Commercial Applications
Meera runs a bakery. Due to a drop in demand for cakes, she starts focusing on cookies and bread. She quickly adapts her business to market trends without needing approvals. Which merit of sole proprietorship does this demonstrate?
- Unlimited liability
- Secrecy of operations
- Flexibility of operations
- Lack of continuity
Answer
Flexibility of operations
Reason — Meera is able to adapt her business to changing market trends quickly because in sole proprietorship, the proprietor enjoys complete freedom of action and can take quick decisions without consulting anyone. This flexibility allows her to shift focus from cakes to cookies and bread without delay, which is a key merit of sole proprietorship.
Related Questions
A sole proprietor's business is experiencing rapid growth, but they are unable to meet financial demands. This reflects a limitation of the sole proprietorship structure.
- True
- False
Statement I: The Joint Hindu family business refers to a business which is owned by members of a Joint Hindu family.
Statement II: The Joint Hindu family form of business is one in which the family possesses some inherited property.
- Only I is correct
- Both I and II are correct
- Only II is correct
- Both I and II are wrong
The liability of a sole proprietor is limited to the assets of the business.
- True
- False
State three characteristics of sole proprietorship.