Business organiza on

Unit-2 – Promo on of business

Choose the correct answers

1. What is the first step in the promo on of a business?
a) Raising finance
b) Choosing a loca on
c) Discovery of a business idea
d) Preparing financial statements
Answer: c) Discovery of a business idea
2. Which document is prepared by a promoter to a ract investors?
a) Memorandum of Associa on
b) Ar cles of Associa on
c) Prospectus
d) Partnership Deed
Answer: c) Prospectus
3. Who is referred to as a 'promoter' in business?
a) A person who lends money to the business
b) A person who ini ates the process of forming a company
c) A person who manages day-to-day business opera ons
d) A shareholder of the company
Answer: b) A person who ini ates the process of forming a company
4. What is the key role of a promoter in business?
a) Legal advisor
b) Manager of opera ons
c) Iden fying opportuni es and arranging resources
d) Dra ing contracts
Answer: c) Iden fying opportuni es and arranging resources
5. Which of the following is NOT a characteris c of a promoter?
a) Takes ini a ve to establish the business
b) Acts as an agent of the company before incorpora on
c) Liable for pre-incorpora on contracts
d) Invests mandatory capital in the business
Answer: d) Invests mandatory capital in the business
6. What is a 'feasibility study' in business promo on?
a) Conduc ng market research to assess the poten al
b) Se ng up a loca on for the business
c) Preparing legal documents for registra on
d) Distribu ng shares to investors
Answer: a) Conduc ng market research to assess the poten al
7. What is meant by 'incorpora on' in the promo on process?
a) Marke ng the products
b) Legal registra on of the company
c) Hiring employees
d) Crea ng a business plan
Answer: b) Legal registra on of the company
8. Which of these is NOT a type of promoter?
a) Professional promoter
b) Financial promoter
c) Occasional promoter
d) Permanent promoter
Answer: d) Permanent promoter
9. The Memorandum of Associa on is also called the:
a) Charter of the company
b) Rulebook of the company
c) Financial document of the company
d) Marke ng strategy document
Answer: a) Charter of the company
10. What is the primary mo ve of a promoter?
a) To ensure compliance with legal requirements
b) To earn profits from business opera ons
c) To bring the company into existence
d) To manage and operate the business
Answer: c) To bring the company into existence
11. What is the first step in establishing a new business?
a) Hiring employees
b) Conduc ng a feasibility study
c) Obtaining funding
d) Registering the business
Answer: b) Conduc ng a feasibility study
12. Which document outlines the mission, vision, and financial goals of a business?
a) Memorandum of Associa on
b) Business Plan
c) Prospectus
d) Ar cles of Associa on
Answer: b) Business Plan
13. Which of the following is NOT a factor to consider when choosing a business loca on?
a) Accessibility for customers
b) Compe tors in the area
c) Cost of u li es
d) Personal preferences of the owner
Answer: d) Personal preferences of the owner
14. What does a feasibility study primarily evaluate?
a) Legal compliance and tax obliga ons
b) Market demand, compe on, and viability of the business idea
c) Employee sa sfac on and reten on
d) Budge ng and cash flow management
Answer: b) Market demand, compe on, and viability of the business idea
15. Which of the following funding sources is considered internal funding?
a) Bank loans
b) Venture capital
c) Personal savings
d) Government grants
Answer: c) Personal savings
16. Which of the following is a key quality of a successful businessman?
a) Indecisiveness
b) Strong decision-making skills
c) Avoiding risks at all costs
d) Delega ng all responsibili es
Answer: b) Strong decision-making skills
17.Why is adaptability important for a successful businessman?
a) It helps them avoid compe on en rely.
b) It enables them to adjust to changing market condi ons and trends.
c) It reduces the need for market research.
d) It eliminates financial risks.
Answer: b) It enables them to adjust to changing market condi ons and trends
18Which interpersonal skill is essen al for business success?
a) Conflict avoidance
b) Effec ve communica on
c) Inflexibility in leadership
d) Micromanagement
Answer: b) Effec ve communica on
19. What trait helps a businessman take calculated risks?
a) Fear of failure
b) Emo onal decision-making
c) Analy cal thinking and planning
d) Reluctance to innovate
Answer: c) Analy cal thinking and planning
20.Which of the following is a characteris c of a sole proprietorship?
a) Limited liability
b) Easy to form and dissolve
c) Separate legal en ty
d) Ownership shared with mul ple partners
Answer: b) Easy to form and dissolve
21. What is the maximum number of members allowed in a partnership firm (as per the
Indian Partnership Act, 1932)?
a) 50
b) 20
c) 10
d) Unlimited
Answer: b) 20
22. In which type of business organiza on do the owners have limited liability?
a) Sole proprietorship
b) Partnership
c) Joint stock company
d) Coopera ve society
Answer: c) Joint stock company
23. Which of the following documents is mandatory for registering a joint-stock company?
a) Ar cles of Incorpora on
b) Partnership Deed
c) Memorandum of Associa on
d) Business License
Answer: c) Memorandum of Associa on
24. What is the primary objec ve of a coopera ve society?
a) Maximizing profits for shareholders
b) Providing service to its members
c) Avoiding taxes
d) Gaining monopoly in the market
Answer: b) Providing service to its members
25. Which form of business organiza on is owned, managed, and controlled by the
government?
a) Private enterprise
b) Sole proprietorship
c) Public enterprise
d) Coopera ve society
Answer: c) Public enterprise
26. What is the main disadvantage of a sole proprietorship?
a) Lack of flexibility
b) Complex legal requirements
c) Unlimited liability
d) Difficulty in decision-making
Answer: c) Unlimited liability
27.Which of the following is NOT a feature of a partnership?
a) Sharing of profits
b) Separate legal en ty
c) Unlimited liability for partners
d) Mutual trust among partners
Answer: b) Separate legal en ty
28.In a joint-stock company, ownership is represented by:
a) Bonds
b) Shares
c) Debentures
d) Savings accounts
Answer: b) Shares
29. What is the primary mo ve of a private limited company?
a) Welfare of society
b) Earning profits
c) Elimina ng compe on
d) Suppor ng government policies
Answer: b) Earning profits
30.What is the main feature of a sole proprietorship?
a) Ownership by mul ple individuals
b) Limited liability
c) Single ownership and control
d) Legal registra on is mandatory
Answer: c) Single ownership and control
31. . Which document governs the working of a partnership?
a) Ar cles of Associa on
b) Partnership Deed
c) Memorandum of Associa on
d) Shareholder Agreement
Answer: b) Partnership Deed

32.Which type of partner has unlimited liability but does not par cipate in the day-to-day
ac vi es of the firm?
a) Sleeping partner
b) Ac ve partner
c) Nominal partner
d) Minor partner
Answer: a) Sleeping partner
33.What is the most significant advantage of a joint stock company?
a) Unlimited liability
b) Easy forma on
c) Separate legal en ty and limited liability
d) Management by a single individual
Answer: c) Separate legal en ty and limited liability
34.Who is the owner of a joint stock company?
a) Directors
b) Employees
c) Shareholders
d) Government
Answer: c) Shareholders
35.What is the primary objec ve of a coopera ve society?
a) Profit maximiza on
b) Service to members
c) Government control
d) Monopoly in the market
Answer: b) Service to members
36. In a coopera ve society, vo ng rights are based on:
a) Number of shares held
b) Financial contribu on
c) One member, one vote principle
d) Seniority of membership
Answer: c) One member, one vote principle
37. Which business form is most suitable for a small-scale opera on with personal
control?
a) Sole proprietorship
b) Partnership
c) Joint stock company
d) Coopera ve society
Answer: a) Sole proprietorship
38. In which form of business is registra on compulsory?
a) Sole proprietorship
b) Partnership
c) Joint stock company
d) None of the above
Answer: c) Joint stock company
39. What is the minimum number of members required to form a partnership?
a) 1
b) 2
c) 7
d) 10
Answer: b) 2
40. What is the main mo ve of a sole proprietorship?
a) Service to society
b) Profit maximiza on
c) Investment in shares
d) Crea ng employment opportuni es
Answer: b) Profit maximiza on
41. How many members are required to form a private limited company?
a) 2 to 200
b) 1 to 50
c) 7 to unlimited
d) 2 to 50
Answer: a) 2 to 200
42. What is the primary mo ve of a coopera ve society?
a) Profit maximiza on
b) Service to members and welfare
c) Gaining monopoly
d) Reducing taxa on
Answer: b) Service to members and welfare
43. What is the maximum number of members allowed in a public limited company?
a) 50
b) Unlimited
c) 200
d) 1000
Answer: b) Unlimited
46. Which form of business is managed by a single person and serves personal profit
goals?
a) Partnership
b) Sole proprietorship
c) Coopera ve society
d) Joint-stock company
Answer: b) Sole proprietorship
47. What is the minimum number of members required to form a coopera ve society?
a) 5
b) 7
c) 10
d) 20
Answer: c) 10
48. What is the main mo ve of a joint stock company?
a) Service to members
b) Profit maximiza on for shareholders
c) Crea ng a monopoly
d) Reducing compe on
Answer: b) Profit maximiza on for shareholders
49. In a public limited company, what is the minimum number of members required for
registra on?
a) 2
b) 7
c) 10
d) 50
Answer: b) 7
50. Which business form aims to eliminate middlemen and provide goods/services at a
reasonable price?
a) Sole proprietorship
b) Partnership
c) Coopera ve society
d) Public limited company
Answer: c) Coopera ve society
51. What is the minimum number of members required to form a private limited
company?
a) 1
b) 2
c) 3
d) 5
Answer: b) 2
52. Which of the following is a key feature of a public limited company?
a) Shares are not traded on the stock exchange
b) Minimum members required are 5
c) Limited liability for shareholders
d) It cannot raise capital through shares
Answer: c) Limited liability for shareholders
53. What is the maximum number of members allowed in a One Person Company (OPC)?
a) 2
b) 1
c) 50
d) 200
Answer: b) 1
54. In a private limited company, what is the main restric on regarding shares?
a) Shares cannot be transferred
b) Shares are freely transferable
c) Shares can only be sold to government employees
d) Shares are issued only to family members
Answer: a) Shares cannot be transferred freely
55. A public company can raise funds by:
a) Borrowing from banks
b) Issuing shares to the public
c) Issuing debentures
d) All of the above
Answer: d) All of the above

Fill in the blanks

1. The first step in establishing a new business is conduc ng a ________ study to understand
the market.
Answer: Market
2. A business plan helps in outlining the ________ and objec ves of the new business.
Answer: Goals
3. One of the major considera ons before star ng a new business is the availability of
________ to fund the venture.
Answer: Capital
4. A ________ analysis helps a business iden fy its strengths, weaknesses, opportuni es,
and threats.
Answer: SWOT
5. Choosing the right ________ is important to avoid legal complica ons and ensure efficient
business opera ons.
Answer: Business structure
6. A successful businessman must possess good ________ skills to make informed decisions.
Answer: Decision-making
7. ________ is a key quality of a successful businessman, allowing them to face challenges
and setbacks.
Answer: Resilience
8. A successful businessman should have a strong sense of ________ to maintain a good
reputa on and trust with clients.
Answer: Integrity
9. A businessman with good ________ skills is able to mo vate employees and keep them
engaged.
Answer: Leadership
10. The ability to think outside the box is known as ________, a cri cal quality for a
successful entrepreneur.
Answer: Crea vity
11. A ________ is the simplest form of business, where one individual is responsible for all
decisions and liabili es.
Answer: Sole proprietorship
12. The main advantage of a ________ is the sharing of financial burden and opera onal
responsibili es among partners.
Answer: Partnership
13. A ________ company has a separate legal iden ty from its owners, and the liability is
limited to the extent of the capital invested.
Answer: Joint-stock
14. The ________ form of business offers the advantage of limited liability but requires a
legal registra on process.
Answer: Corpora on
15. The primary disadvantage of a ________ company is the difficulty in transferring
ownership and raising capital.
Answer: Sole proprietorship
16. The main disadvantage of a ________ partnership is the unlimited liability of the
partners.
Answer: General
17. A ________ partnership allows partners to have limited liability, which protects their
personal assets.
Answer: Limited
18. The ________ form of business can easily raise capital by issuing shares to the public.
Answer: Public
19. One of the key characteris cs of a ________ company is that it has shareholders who
have limited liability.
Answer: Public
20. In a ________ company, shares are not traded publicly, and the number of shareholders
is limited to 50.
Answer: Private
21. The minimum number of members required to form a ________ company is 7.
Answer: Public
22. A ________ company cannot offer shares to the public and has restric ons on share
transfers.
Answer: Private
23. In a ________ company, ownership is held by a single individual, and the owner has full
control over the business.
Answer: One Person
24. A public company can raise funds by issuing shares to the ________.
Answer: Public
25. A key advantage of a ________ company is the limited liability of its shareholders.
Answer: Public
26. In a One Person Company (OPC), the owner’s liability is ________, protec ng their
personal assets.
Answer: Limited
27. The ________ company structure requires a minimum of two directors for legal
registra on.
Answer: Private
28. A ________ company is more suitable for businesses aiming for significant growth and
public investment.
Answer: Public
29. A ________ company can only have one member but must appoint a nominee in case of
death or incapacity.
Answer: One Person
30. One of the disadvantages of a ________ company is its inability to raise funds through
the public market.
Answer: One Person

Matching
Column A
Column B (Descrip ons)
(Quali es)

1. Crea vity A. The ability to inspire and guide a team towards a common goal.

2. Leadership B. Ability to bounce back from failures and keep pursuing goals.

3. Integrity C. The ability to come up with new and innova ve ideas.

D. The ability to choose the best course of ac on among

4. Decision-making
alterna ves.

5. Resilience E. The quality of being honest and having strong moral principles.

Answer Key:
 C,A,E,D,B

Set 2: Matching - Types of Business Forms

Column A (Business
Column B (Characteris cs)
Forms)

1. Sole Proprietorship A. Business owned and controlled by a single individual.

2. Partnership B. Limited liability, but shares cannot be freely transferred.

3. Joint-stock Company C. Allows public to buy shares and raise capital from the public.

4. Private Limited D. Business owned by two or more people with shared

Company responsibili es.
Column A (Business
Column B (Characteris cs)
Forms)

5. Public Limited E. A company with separate legal iden ty from its owners, can
Company issue shares publicly.

Answer Key: A,D,E,B,C

One person mark ques on

1.Who is considered a successful businessman?
Answer: A successful businessman is one who consistently achieves business goals, adapts
to challenges, and manages risks while maintaining ethical prac ces.
2.What is the minimum number of members required to form a public company?
Answer: A public company requires at least 7 members.
3.How many members are required to form a One Person Company (OPC)?
Answer: A One Person Company requires just 1 member.
4.Sole Proprietorship
Answer: A business owned and operated by a single individual with unlimited liability.
5.Partnership
Answer: A business owned by two or more individuals who share profits, losses, and
liabili es.
6.Joint-Stock Company
Answer: A company whose capital is divided into shares, which are owned by shareholders
who have limited liability.
7.Coopera ve
Answer: A business owned and operated by a group of people for their mutual benefit, with
equal vo ng rights for all members.
8.Private Limited Company
Answer: A company with limited liability, whose shares are not available to the public and
can be transferred only with restric ons.
9.Public Limited Company
Answer: A company with limited liability, whose shares are available for purchase by the
public and can be traded on the stock exchange.
10.One Person Company (OPC)
Answer: A company that is formed by a single individual, with limited liability and a separate
legal iden ty from its owner.
True or Flase

1. A market study is the first step when star ng a new business.

Answer: True
2. A sole proprietorship allows the owner to transfer ownership easily.
Answer: False
3. Crea vity helps a businessman come up with innova ve solu ons.
Answer: True
4. In a partnership, profits and losses are shared equally between the partners.
Answer: False
5. A One Person Company (OPC) requires at least two members to form.
Answer: False
6. A business plan is unnecessary if the entrepreneur has enough capital.
Answer: False
7. Public companies can raise capital by issuing shares to the public.
Answer: True
8. Resilience is not important for a businessman a er facing failure.
Answer: False
9. Coopera ves are set up primarily to maximize profits for members.
Answer: False
10. In a joint-stock company, the owners are personally liable for the company’s debts.
Answer: False
11. Leadership is a key quality for inspiring and managing a business team.
Answer: True
12. In a coopera ve, each member has one vote regardless of their contribu on.
Answer: True
13. A private limited company can raise capital by issuing shares to the public.
Answer: False
14. A sole proprietorship is the simplest and most common form of business ownership.
Answer: True
15. In a partnership, all partners share the responsibility for profits and losses.
Answer: True
16. A joint-stock company has a separate legal iden ty from its shareholders.
Answer: True
17. The main disadvantage of a sole proprietorship is limited liability for the owner.
Answer: False
18. A private limited company can have up to 200 members.
Answer: True
19. A public company is owned by a single individual.
Answer: False
20. In a One Person Company (OPC), the liability of the owner is limited.
Answer: True