Commercial Applications
Statement I: The capital of joint Hindu family business is limited to the ancestral property.
Statement II: The Karta of joint Hindu family business may not be competent to manage the business.
- Both I and II are correct
- Both I and II are wrong
- Only I is correct
- Only II is correct
Answer
Both I and II are correct
Reason — Statement I is correct because the capital of joint Hindu family business is limited to the ancestral property, and the family property gets divided on the birth of every member, so the business cannot expand and grow due to shortage of capital. Statement II is correct because the karta alone may not be competent to manage the business — there is lack of specialisation and professional management.
Related Questions
Which of the following options regarding Proprietorship is wrong?
- Basis of formation : No agreement
- Number of members : No maximum limit
- Management : By the Sole Proprietor
- Application of Law : The Contract Act
Which of the following options regarding Joint Hindu Family Business is wrong?
- Basis of formation : By Birth
- Division of profit : Unequal share
- Management : Only by Karta
- Application of law : Hindu Succession Act
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