Class 11 MCQ Questions – Forms of Business Organisation

Class 11 Business Studies Chapter 2 provides an introduction to various forms of business organization. It covers sole proprietorship, joint Hindu family business, partnership and cooperative society models, and joint stock company ownership structures.

Extramarks has created essential questions and answers for students studying this chapter of CBSE MCQs to strengthen their preparation level. Practice them now!

Sole Proprietorship

As its name implies, sole proprietorship is a type of business organization where one person owns and manages an enterprise, enjoying all profits while shouldering all risks. It is one of the most accessible forms of organization available and is typically utilized by small-scale operations like tea stalls and grocery stores.

The form of business organization chosen depends on how much control a person wishes to exert over its management. If they prefer having full authority themselves, a sole proprietorship may be best. Otherwise, partnership or company structures might offer more suitable arrangements.

One key consideration in selecting a business organization type is its capacity for raising capital. A sole proprietorship offers limited flexibility when it comes to raising funds; instead, relying on personal assets and the creditworthiness of its proprietor as sources for funding can become problematic when the business struggles to do well.

Samarth, a fashion designer from Delhi’s Greater Kailash market, runs his high-fashion garment business at reasonable prices with quality products that he can offer customers at great value. To protect himself from unlimited liability, he wants his business registered so as to identify which form of organization best suits his requirements.

The duration of business activities depends upon the form of business organization chosen. A sole proprietorship could end upon death or incapacity of its owner, while limited companies can continue for as long as shareholders wish. Also, shares can be transferred within limited companies.

Joint Hindu Family Business

Indian law governs this unique form of business organization, known as Karta companies. Membership in these businesses is determined by birth; three consecutive generations from one family can join as members. Their head is known as the Karta; all family members share equal ownership in this entity, with all having equal voting power in matters related to its running and debt payments for debts owed by Karta companies. His personal property can even be used to pay the business debts.

The Karta is accountable for making all decisions for his or her company, ensuring their choices do not harm other members’ interests, and utilizing all available resources optimally to maximize profits. Unfortunately, such an enterprise can be challenging due to its large size and ambiguous roles and responsibilities; conflicts among family members could interfere with business expansion.

Establishing this type of business requires at least two male family members and ancestral property that they inherited as assets, along with coparceners whose children will automatically become part of this firm. They do not need to sign an agreement to join and can join at any time; death, lunacy, or insolvency of one family member does not impede business operations – in fact, it continues operating with limited liability such that only their shares in the company can be claimed against.


The partnership is a form of business organization that involves at least two partners. Although this form allows for shared control and responsibility, legal liability issues could still arise in the event of disputes among partners; profits/losses must also be distributed evenly among them in order to avoid conflicts in the future when one decides to exit from their partnership.

Partnerships are subject to the laws of their home state. While specific requirements must be fulfilled – including registering the business name and filing taxes – there are few other recurring governmental obligations associated with partnerships; similar to sole proprietorships, partners can report profits or deductions individually on their income tax returns.

Before answering Forms of Business Organisation Class 11 multiple choice questions (MCQs), it is vitally important that students read each question thoroughly and select an answer logically. Students often get carried away while looking at various choices and pick an inappropriate option by getting overexcited; to prevent this from happening again, it is vital to reread each question and select what seems most logical as an answer option.

Note that correct answers may not appear among any of the options, as questions designed to confuse students and test their knowledge are meant to do just that. For optimal performance in multiple-choice questions (MCQs), read through each question prior to reviewing any potential answer choices and choose your first selection – this way, you won’t miss out on any points which could have been earned had the correct one has been selected instead!

Cooperative Society

Cooperative societies emphasize cooperation. Cooperative societies are formed with specific economic objectives in mind and often aim to help the poorest sections of society by offering goods and services at reduced rates for members while sharing profits among themselves and eliminating middlemen; however, this type of arrangement may be challenging to compete against non-cooperatives.

Cooperative societies can be an excellent way to lower taxes and legal fees for businesses looking to minimize taxes and legal costs. Establishment is easy, with only ten adults required; registration with the Registrar of Companies requires audited returns, inspection reports, and an established memorandum of association along with a register of members being maintained by them.

Cooperative societies offer many advantages, from reduced risks and faster decision-making times, to the promotion of community among employees and customers, motivation, morale improvement, and even financial incentives for staff. But cooperatives can become problematic if they fail to address problems adequately; employees may become demotivated to work hard if they feel they don’t matter or lack appreciation, while honorary office bearers may lose interest if their duties are not compensated adequately.

Forms of Business Organisation class 11 multiple choice questions (MCQs) provide an excellent way to gauge your knowledge and skills before an exam. Make sure you read each option closely as they often contain answers within their options – more practice means better results!

Joint Stock Company

NCERT MCQ Questions for Class 11 Business Studies Chapter 2 Forms of Business Organisation with Answers Pdf free download is here to assist students in practicing what they learned in classrooms and applying it during exams. Subject matter experts prepared these MCQs for optimal results.

A joint stock company is a type of business organization that allows investors to purchase shares that can be bought and sold quickly, making capital faster to raise, operations scalable quickly, shareholder liabilities protected against debts or losses related to company operations, and management being separated, so each shareholder can focus on managing his or her portion of the organization effectively.

To prepare for a Joint Stock Company exam, the most accessible and most straightforward approach is to memorize keynotes and use word associations. With practice comes better scores. Multiple-choice question practice can also help assess your level of preparedness for the exam; by taking multiple-choice question practice tests, you can understand where you currently stand, as well as any additional work necessary in order to meet your goals.

Preparing for an exam requires anticipating what kinds of questions may come your way and the estimated duration. Starting by answering familiar questions will save time so that later, when more challenging ones arrive, you can focus on solving those first. Furthermore, if an answer remains unknown to you, it’s okay to make an educated guess – no negative marking will result from doing so!