TN State Board 11th Commerce Important Questions Chapter 4 Sole Proprietorship
Question 1.
Who is called a Sole Trader?
Answer:
Sole Proprietorship is a form of business organisation in which an individual introduces his own capital, uses his own skill and intelligence in the management of its affairs and is solely responsible for the results of its operations.
Question 2.
What are the Non-corporate enterprises?
Answer:
Non-corporate enterprises are:
- Sole trading concern,
- Partnership firms.
- Joint Hindu Family Business.
Question 3.
What are the Corporate enterprises?
Answer:
Corporate enterprises are:
- Government,
- Public undertakings,
- Public utilities,
- Private,
- Joint stock companies,
- co-operative.
Question 4.
For which of the following types of business do you think a sole proprietorship form of organisation would be more suitable, and why?
Answer:
- Grocery store,
- Medical store,
- Craft centre,
- Legal consultancy,
- Internet cafe.
Medical store:
Sole proprietorship form of organisation is more suitable for medical store because it is a small scale business. One man can own and manage it very easily. It requires a small amount of capital.
Question 5.
How is it possible to maintain secrecy in sole proprietorship?
Answer:
In sole trading business started by an individual he is a sole owner of the business he cannot share any business details with any body else. So he can maintain secrecy.
Question 6.
What is unlimited liability?
Answer:
The liability of proprietor for the debts of the business is unlimited. The creditors have the right to recover their dues even from the personal property of the proprietor in case business assets are not sufficient to pay their dues.
Question 7.
Write any three characteristics of Sole Proprietorship.
Answer:
(i) Ownership by one man:
This is owned by single person. The sole trader contributes the required capital. He is not only the owner of the business but also manager of the entire affairs.
(ii) Freedom of work and Quick Decisions:
Since the individual is himself as a owner, he need not consult anybody else. Hence he can take quick decisions.
(iii) Unlimited Liability:
When his business assets are not sufficient to pay off the business debts he has to pay from his personal property.
Question 8.
Give some examples of Sole trading business.
Answer:
- Adyar Anandha Bhavan.
- Chennai Silks.
- Nalli Silks.
- Bakery Shop.
- Retail shop.
- Jeyachandran Textiles.
Question 9.
Define Sole trading business.
Answer:
“Sole trader is a type of business unit where a person is solely responsible for providing the capital, for bearing the risk of the enterprise and for the management of business”.
Dr. O.R. Krishnasamy defines sole trading business as “the business carried on by a single person exclusively by and for himself’.
Question 10.
Explain the characteristics of Sole Trading Business.
Answer:
(i) Ownership by one man:
This is owned by single person. The sole trader contributes the required capital. He is not only the owner of the business but also manager of the entire affairs.
(ii) Freedom of work and Quick Decisions:
Since the individual is himself as a owner, he need not consult anybody else. Hence he can take quick decisions.
(iii) Unlimited Liability:
When his business assets are not sufficient to pay off the business debts he has to pay from his personal property.
(iv) Enjoying Entire Profit:
He strives tirelessly for the improvement and expansion of his business and enjoys all the benefits of his hard work.
(v) Absence of Government Regulation:
A sole proprietor concern is free from Government regulations. No legal formalities are to be observed in its formation, management or in its closure.
(vi) No Separate Entity:
The sole trading concern comes to an end with death, disability, insanity and insolvency of the individual.
(vii) Maintenance of Secrecy:
Since he/she manages all the affairs of the business, the secrecy can be maintained easily.
Question 11.
What are the advantages of Sole trading business?
Answer:
(i) Easy Formation:
No legal formalities are required to initiate a sole trading concern. Any person capable of entering into a contract can start it, provided he has the necessary resources for it.
(ii) Incentive to Work hard:
There is a direct relationship between effort and reward. The fact that the entire profit can be taken by himself without sharing with anybody else induces him to work ceaselessly.
(iii) Small Capital:
Small capital is an important as well as specific advantage of sole proprietorship. Sole proprietor can start business with small capital.
(iv) Credit Standing:
Since his private properties are held liable for satisfying business debts, he can get more financial assistance from others.
(v) Personal Contact with the Customers:
Since sole proprietor knows each and every customer individually he can supply goods according to their taste and preferences. Thus he can cultivate personal relationship with the customers.
(vi) Flexibility:
The sole trader can easily adjust himself to the changing requirements of his business.
Question 12.
What are the disadvantages of Sole trading business?
Answer:
(i) Limited Capital:
Since the capital is contributed by one individual only, business operations have necessarily to be on a limited scale.
(ii) Limited Managerial Skill:
Single person’s intelligence and experience may not help him beyond a certain stage. Since he has to focus on each and every activity, his managerial ability is bound to be limited.
(in) Unlimited Liability:
The creditors have the right to recover their dues even from the personal property of the proprietor in case the business assets are not sufficient to pay their debts.
(iv) Lack of Specialisation:
Since the business unit is small and the financial resources are limited, experts in different fields cannot be employed to secure maximum advantages.
(v) Hasty Decisions:
Sole proprietor is more likely to take hasty decision as he need not consult anybody else.
Question 13.
How to start snack manufacturing unit at home?
Answer:
First we select snacks-
eg: Vada, Popcorn.
One man is enough for preparing Vada and Popcorn.
(i) We want buy black gram Dhall onion and green chilli. Small amount is enough.
(ii) We want to buy maize for preparing popcorn using machine.
Question 14.
Dried Fish-Trading Explain.
Answer:
Small scale trading.
(i) First we have to buy fresh fishes.
(ii) Next we have to try it in open air.
(iii) The try in ready and we can sell them in fish market.
♦ Individual – Independent software companies run by New graduates.
B.E. Software graduates starts this type of companies with small amount of capital and two employees as a helpers.
Question 15.
Rajendran has done tfis B.Com., this year. He wants to do some good business now. Kesavan, his father, is a Sole-proprietor of a small Banian – manufacturing plant in Salem and ask Rajendran to join business with him as a partner. However, Rajendran likes to go in for an independent venture. A discussion follows between them on this issue. Meanwhile Mr. Arul, an advocate and friend of Rajendran’s father, comes there and gives comments on both of them. Assume the role of Rajendran, Kesavan and Arul and state and defend your positions.
Answer:
Mr. Kesavan: He is sole proprietor.
Mr. Rajendran: Rajendran likes to go in for an independent venture. He gives large employment opportunities to uneducated and less educated persons and reduce unemployment problem in the society.
Mr. Arul: He is an advocate. He give suggestion both the father and son. Because reduce unemployment problem in the society.
Question 16.
Mahesh is a young graduate who has. inherited a sum of ? 1,00,000 by way of family savings. He also has a family house to which he has sole title as the only son of his father. He is thinking of starting a small factory for the manufacture of plastic toys. What form of ownership organisation will you advise him to choose?
Answer:
Sole proprietorship.
Question 17.
Amar started a business on his own. He has his father helping him with the accounts and his brother helps him with looking after customers in the evening. Amar pays a monthly salary to his father and brother. Identify the form of business organisation.
Answer:
Sole trading form of business. Because he engaged father and brother as a employees.
Choose the correct answer:
Question 1.
Which is the oldest form of Business organisation?
(a) Sole Proprietorship
(b) Partnership
(c) Co-operative Society
(d) Company
Answer:
(a) Sole Proprietorship
Question 2.
In which form the owner, establisher and manager is only one?
(a) Joint Enterprise
(b) Government Company
(c) Co-operative Society
(d) Sole Proprietor
Answer:
(d) Sole Proprietor
Question 3.
A major disadvantage of sole proprietor-ship is:
(a) limited liability
(b) unlimited liability
(c) easy formation
(d) quick decision
Answer:
(b) unlimited liability
Question 4.
From the following which one is Non-corporate form of business?
(a) Joint stock company
(b) Sole trading business
(c) Government company
(d) Co-operatives
Answer:
(b) Sole trading business
Samacheer Kalvi 11th Commerce Notes Chapter 4 Sole Proprietorship
→ A business organisation is an organisation which is engaged in some industrial or commercial activity. It represents an institutional management for carrying on any kind of business activity. It may be owned and controlled by a single individual, or by a group of individuals who have entered into a formal or informal agreement to jointly conduct the business. A sole tradership is the oldest form of business organisation.
→ It is easy and simple to organise it is found in each and every country in the world. Sole proprietorship is a form of organisation in which the individual invests the entire capital, uses his own skill and is solely responsible for the result of his business. He may borrow from his friends and relatives.
→ He alone enjoy all profit and bears all losses. No legal formality is required. He get license from the local authority municipality, panchayat etc. It is non-corporate form the enterprise and it’s ownership are considered as having the same entity ownership and business are not separated.
→ Role of sole trading business it to solution to unemployment problem, provision of goods at low price. Helps small producers. Supply to quality goods. He is very helpful to consumers. Giving employment opportunities to uneducated and less educated. So to increase the standard of living of the society.
→ “ Business is like riding a bicycle.
Either you keep moving or you fall down.”