Commercial Applications
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
Answer
Ancestral goodwill
Reason — A joint Hindu family business enjoys the benefits of ancestral goodwill. The long-standing reputation built over generations creates trust among customers. The creditworthiness of the business is also high due to the large property of the family and unlimited personal liability of the karta.
Related Questions
In a joint Hindu family business, all members have equal liability, including the karta.
- True
- False
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
Which form of business ownership is represented in the image?
- Joint Hindu Family Business
- Partnership
- Sole Proprietorship
- Public Limited Company
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