Commercial Applications
The merit of a joint company is
- Continuity of Existence
- Capital Formation
- Limited Liability
- All of these
Answer
All of these
Reason — A joint stock company enjoys several merits including continuity of existence (perpetual succession ensures uninterrupted operations), capital formation (large capital resources can be raised from the public by issuing shares and debentures), and limited liability (members' liability is restricted to the face value of shares held). Other merits include efficient management, transferability of shares, economies of scale, democratic management and goodwill.
Related Questions
Assertion (A): Transferability of shares makes public companies more attractive to investors.
Reasoning (R): Public companies allow shareholders to transfer shares without restrictions, providing liquidity to their investments.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true.
Statement I : A company is an artificial person created by law having no physical body of a natural human being.
Statement II : A company can't exist in the contemplation of law.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong
Statement I : A company enjoys a good reputation and prestige in the business world.
Statement II : The membership of a public company is large and its ownership is generally diffused.
- Only I is correct
- Only II is correct
- Both I and II are correct
- Both I and II are wrong
Statement I : Red tape and bureaucracy do not permit quick decisions and prompt action.
Statement II : The management of a company is supposed to be carried on according to the collective will of its members.
- Only I is correct
- Only II is correct
- Both I and II are wrong
- Both I and II are correct