Please refer to Forms of Business Organisation Class 11 Business Studies Important Questions with answers below. These solved questions for Chapter 2 Forms of Business Organisation in NCERT Book for Class 11 Business Studies have been prepared based on the latest syllabus and examination guidelines issued by CBSE, NCERT, and KVS. Students should learn these solved problems properly as these will help them to get better marks in your class tests and examinations. You will also be able to understand how to write answers properly. Revise these questions and answers regularly. We have provided Notes for Class 11 Business Studies for all chapters in your textbooks.

Important Questions Class 11 Business Studies Chapter 2 Forms of Business Organisation

All Forms of Business Organisation Class 11 Business Studies Important Questions provided below have been prepared by expert teachers of Standard 11 Business Studies. Please learn them and let us know if you have any questions.

Short /Long Answer type Questions :

Question. Gupreet is a sole proprietor. Over the past decade, his business has grown from operating a neighbourhood corner shop selling accessories such as artificial jewellery, lipsticks, nail polish, hair clips and bags to a retail chain with three branches in the city. Although he looks after the varied functions in all the branches, he is wondering whether he should form a company to better manage the business. He also has plans to open branches countrywide.
(a) Explain two benefits of remaining a sole proprietor.
(b) Explain two benefits of converting into a joint stock company.
(c) What role will his decision to go nationwide play in his choice of form of the organisation?
(d) What legal formalities will he have to undergo to operate business as a company. 
Answer. (a) Two benefits of remaining sole proprietor are:
(i) He is the sole recipient of all the profits. (ii) One-man control.
(b) Two merits of converting to a joint stock company:
(i) Scope for expansion and growth. (ii) Limited Liability.
(c) If he plans to go nationwide then he will have to change his form of business from sole proprietorship to joint stock company.
(d) If he takes decision to operate as Joint Stock Company, he will have to complete various legal formalities such as :
(i) Getting certificate of incorporation.
(ii) Getting certificate of commencement of business, if he plans to operate as public limited company.
(iii) Appoint professional experts such as brokers, who charge high fees.
(iv) Prepare many documentation such as : Prospectus, Memorandum of Association, Articles of Association, etc.

Question. Lalit, Saksham and Mayank are partners in a firm. Lalit and Sakshm are very upset due to untimely demise of Mayank and wish to help his family. On the suggestion of their common friend Aditya, Lalit and Saksham decide to include Mayank’s 13 year old son Vaibhav in their business.
(i) Comment upon the status of Vaibhav as a partner.
(ii) Will the status of Vaibhav change when he attains majority?
Answer. (i) Vaibhav is a minor and can be admitted only to the benefits of a partnership firm with the mutual consent of all other partners. As only a major can enter into a valid contract with others, Vaibhav cannot become a partner in any firm. His liability is limited to the extent of capital invested by him in the firm. He can share only the profits and cannot be asked to bear the losses. He will not be eligible to take an active part in the management of the firm.
(ii) On attaining majority the status of Vaibhav as a partner changes. He has to decide whether he would like to become a partner in the firm. He has to give a public notice of his decision within six months of attaining majority. If he does not give any notice within a period of six months, he will be treated as a full-fledged partner for the debts of the firm since the date he becomes partner in the firm (during his minority). He will also be allowed to take an active part in the management, like any other active partner.

Question. The business assets of an organisation amount to ₹ 1,00,000 but the debts that remain unpaid are ₹ 1,50,000. What course of action can the creditors take if : 
(a) The organisation is a sole proprietorship firm.
(b) The organisation is a partnership firm with Aditya and Nikhil as partners. Which of the two partners can the creditors approach for repayment of debt? Explain giving reasons.
Answer. Business assets = ₹ 1,00,000;
Liabilities = ₹ 1,50,000,
Therefore, Creditor’s claim = ₹ 50,000
(a) If the organisation is a sole proprietorship firm, the creditors can sue the sole proprietor for ₹ 50,000, because a sole proprietor has unlimited liability. In the case of business losses, if the business assets are not sufficient to meet all business liabilities, the proprietor may have to sell his personal property to payoff the liabilities.
(b) If the organisation is a partnership firm with Aditya and Nikhil as partners, the creditors can sue both the partners or a single partner for their claims. The reason is that partners
have unlimited liability. They are jointly and individually liable for payment of firm’s debts. Jointly, all the partners are responsible for the payment of the firm’s debts in their profit
sharing ratio. So, Aditya and Nikhil will have to pay ₹ 25,000 each. Individually, a single partner (suppose Aditya) can be held responsible to repay the debts of the business ₹ 50,000,
if Nikhil becomes insolvent and cannot bring anything from his personal assets.

Question. Varun, Akshit and Prachi were friends who started a partnership business. They did not get their firm registered as it was optional. Soon, Akshit and Prachi started having conflicts. Akshit wanted to approach a lawyer. If you were a lawyer than how would you guide him? 
Answer. I would guide him by saying that you cannot file a complaint because a partner of an unregistered firm cannot file a case against the firm or any other past or present partner.

Question. In the recent past Sahara India Ltd. did a fraud as its top officials had put the interest of its investors at stake. Inspite of the growing realisation all over the world regarding social responsibility of business, profits play a dominant role for such businesses, In the light of the case, answer the following questions;
(a) Explain any two points which highlights the role of profit in the business.
(b) Sahara India Ltd. is a public company. How a public company is different from a private company.
(c) Give two similarities between company and cooperative societies form of business organisation on any two basis.
Answer. (a) (i) Source of Income for Businessmen : Profit is the main source of income and it provides livelihood for the businessmen who spends time and efforts to manage business.
(ii) Source of Funds for Business Growth : Just as air, water and food is essential for living similarly profit is essential for the survival, growth, diversification, modernisation,
innovation and expansion of business. Profit is the life blood of any business without which it cannot survive. A part of the profits can be retained for the expansion of the business. Retention of profits, an internal source of funds, is always considered cheaper source than external sources such as banks, financial institutions etc.
(b)

(c) Similarities