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Questions and Answers
What does the term 'business' refer to?
An organization or enterprising entity engaged in commercial, industrial, or professional activities.
Which of the following is a type of business entity?
What is a sole trader?
The simplest and oldest form of business organization, owned by one person.
A sole trader has a division of labor.
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What is one merit of being a sole trader?
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What is the purpose of the Memorandum of Association (MoA)?
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What defines a partnership according to the Indian Partnership Act, 1932?
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What is a partnership deed?
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Which of the following is a demerit of partnership?
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What is a corporation?
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Which of the following is NOT a merit of corporate structure?
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Study Notes
Business Types
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Sole Trader: An individual who is the sole owner and operator of the business.
- Merits: Easy to start and close, personal customer contact, prompt decision-making, high degree of flexibility, minimal government interference.
- Demerits: Unlimited liability, no division of labor, more competition.
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Partnership: A group of two or more individuals who agree to share the profits of a business.
- Merits: Easy to form, larger capital availability, division of labor, flexibility.
- Demerits: Difficult to form, limited liability, potential for conflict, limited growth.
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Corporation: A legal entity separate from its owners, with limited liability for shareholders.
- Merits: Limited liability, perpetual existence, access to capital, professional management, transferability of ownership.
- Demerits: Double taxation, complexity and cost, regulatory scrutiny, loss of control.
Corporation Registration
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Steps for Registration: Choosing a company name, obtaining a digital signature certificate and DIN, drafting the company's MoA and AoA, filing registration documents, paying fees, acquiring a certificate of incorporation, applying for PAN and TAN, and opening a bank account.
- Memorandum of Association (MoA): Defines the company's scope and objectives.
- Articles of Association (AoA): Outlines the company's internal management rules.
Partnership Deed
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Partnership Deed: A written agreement outlining the terms and conditions of the partnership, including the roles and responsibilities of each partner.
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Partner Types:
- Active Partner: Actively involved in running the business.
- Sleeping Partner: Contributes capital but does not participate in management.
- Nominal Partner: Acts as a figurehead, without active involvement.
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Partner Types:
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Description
Explore the different types of business organizations, including sole traders, partnerships, and corporations. Understand their merits and demerits, as well as the complexities involved in registering a corporation. This quiz will help you grasp essential business concepts and their implications.
