This leads to weak and inefficient management.

2) Limited financial resources: Restriction on dividend and the principle of one member, one vote discourage rich people from joining the society. Due to shortage of funds, there is limited scope for expansion and growth.

3) Lack of unity among members: The members are drawn from different sections of the society. There is lack of harmony among them.

4) Lack of incentive to work hard: Managing committee members do not take active part as they are not paid for their services. The loyalty of the members may not always assured.

5) Lack of secrecy: It is very difficult to maintain business secrets which are important for the success of the business unit.

6) Political interference: Government nominates members to the managing committee. Every government tries to send their own party members to these societies.

7) Government interference: Cooperative societies have to follow the rules and regulations of the cooperative societies act and government.

8) Cash trading: The members need credit facilities. But the societies sells goods only for cash. So, the members may go to private traders who extend credit facility.

Short Answer Questions

Question 1.
Explain the features of Sole Proprietor.
Answer:
Sole proprietorship is the oldest form of business organisation in which a single individual introduces his / her own capital, skill and intelligence in the management of its affairs and is solely responsible for the results of its operations. It is also known as Individual Proprietorship or Single Entrepreneurship.

A sole proprietor contributes and organizes the resources in a systematic way and controls the activities with the objective of earning profit.

Definition:
J.L. Hanson: “A type of business unit where one person is solely responsible for providing the capital and bearing the risk of the enterprise, and for the management of the business”.

Features of Sole Proprietorship: The following are the important features of sole proprietorship business organisation.
a) Individual Initiative: The sole proprietorship business is started by the initiative of a single person who wishes to start the business. The profits or losses of the business are taken by the individual.

b) Single Ownership: The sole proprietorship form of business organisation has a single owner who himself / herself start the business by bringing together all the resources.

c) Less Legal Formalities: The formation and operation of a sole proprietorship involves less legal formalities. Thus, its formation and winding up is quite easy and simple.

d) Unlimited Liability: The liability of the sole proprietor is unlimited. In case of loss, if his / her business assets are not enough to pay the business liabilities, his personal property can also be utilised to pay off the liabilities of the business.

e) Ownership and Management Exist Together: The owner himself / herself manages the business as per his / her own skills and intelligence. There is no separation of ownership and management. The business is dissolved if the owner dies, becomes insolvent or removed from the business.

f) Motivation: The sole proprietorship enjoys all the profits and at the same time bears the losses, if any. No other person shares the profits and losses of the business. It he works more, he will earn more.

Question 2.
Explain the limitations of, Sole Trader.
Answer:
The following are the limitations of sole trading business.
1. Limited resources: The resources of sole trader are limited. He has only two sources of securing capital, personal savings and borrowing on personal security. Hence, he can raise very limited amount of capital.

2. Instability: It has no separate legal status. The business and the owner are inseparable from one another. The business comes to an end on the death, insolvency, insanity of the owner.

3. Unlimited liability: The liability of the sole trader is unlimited. The creditors can recover the loan amounts not only from the business but also from his private property.

4. Not suitable for large scale operations: The resources are limited. Therefore, it is suitable only for small business and not large scale operations.

5. Limited managerial skill: The managerial ability is limited. A person may not be an expert in all matters. Sometimes wrong decisions may be taken.

6. Restricted growth: The limitations of capital and managerial ability will restrict the growth development and expansion of the business.

7. Dependence on paid employees: When the business expands, the sole trader has to depend on the paid employees. They may not work hard and show interest. Hence the efficiency suffers.

Question 3.
State the suitability of Sole Proprietorship.
Answer:
The sole trading form of business is suitable in the following cases:

• Where the capital required is small.
• Where the risk is not heavy.
• Where the decisions are to be taken quickly.
• Where the customers require personal attention.
• Where market is local.
• Where business is of speculative nature.
• Where production of artistic goods to be carried on.

Question 4.
What are the features of Joint Hindu Family Business?
Answer:
Meaning:

• “A business, which continues from one generation to another generation is known as “Joint Hindu Family Business”. This is special form of business organization, which now exists only inf India. And the business is within the family.
• The head of the family is the head of the business also. He is also known as “Karta” and the members are known as “co-parceners”.

Features of Joint Hindu Family Business: The essential features of the Joint Hindu Family Business are as follows.
a) Formation: In Joint Hindu Family business there must be atleast two members in the family having some ancestral property. It is not created by an agreement but by operation of law.

b) Governed by Hindu Law: The JHF business is a jointly owned business. The management and control of the JHF business is done according to Hindu Succession Act, 1956.

c) Membership: The membership of the family can be acquired only by birth. Unlike other business, outsiders are not allow become the coparceners in the JHF business. However, by adoption and Marriage with male member also confers membership.

d) Management: The business is managed by the senior most member of the family known as ‘Karta’ or ‘Manager’. Other members do not have the right to participate in the management. The Karta has the authority to manage the business as per his own will. His ways of managing cannot be questioned.

e) Profit Sharing: The Joint Hindu Family business is jointly owned by all the members. All the coparceners have equal share in the profits of the business.

Question 5.
Explain the features of Co-operative Societies.
Answer:
Meaning: The term “cooperation” is derived from the Latin word “co-operari”. The word “Co” means “with” and “operari” means “to work”. Thus the term cooperation means working together. Cooperative society is a voluntary association of persons who work together to promote their economic interest.

Definition: The Indian co-operative societies Act 1912, section (4) defines co-operative society as “a society, which has its objectives for the promotion of economic interests of its members in accordance with co-operative principles”.

Features:
1) Voluntary Association: A co-operative society is a voluntary association of persons. That means, persons can join and leave the society when they want.

2) Open Membership: The Membership is open to all persons having a common economic interest. Any person can become a member irrespective of his/her caste, creed, religion, colour, sex etc.

3) Number of Members: A Minimum of TO’ members are required to form a co-operative Society. In case of multi-state co-operative societies, the minimum number of members should be ’50’ from each state.

4) State control: Every co-operative society comes under the control and supervision of the Government. Every society has to get its accounts audited from the co-operative Department of the government.

5) Capital: The capital of the co-operative society is contributed by its members, it often depends on the loans and grants from state and central Government.

Very Short Answer Questions

Question 1.
What is Business Organisation?
Answer:
1) In order to carry out any business and to achieve its objective of earning profit, it is required to bring together all the resources and put them into action in a systematic way, and to coordinate and control all these activities properly. This arrangement is known as business organisation.

2) Arrangement of ownership and management of business organisations is termed as ‘Form of Business Organisation’. Business organisations may be owned and managed by a single person (Sole Proprietorship) or a group of persons (Partnership) or in the form of a company Joint Stock Company.

Question 2.
Define Sole Proprietorship.
Answer:
1) Sole proprietorship is the oldest form of business organisation in which a single individual introduces his / her own capital, skill and intelligence in the management of its affairs and is solely responsible for the results of its operations. It is also known as Individual Proprietorship or Single Entrepreneurship.

2) A sole proprietor contributes and organizes the resources in a systematic way and controls the activities with the objective of earning profit.
Definition:
J.L. Hanson:
“A type of business unit where one person is solely responsible for providing the capital and bearing the risk of the enterprise, and for the management of the business”.

Question 3.
What is Joint Hindu Family Business?
Answer:
1) Meaning: “A business, which continues from one generation to another generation, is known as “Joint Hindu Family Business”. This is special form of business organization, which now exists only in India. And the business is within the family.

2) The head of the family is the head of the business also. He is known as “Karta” and the members are known as “Co-parceners”.

Question 4.
Define Co-operative Society.
Answer:
1) Cooperative society is a voluntary association of persons who work together to promote their economic interests. It works on the principle of self help and mutual help.

2) The motto of co-operative society is “Each for all and all for each”. People come forward as a group, pool their individual resources, utilise them in the best possible manner and derive some common benefits out of it.

Question 5.
Briefly explain the different types of co-operative societies.
Answer:
According to the needs of people different types of co-operative societies are started in India. They are:
1) Consumers Co-operative Society: These are started to help lower and middle class people. These societies protect weaker sections from the clutches of profit hungry businessmen. These societies make bulk purchases directly from producers and sells these goods to members on retail basis. The commission and profit of the middlemen are eliminated. The members contribute capital and membership is open to all irrespective of caste, creed, colour etc.

2) Producers Co-operative Society: Small producers find it difficult to collect various factors of production they also face marketing problem. The production of goods is undertaken by members in their houses or at common place. They are paid wages for their services. They are supplied raw material and equipment by the society. The output is collected and sold by the society. The profits are distributed among members after retaining some profit in the general pool.
Ex.: Appco, Co-Optex, Emniganur weavers co-operative society.

3) Marketing Co-operative Society: These societies are established by producers for selling their products at remunerative prices. These societies pool production from different members and undertake to sell these products by eliminating middlemen. The goods are sold when the market is favourable. The societies provide some advance money to the members for helping them in meeting their urgent needs. The sale proceeds are shared among members according to their contributions. These societies provide services like grading, warehousing, insurance, finance etc.

4) Co-operative Credit Society: The people with moderate means are formed with the object of extending short term credit to their members. They also develop thrift among the members. The funds are contributed by the members. These societies are divided into rural credit co-operative societies and urban credit co-operative societies.

5) Co-operative Housing Society: The low and middle income group of people are not able to construct their own house for want of money. Co-operative society arrange loans for their members from financial institutions and government agencies against security of the houses. These societies helps the members to become owners of house over a period of time. Ex.: Housing Board Colonies.

6) Co-operative Farming Societies: These societies are basically agricultural co-operatives. These are formed by the small land owners. They pool their resources to achieve the benefits of large scale farming and maximizing agricultural product. They solve the problems of finance, irrigation seeds, fertilizers etc.

Question 6.
Karta.
Answer:
1) The senior most male member of the family is Karta. All the affairs of the Joint Hindu Family are controlled and managed by one person. He is known as Karta or Manager.

2) The liability of the Karta is unlimited. He acts on behalf of the other members of the family. He is not accountable to anyone. He is the great master of the grandshow.

Question 7.
Co-parcener.
Answer:

• The members of the Joint Hindu Family are called co-parceners.
• Co-parcener is a person who has a share in common property formed either through inheritance or conversion of assets by members. The liability of the co-parceners is limited to their share of interest in the common property.

Question 8.
Dayabhaga.
Answer:

• This school of Hindu prevails only in Assam and West Bengal.
• Under this the right of the property comes to a co-parcener by succession and not by birth.
• Share in a Joint Hindu Family does not fluctuates, on the basis of birth or death of a member.

Question 9.
Mitakshara.
Answer:

• This school of Hindu law prevails in the entire India except in Assam and West Bengal.
• Family members of the male line and their wives, and unmarried daughters are its members. By birth, a member gets a share in common property, it continues till his death.
• In this way shares in the property get fluctuate in accordance with the number of co-parceners.

Telangana TSBIE TS Inter 1st Year Commerce Study Material 4th Lesson Partnership Firm Textbook Questions and Answers.

TS Inter 1st Year Commerce Study Material 4th Lesson Partnership Firm

Long Answer Questions

Question 1.
Define Partnership. Discuss its advantages and disadvantages.
Answer:
Meaning of partnership: ‘Partnership’ is an association of two or more persons who pool their financial and managerial resources and agree to carry on a business, and share its profits or losses. The person who form a partnership are individually known as ‘partners’ and collectively known as a firm or ‘partnership firm’.

Definition:

• Section 4 of the Partnership Act, 1932 defines partnership as “the relationship between persons who have agreed to share the profits of a business carried on by all or anyone acting for all”.
• According to L.H. Haney, “Partnership is the relationship existing between persons competent to make contract, who agree to carry on a lawful business in common with a view to private gain.

Advantages of Partnership firm:
a) Easy to Form: A partnership can be formed easily without many legal formalities. Since it is not compulsory to get the firm registered, a simple agreement, either in oral, writing or implied is sufficient to create a partnership firm.

b) Larger Resources: Since two or more partners join hands to start partnership firm, it may be possible to pool more resources as compared to sole proprietorship form of business organisation.

c) Better Decisions: In partnership firm each partner has a right to take part in the management of the business. All major decisions are taken in consultation with the consent of all partners. Thus, collective wisdom prevails and there is less scope for reckless and hasty decisions.

d) Benefits of specialisation: All partners actively participate in the business as per their specialisation and knowledge. In a partnership firm providing legal consultancy to people, one partner may deal with civil cases, one in criminal cases and other in labour cases and so on as per their area of specialisation.

e) Flexibility in operations: The partnership firm is a flexible organisation. At any time the partners can decide to change the size or nature of business or area of its operation after taking the necessary consent of all the partners.

f) Sharing of Risks: The losses of the firm are shared by all the partners equally or as per the agreed ratio. The burden of every partner will be much less as compared to the burden of sole-trade. The business expansion will not be hampered for fear of risk.

g) Secrecy: Business secrets of the firm are known to the partners only. It is not required to disclose any information to the outsiders. It is also not mandatory to publish the annual accounts of the partnership firm.

Disadvantages of Partnership Firm:
a) Unlimited liability: The most important drawback of partnership firm is that the liability of the partners is unlimited i.e., the partners are personally liable for the debts and obligations of the firm. Their personal property can also be utilised for payment of firm’s liabilities.

b) Instability: Every partnership firm has uncertain life. The death, insolvency, incapacity or the retirement of any partner brings the partnership to an end.

c) Limited capital: Since the total number of partners cannot exceed 20, the capacity to raise funds remains unlimited as compared to a joint stock company where there is no limit on the number of share holders.

d) Nob-transferability of share: The share of interest of any partner cannot be transferred to other partners or to the outsiders. So, it creates inconvenience for the partner who wants to transfer his share to others fully & partly.

e) Possibility of conflicts: Every partner in the firm has a equal right to participate in the management. Every partner can place his or her opinion or view point before the management regarding any matter at any time. Difference of opinion may give rise to quarrels and lead to dissolution of the firm.

f) Delay in Decision making: All important decisions are taken by the consent of partners, so decision making process becomes time consuming. There may be a possibility of losing business opportunities because of slow decision making.

Question 2.
Is registration of Partnership compulsory under the partnership Act, 1932? Explain the procedure required as registration of a firm.
Answer:
The registration of partnership is not compulsory under Indian Partnership Act, 1932. In England, registration is however, compulsory. In India, there are certain previlages which are allowed to those firms which are registered. Un-registered firms are prejudiced in certain matters in comparison to registered firms. Though directly the registration of firms is not compulsory but indirectly it is so. To avail certain advantages under law, the firm must be registered with the Registrar of firms of the state procedure for registration. For getting the firm registered the partners must file an application with the registrar of firms on a prescribed form. A small amount of registration fees is also deposited along with application form.

The application should contain the following information –

• Name of the firm.
• Location of the firm.
• Names of other places where the firm carries on business.
• The names and addresses of partners.
• The dates on which various partners persons joined the firm.
• If the firm is started for a particular period then that period should be mentioned.
• If the firm is started to achieve specific objective then it should also be given.

The application form should be signed and verified by each partner or his agent.
The particulars submitted to the Registrar are examined. It is also seen whether all legal formalities required have been observed or not. If everything is in order, then the Registrar shall record an entry in the Register of firms and issue the certificate of Registration. The firm is considered registered there on.

Question 3.
Discuss different types of partners.
Answer:
There are different types of partners in a partnership firm. They are:
I. On the base of participation:
1) Active Partner: An active partner is the one who takes active part in the day-to-day working of the business. He may act in various capacities as manager, advisor or organisor. He is also known as working partner or managing partner.

2) Sleeping Partner: A sleeping partner or dormant partner is the one who contribute capital, share profits and losses but does not take part in the working of the concern. He is not known to the public. So, he is also called as secret partner.

II. On the base of sharing profits:
1) Nominal Partner: A nominal partner is who lends his to the firm. He does neither contribute any capital nor does he shares profits of the business. They do not participate in the management of the business. But they are liable to third parties for all acts of the firm.

2) Partners in Profits: He is a partner who shares in the profits of the firm but not losses. But he is liable to third parties like any other partner. He is not allowed to take part in the management of the business.

III. On the base of Behaviour / Conduct:
1) Partner by Estoppel: When a person is not a partner, but posses himself as partner, either by words or in writing or by his acts, he is called partner by estoppel. He neither contributes the capital nor participate in profits and losses. But he is liable to any creditor like any other partner.

2) Partner by Holding out: If a person is considered by outsider as partner in the firm and he does not disclaim it, he is called partner by holding out. He neither contributes the capital to the firm nor participate in profits and losses. But he is liable to third parties for the debts of the firm.

IV. On the base of Liability:
1) Limited Partner: The liability of limited partners is limited to the extent of their capital contribution. This type of partners found in limited partnership.
2) General Partners: The partners having unlimited liability are called general partners.

V. Other partners:
1) Minor Partner: A minor is a person who has not yet attained the age of majority i.e., 18 years. According to Indian contract Act, a minor cannot enter into a contract. A minor may be admitted to the benefits of existing partnership with the consent of all partners. The minor is not personally liable for liabilities of the firm.

Question 4.
What is Partnership Deed? Explain its contents in detail.
Answer:

• It is a document which containing the terms and conditions of a partnership.
• Partnership deed forms the basis of partnership.
• “Partnership deed is a document containing all the matters according to which mutual rights, duties and liabilities of the partners in the conduct of management of the affairs of the firm are determined”.
• The partnership deed can he both oral or in writing. A written agreement, however, should be preferred because nobody can dispute the contents.
• The partnership deed should not contain any term which is contrary to the provisions of the partnership Act. The deed has to be stamped according to Indian stamps Act, 1899. It should be signed by all partners and every partner should have a copy of the deed. The following clauses are generally included in the deed.
  • The name of the firm.
  • Names and addresses of partners.
  • Nature of the business.
  • Location of the business.
  • Duration of the period, if decided. ,
  • The amount of capital to be contributed by each partner.
  • The profit sharing ratio.
  • Rights, duties and liabilities of partners.
  • Salaries, commission pay able to any partner.
  • Amount of withdrawals allowed to each partner.
  • Rate of interest to be allowed on capital as well as rate of interest to be charged on drawings.
  • The method of evaluating good will at the time of admission, retirement or death of partner.
  • Procedure for dissolution of the firm.
  • Maintenance of books of accounts and audit of accounts.
  • Procedure for settlement disputes among the partners.

Question 5.
State rights and duties of partners.
Answer:
The rights and duties of the partners of a firm usually are governed by the partnership agreement (Agreement Deed) among the partners. In case, the partnership deed does not specify them, then the partners will have rights and duties as laid down in the Indian Partnership Act, 1932.

Rights of a partner:

• Right to take part in the conduct and management of the firm’s business.
• Right to be consulted and expressed his opinion on any matter related to the firm.
• Right to have access to inspect and copy any books of accounts and records of the firm.
• Right to have an equal share in the profits of the firm, unless and otherwise agreed by the partners.
• Right to receive 6% interest on loan and advances made by partner to the firm.
• Right to be indemnified for the expenses incurred and losses sustained by partner to the firm.
• Right to the partnership property unless and otherwise mentioned in the partnership deed.
• Every partner has power of authority in an emergency, to do any such acts, for the purpose of protecting the firm from losses.
• Right to act an agent of the partnership firm in the ordinary course of business.

Duties of a partner:

• Should act honestly in the discharge of his duties to the maximum advantage of all the partners.
• Should act in a just and faithful manner towards other partner and partners.
• Should bound to share the losses of the firm equally unless and otherwise agreed upon by all partners.
• Should indemnify the firm against losses sustained due to his wilful negligence in the business.
• Must maintain true and correct accounts relating to the firm’s business.
• No partner should make secret profits by way of commission or otherwise from the firm’s business.
• No partner is allowed to assign or transfer his rights and interest in the firm to an outsider without the consent of other partners.
• A partner must not carry on any business which is similar to or likely to compete with the business of his current partnership firm.

Question 6.
Define Limited Liability Partnership and state its features.
Answer:
Meaning: Government of India passed limited liability partnership Act, 2008 and it was notified on 31st March, 2009. According to this act the LLP shall be a body corporate and a legal entity. Separate from its members. Any two or more persons associated for carrying on a lawful business with a view to earn profit, may be subscribing their names to an incorporation document and filing the same with the Registrar, for forming limited liability partnership.

Definition: According to Section 3 of the Limited Liability Partnership Act, 2008, “an LLP is a body corporate formed and incorporated under the Act. It is a legal entity separate from its partners”.

Features of Limited Liability Partnership:
1) Limited Liability: The important feature of LLP is the liability of partners is limited to extent of their share. The private property of the partners may not be utilized to meet liabilities of the business.

2) Separate legal entity: Limited liability partnership is a separate legal entity as like as a company. The partners and firm are not one and the same, they are separate.

3) Number of members: Every LLP shall have atleast two persons to form the business and atleast one designated partner should be residents of India. There is no limit on the max no. of partners in the LLP.

4) Perpetual succession: Unlike a partnership firm, an LLP can confine its existance even after the death, retirement, insanity or insolvency of one or more partners.

5) Mutual Rights and duties: Mutual rights and duties of the partners within the LLP and governed by an agreement between the partners or between the partners and LLP as the case may be the case.

6) Not liable for un-authorized acts: No partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded form joint liability created by another partner’s wrongful business decisions and misconduct.

Question 7.
What is Dissolution of Partnership Firm? Discuss different types of dissolution of firms.
Answer:
A distinction should be made between the ‘Dissolution of partnership’ and ‘Dissolution of firm’.

Dissolution of partnership: Dissolution of partnership implies the termination of the original partnership agreement or change in contractual relationship among partners. A partnership is dissolved by the insolvency, retirement, incapacity, death, expulsion etc., of a partner or on the expiry / completion of the term / venture of partnership.

A partnership can be dissolved without dissolving the firm. In dissolution of partner-ship, the business of the firm does not come to an end. The remaining partners continue the business by entering into a new agreement.

Dissolution of firm: Dissolution of firm implies dissolution between all the partners. The business of the partnership firm comes to an end. Its assets are realised and the creditors are paid off. Thus, dissolution of firm always involves dissolution of partnership but the dissolution of partnership does not necessarily mean dissolution of the firm.

Partnership firm may be dissolved in any one of the following ways:

1) Dissolution by Agreement: A partnership firm may be dissolved with the mutual consent of all the partners or in accordance with the terms of the agreement.

2) Dissolution by Notice: In case of partnership-at-will, a firm may be dissolved, if any partner gives a notice in writing to other partners indicating his intention to dissolve the firm.

3) Contingent Dissolution: A firm may be dissolved on the expiry of the term, completion of the venture, death of a partner, adjudication of a partner as insolvent.

4) Compulsory Dissolution: A firm stands automatically dissolved if all partners or all but one partner are declared insolvent, or business becomes unlawful.

5) Dissolution through court: Court may order the dissolution of a firm, when any partner becomes member unsound, permanently incapable of performing his duties, guilty of misconduct, wilfully and persistently commits breach of the partnership agreement, unauthorised transfers the whole of his interest or share in the firm to a third person.

Short Answer Questions

Question 1.
Define partnership and state its important features.
Answer:
Meaning: ‘Partnership’ is an association of two or more persons who pool their financial and managerial resource and agree to carry on a business, and share its profit or losses. The persons who form a ‘partnership firm’.

Definition: Section 4 of the partnership Act, 1932 defines partnership as “the relationship between persons who have agreed to share the profits of a business carried on by all or any one acting for all”.

The features of partnership:
1) Formation: The partnership form of business organisation is governed by the provisions of the Indian partnership Act, 1932. It comes into existance through a legal agreement where in the terms and conditions governing the relationship among the partners, sharing of profits and losses and the manner of conducting the business are specified must be lawful and run with the profit motive.

2) Association of two or more persons: In partnership, there must be at least two persons. Maximum number of members in case of Banking business is 10 and for other business is not more than 20.
Minor cannot form a partnership firm as they are in competent to enter into a contract.

3) Unlimited liability: The partners of a firm have unlimited liability. Personal assets may be used for repaying debts in case the business assets are insufficient. The partners are jointly and individually liable for payment of debts.

4) Implied authority: There is an implied authority that any partner can act on behalf of the firm. The business will be bound by the acts of partners.

5) Existence of lawful business: The business of which the persons have agreed to share the profit, must be lawful. Any agreement to indulge in smuggling, back marketing etc., cannot be called partnership business in the eyes of law.

6) Utmost good faith: The main basis of the partnership business is good faith and mutual trust. Each partner should act honestly and give proper accounts to other partners.

7) Principal and agent relationship: There must be an agency relationship between the partners. Every partner is the principal as well as the agent of the firm. When a partner deals with other parties he / she acts as an agent of other partners and at the same time the other partners become the principal agent.

8) Restriction on transfer of shares: No partner can sell or transfer his / her share to others without the consent of the other partners. In case any partner does not want to continue in the partnership, he / she give a notice for dissolution of the partnership.

Question 2.
Discuss the registration procedure of partnership.
Answer:
For registering a partnership, the partners must prepare a statement containing the following particulars and submit the same to the Registrar along with the registration fee.

• Name of the firm.
• Name of the head office and branches, if any.
• The names and addresses of partners.
• Dates on which the partners joined the firm.
• Duration of the business.
• Date of opening the firm, type of business.

The statement must be stamped, dated and signed by all the partners. Along with this statement, a copy of the partnership deed should be submitted to the Registrar. If everything is in order, the Registrar shall record an entry in the Register of firms and will issue a ‘Certificate of Registration’.

Question 3.
Explain the contents of the partnership deed.
Answer:

• It is a document which containing the terms and conditions of a partnership.
• Partnership deed forms the basis of partnership.
• “Partnership deed is a document containing all the matters according to which mutual rights, duties and liabilities of the partners in the conduct of management of the affairs of the firm are determined”.
• The partnership deed can be both oral or in writing. A written agreement, however, should be preferred because nobody can dispute the contents.
• The partnership deed should not contain any term which is contrary to the provisions of the partnership Act. The deed has to be stamped according to Indian stamps Act, 1899. It should be signed by all partners and every partner should have a copy of the deed. The following clauses are generally included in the deed.
  • The name of the firm.
  • Names and addresses of partners.
  • Nature of the business.
  • Location of the business.
  • Duration of the period, if decided.
  • The amount of capital to be contributed by each partner.
  • The profit sharing ratio.
  • Rights, duties and liabilities of partners.
  • Salaries, commission pay able to any partner.
  • Amount of withdrawals allowed to each partner.
  • Rate of interest to be allowed on capital as well as rate of interest to be charged on drawings.
  • The method of evaluating good will at the time of admission, retirement or death of partner.
  • Procedure for dissolution of the firm.
  • Maintenance of books of accounts and audit of accounts.
  • Procedure for settlement disputes among the partners.

Question 4.
Explain the ways of dissolution of a partnership firm.
Answer:
A firm may be dissolved in the following circumstance.

• Dissolution by agreement: A partnership firm can be dissolved by an agreement among all the partners.
• Dissolution by notice: If a partnership is at will, it can be dissolved by any partner giving a notice to other partners.
• Compulsory dissolution: A firm may be compulsory dissolved when all the partners or all but one partner are insolvent or the activities of the firm may become illegal.
• Contingent dissolution: A firm will be dissolved on the happening of any of the situation:
  • Death of the partner
  • Expiry of the firm
  • Completion of the venture
  • Regignation by a partner.
• Dissolution through court: A partner can apply to the court for dissolution of the firm on any of these grounds:
  • Insanity of a partner
  • Incapacity of a partner
  • Misconduct by the partner
  • Breach of agreement
  • Transfer of share to a third person
  • Regular losses.

Question 5.
Write about different kinds of partnership.
Answer:
Partnership firms formed with different types of partnership as mentioned in the following chart.

 

1. Partnership on the basis of duration:
a) Partnership at will: The partnership which is formed for indefinite period is called as partnership at will. This partnership continues till the time the partners want it and will come to an end if they decide to dissolve it. Thus, partnership exists at the will of the partners.

b) Particular partnership: When the partnership is started for a particular work, then it is known as particular partnership. As and when the work is completed then partnership automatically comes to an end.

2. Partnership based on the liability:
a) General partnership: In this type, the liability of members is limited and all of them can participate in management. All the partners are collectively and personally liable for the liabilities of the firm. It means that personal properties of the partners can be utilized to meet liabilities of the business, if assets are not enough to pay the business liabilities.

b) Limited partnership: In limited partnership, the liability of atleast one partner is limited while liability of other partners may be limited. The partners with limited liability are called special partners, while those with unlimited liability are called general or active partners. The liability of special partners is limited only to their capital in the business, whereas the liability of general partners can go beyond their capital.

3. Limited Liability Partnership (LLP):
Limited Liability Partnership (LLP) is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of a partnership. A partnership firm could not expand its activities because of higher risks and unlimited liability. As the personal properties of partners will be utilized to meet business liabilities. With a view to overcome the limitations of a partnership and company form, an alternative form, limited liability partnership was created.

Question 6.
What are the features of Limited Liability Partnership?
Answer:
Meaning: Government of India passed limited liability partnership Act, 2008 and it was notified on 31st March, 2009. According to this act the LLP shall be a body corporate and a legal entity. Separate from its members. Any two or more persons associated for carrying on a lawful business with a view to earn profit, may be subscribing their names to an incorporation document and filling the same with the Registrar, for forming limited liability partnership.

Definition: According to Section 3 of the Limited Liability Partnership Act, 2008, “an LLP is a body corporate formed and incorporated under the Act. It is a legal entity separate from its partners”.

Features of limited liability partnership:

• Limited Liability: The important feature of LLP is the liability of partners is limited to extent of their share. The private property of the partners may not be utilized to meet liabilities of the business.
• Separate legal entity: Limited liability partnership is a separate legal entity as like as a company. The partners and firm are not one and the same, they are separate.
• Number of members: Every LLP shall have atleast two persons to form the business and atleast one designated partner should be residents of India. There is no limit on the max no. of partners in the LLP.
• Perpetual succession: Unlike a partnership firm, an LLP can confine its existance even after the death, retirement, insanity or insolvency of one or more partners.
• Mutual Rights and duties: Mutual rights and duties of the partners within the LLP and governed by an agreement between the partners or between the partners and LLP as the case may be the case.
• Not liable for un-authorized acts: No partner is liable on account of the independent or un-authorized actions of other partners, thus individual partners are shielded form joint liability created by another partner’s wrongful business decisions and misconduct.

Very Short Answer Questions

Question 1.
What is partnership firm?
Answer:
1) ‘Partnership’ is an association of two or more persons who pool their financial and managerial resources and agree to carry on a business, and share its profit or losses. The person who form a ‘partnership and individually known as ‘partners’ and collectively known as firm or ‘partnership firm’.

2) Section 4 of the partnership Act, 1932 defines partnership as “the relationship between persons who have agreed to share the profits of a business carried on by all or any one acting for all”.

Question 2.
Write about Partnership Deed.
Answer:
1) Partnership Deed: Partnership deed is a document containing the terms and conditions of a partnership. It is an agreement in writing signed by all the partners duly stamped & registered.

2) The partnership deed defines certain rights, duties and obligations of partners and governs relations among them in the conduct of business affairs of the firm.

Question 3.
What do you mean by Active partner?
Answer:
Active partner:
1) The partner who actively participates in the day-to-day operations of the business is known as “active partner”.

2) He / she may act in different capacities such as Manager, Organizer, adviser and controller of all the affairs of the firm. He is also called as “working partner”.

Question 4.
Describe about sleeping partner.
Answer:
Sleeping partner:

• The partner who does not participate in the day – to – day activities of the business es known as ‘sleeping’ or ‘dormant’ partner.
• Such partner simply contributes capital and shares the profit and losses.

Question 5.
Define Partner by Estoppel.
Answer:

• A person who behaves in the public in such a way as to give an impression that he / she is a partner of the firm, is called ‘partner by estoppel’.
• Such a partner is not entitled to share the profits of the firm, but is fully liable if somebody suffers because of his / her false representation.

Question 6.
Discuss Partner by Holding out.
Answer:

• A partner (or) partnership firm declares that a particular person is a partner of their firm and such a person does not disclaim it, then he/she is known as a ‘partner by holding out’.
• Such partners are not entitled to profits but are fully liable as regards the firm’s debts.

Question 7.
What is a partnership at will?
Answer:
Partnership at will:

• A partnership that is formed for an indefinite period is called a partnership at will.
• This partnership continues till the time the partners want it and will come to an end if they decide to dissolve it. Thus, a partnership exists at the will of the partners.

Question 8.
Write about Limited Liability Partnership.
Answer:
Limited Liability Partnership (LLP):

• According to section 3 of the Limited Liability Partnership Act, 2008, “an LLP is a body corporate formed and incorporated under the Act. It is a legal entity separate from its partners”.
• LLP is an alternative corporate business that gives the benefits of the limited liability of a company and the flexibility of a partnership.
• With a view to overcoming the limitations of a partnership and company form, an alternative form, a limited liability partnership was created.
• This act passed in 2008, and it was notified on 3ist March 2009.

Question 9.
What is the dissolution of a partnership?
Answer:
Dissolution of partnership:

• Dissolution of partnership implies the termination of the original partnership agreement or change in contractual relationship among partners.
• A partnership is dissolved by the insolvency, retirement, incapacity, death expulsion, etc., of a partner or on the expiry/completion of the term/venture of the partnership.

Question 10.
What is the dissolution of a firm?
Answer:
The dissolution of a firm implies dissolution between all the partners. The business of the partnership firm comes to an end. Thus, the dissolution of the firm always involves the dissolution of the partnership, but the dissolution of a partnership does not necessarily mean the dissolution of the firm.