Commercial Applications
In a joint Hindu family business, all members have equal liability, including the karta.
- True
- False
Sole Proprietorship
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Answer
False
Reason — The liability of the karta is unlimited, whereas the liability of all other members is limited to the extent of their share in the property of the family business. Therefore, all members do not have equal liability.
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Related Questions
Assertion (A): Sole proprietors have unlimited personal liability for the business debts.
Reason (R): Personal assets of the owner may be used to settle business obligations in case of financial difficulties.
- A is true but R is false.
- A is false but R is true.
- Both A and R are true and R explains A.
- Both A and R are true but R does not explain A.
In a sole proprietorship, the business and the owner are considered …………… .
- Two separate legal entities
- A single legal entity
- Governed by different laws
- Managed under a partnership deed
In a sole proprietorship, decisions can be made ……………, whereas in a joint Hindu family business, decisions are made by …………… .
- By consensus; family members jointly
- Independently; the karta
- By majority vote; external consultants
- By board meetings; coparceners
The Sharma family runs a successful spice business that has been operating for generations. Customers trust their products because of the business's long-standing reputation. Which advantage of joint Hindu family business is illustrated in this case?
- Incentive to work hard
- Ancestral goodwill
- Ease of formation
- Quick decisions