Forms of Business Organisation Class 11 Business Studies Exam Questions

Please refer to Forms of Business Organisation Class 11 Business Studies Exam Questions provided below. These questions and answers for Class 11 Business Studies have been designed based on the past trend of questions and important topics in your class 11 Business Studies books. You should go through all Class 11 Business Studies Important Questions provided by our teachers which will help you to get more marks in upcoming exams.

Class 11 Business Studies Exam Questions Forms of Business Organisation

Class 11 Business Studies students should read and understand the important questions and answers provided below for Business Studies which will help them to understand all important and difficult topics.

Short /Long Answer type Questions :

Question. ‘A to Z solutions’ is a well-known advertising agency in Kerela. The company has already raised its entire authorised capital of ₹ 10 crores through issue of shares. The company needs more funds to finance its expansion projects. Can the company issue more share capital to meet the shortage of funds? Why or why not?
Answer. No, the company cannot issue more share capital to meet the shortage of funds as it has already raised its entire authorised capital of ` 10 crores through issue of shares. The capital clause in the memorandum of Association specifies the maximum capital which the company will be authorised to raise through the issue of shares. The said company cannot issue share capital in excess of the amount mentioned in this clause. It will have to make amendments in the memorandum first.

Question. “If a company suffers heavy losses and its assets are not sufficient to payoff its liabilities, the balance can be recovered from the personal property of its members.” Do you agree? Give reasons. 
Answer. No, I do not agree with this because the ‘liability clause’ of Memorandum of Association limits the liability of the members to the amount unpaid on the shares held by them. For example, suppose Shrenik, a shareholder is holding 2,000 shares of ₹ 10 each on which he has already paid ₹ 8 per share. In the event of losses or company’s failure to pay debts, he is liable to pay only ₹ 4,000 (2,000 shares @ ₹ 2 unpaid). Beyond this, he could not be called upon to bear losses from his personal assets.

Question. Batra Pvt. Ltd., the known group of promoters submitted an application to the registrar of companies for the approval of the name for cosmetic manufacturing company. They selected “Avon Ltd.” as the name of the company so as to increase the sales of the newly opened company, as it will be benefited by the name of already existing company.
(a) Which function of promoter is being referred here?
(b) Who selects the name for the company?
(c) Would the proposed name be accepted by the Registrar of Companies?
(d) Identify the value being violated by Batra Pvt. Ltd. 
Answer. (a) Name approval.
(b) Promoters.
(c) No, the proposed name should not be identical with the existing company.
(d) Values:
(i) Respect of Law. (ii) Integrity.

Question. Mr. Sumit owns an ancestral house in Chennai. On the advise of his friend he converts it into a lodge after renovation. The revenue from the lodge helps to supplement his income considerably. On his death the property (lodge) is inherited by his three sons in order of their age namely, Mr. Sham, Mr. Anil and Mr. Satish who carry on with the business under the form of Joint Hindu Family Business.
(i) Which law governs Joint Hindu Family Business.
(ii) Who amongst the three brothers has the right to exercise control over the family business?
(iii) Comment upon the liability of the three brothers. 
Answer. (i) Hindu Succession Act, 1956
(ii) The eldest son, Mr. Sham has the right to exercise control over the family business of the Karta.
(iii) The liability of Mr. Sham (Karta) is unlimited. The liability of Mr. Anil and Mr. Satish as coparceners is limited to the extent of their share in the family business,.

Question. Mr. Deepak Wadhwa and his brothers inherited some ancestral property. They had a joint family. They decided to start a business in which, only the family members will be participating. They took a loan of ₹ 50,00,000 from Axis Bank. But they were unable to repay the loan. And they also invested their ancestral property into business. Mr. Deepak being eldest, is entrusted with the job of taking decisions for the business.
(a) What is the form of business Wadhwa family has started?
(b) By what name is the senior most member of the family known as?
(c) What is the nature of liability of the senior most member and other members?
(d) By what name the other members are known in this particular form of business?
(e) After the death of senior member, will the business comes to an end? 
Answer. (a) Hindu Undivided Family Business.
(b) Karta.
(c) Senior-unlimited liability. Others-limited liability.
(d) Co-parceners.
(e) No. After the death of Karta, next senior member becomes Karta.