CBSE Class 11 Business Studies Notes - Forms of Buisness Organisation

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 Class 11 <o
:p></o:p></h1>
<h1> Business Studies <o:p></o:p></h1>
<h1>Forms of Buisness Organisation<o:p></o:p></h1>
<time class="entry-time" itempro

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1. Introduction A business enterprises is an organisation
which is engaged in some business or commercial activity. Every business
enterprises is a separate and distinct unit of business.<o:p></o:p>
Various forms of business organisation
from which one can choose the right one include<o:p></o:p>
<![if !supportLists]> &n
bsp;
<![endif]>Sole Proprietorship<o:p
></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Joint Hindu Family
Business<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Partnership<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Co-operative Societies<
o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Joint Stock Compan<o:p></o:p>
,"sans-serif";
color:#222222'>2. Sole
Proprietorship A business owned, managed and controlled by a
single individual is known as a sole proprietorship organi
sation.<o:p></o:p>
,"sans-serif";
color:#222222'>(i) Features<o:p></o:p>
margin-left:30.0pt;text-indent:-.25in;mso-list:l12 level1 lfo4;tab-stops:list .5
in'><![if !supportLists]>Formation and closure<o
:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Liability<o:p></o:p></s
pan>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Sole risk bearer and
profit recipient<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Control<o:p></o:p></spa
n>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>No separate entity<o:p>
</o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Lack of business cont
inuity<o:p></o:p>
,"sans-serif";
color:#222222'>(ii) Merit
s<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Quick decision making<o
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Confidentiality of
information<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Direct incentive<o:p></
o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Sense of acco
mplishment<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Ease of formation and
closure<o:p></o:p>
,"sans-serif";
color:#222222'>(iii) Limi
tations<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited resources<o:p><
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited life of a
business concern<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Unlimited liability<o:p
></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited managerial
ability<o:p></o:p>
,"sans-serif";
color:#222222'>3. Joint
Hindu Family Business The business
carried out by the male members of a Hindu undivided family is known as Joint
Hindu Family Business.<o:p></o:p>
,"sans-serif";
color:#222222'>There are two conditions for existence of Joint Hindu Family
Business, These are<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Minimum two male
members must <sp
an
id="IL_AD12">be there in the family<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Existence of some
ancestral property<o:p></o:p>
,"sans-serif";
color:#222222'>Under Hindu Law there are two systems of inheritance. These are Dayabhaga and Mitakshara.<o:p></o:
p>
,"sans-serif";
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Formation<o:p></o:p></s
pan>
bsp;
pan>
bsp;
n>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Continuity<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Minor members<o:p></o:p
>
,"sans-serif";
color:#222222'>(ii)
Merits<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Effective Control<o:p><
/o:p>
bsp;
<![endif]>Conti
nued business existence<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited liability of
members<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Increased loyalty and
co-operation<o:p></o:p>
,"sans-serif";
margin-left:30.0pt;text-indent:-.25in;mso-list:l24 level1 lfo10;tab-stops:list .
5in'><![if !supportLists]>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Unlimited liability of
karta<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Dominance of karta<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited managerial
skill<o:p></o:p>
,"sans-serif";
color:#222222'>4. Partner
ship
Partnership is an association of two or more persons
who have agreed to share the profits of the business
carried on by all 01 any of them acting for all.<o:p></o:p>
,"sans-serif";
color:#222222'>According to LH
Honey, Partnership may be defined as the relation between the <sp
an
class=GramE>person who agree to carry on a business in common with a
view to private gain.<o:p></o:p>
,"sans-serif";
bsp;
pan>
bsp;
pan>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Risk bearing<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Decision making and
control<o:p></o:p>

bsp;
span>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Mutual agency<o:p></o:p
>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Membership<o:p></o:p>
,"sans-serif";
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Ease of formation an
closure<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Balanced decision
making<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>More funds<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Sharing of risks<o:p></
o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Secrecy<o:p></o:p></spa
n>
,"sans-serif";
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Unlimited liability<o:p
></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited resource<o:p></
o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Possibility of
conflicts<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Lack of continuity<o:p>
</o:p>
,"sans-serif";
color:#222222'>5. Types
of Partner<o:p></o:p>
bsp;
,"sans-serif";
mso-fareast-font-family:"Times New Roman";color:#222222'>Acti
ve
Partner The active partner
participates in the management of the firm.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Sleeping or Dormant
Partner The partner who does not participate in the
management of the firm.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Secret Partner Secret
partner is one whose association or relation With the
firm is not known to outsiders.<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Nominal Partner The nominal partners are not the real partners of the firm.
He only lends his name and reputation for the benefit of the firm.<o:p></o:p></s
pan>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Partner by Estoppel A
person is considered a partner by estoppel if, through his own initiative,
conduct or behaviour, he gives an impression to
others that he is a partner of the firm.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Partner by Holding Out
A partner holding out is a person who though is not a partner in a firm but
knowingly allows himself to be represented as a partner in a firm.<o:p></o:p></s
pan>
6. Types
of Partnership<o:p></o:p>
Based on the basis of time period, there are three types of
partnership firm<o:p></o:p>
<![if !supportLists]> &n
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Partnership at will<o:p
></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Fixed period
partnership<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Particular partnership<
o:p></o:p>
,"sans-serif";
color:#222222'>On the basis of liability of members, there are two types of
partnership. These are<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>General partnership<o:p
></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited partnership<o:p
></o:p>
,"sans-serif";
color:#222222'>7. Partner
ship
Deed<o:p></o:p>
,"sans-serif";
color:#222222'>The common contents of Partnership Deed are<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Name of the firm<o:p></
o:p>
bsp;
,"sans-serif";
mso-fareast-font-family:"Times New Roman";color:#222222'>Name
and address of the partners<o:p></
o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Nature of business the
firm will carry on<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>lace of business<o:p></
o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Capital contribution
by each other<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Profit sharing ratio
of partners<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>The right and duties
of the partners<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>The mode of
maintaining accounts<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>The <s
pan
style='font-family:"Arial","sans-serif"'>rate of

interest payable to partners on their capital<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>The rate of interest
to be paid by partners on amount withdrawn by them<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>The amount of salary
payable to partners<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Provision regarding
retirement and dissolution<o:p></o:p>
bsp;
,"sans-serif";
mso-fareast-font-family:"Times New Roman";color:#222222'>Metho
ds of solving disputes<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Whether interest is
payable on the loan provided by partners etc.<o:p></o:p>
,"sans-serif";
color:#222222'>8. Registr
ation
of Partnership Firm The procedure for registration of the
partnership firm<o:p></o:p>
,"sans-serif";
"Arial","sans-serif"'>Co-operative Society A co-operative form
of business enterprise. In this form the main motive is not earning profit but
the main motive of co-operative organisation is
mutual help. It work with the principle of each for all and all for each.<o:p></
o:p>

,"sans-serif";
color:#222222'>(a) Featur
es<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Voluntary membership<o:
p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Legal status<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Limited liability<o:p><
/o:p>
bsp;
n>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Service motive<o:p></o:
p>

,"sans-serif";
color:#222222'>(b) Merits
<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Equality in voting
status<o:p></o:p>
bsp;
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Stable existence<o:p></
o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Economy in operations<o
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Support from
government<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Ease of formation<o:p><
/o:p>
,"sans-serif";
color:#222222'>(c) Limita
tions<o:p></o:p>
bsp;
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Inefficiency in
management<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Lack of secrecy<o:p></o
:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Government control<o:p>
</o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Difference of opinion<o
,"sans-serif";
color:#222222'>(ii) Types of Co-operative Societies<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Consumers
co-operative societies<o:p></o:p>
<![if !supportLists]> &n
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Producers co-operative
societies<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Marketing co-operative
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Former co-operative
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Credit co-operative
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Co-operative housing
,"sans-serif";
color:#222222'>9. Joint
Stock Company<o:p></o:p>
,"sans-serif";
color:#222222'>Definition by Prof
Honey. Joint Stock Company is a voluntary association of
individual for profit, having a capital divided into transferable shares, the
ownership of which is the condition of membership.<o:p></o:p>
,"sans-serif";
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Artificial person<o:p><
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Separate legal entity<o
bsp;
pan>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Perpetual succession<o:
p></o:p>
bsp;
n>
bsp;
pan>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Common seal<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Risk bearing<o:p></o:p>

,"sans-serif";
color:#222222'> <o:p></o:p>
,"sans-serif";
bsp;
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Transfer of interest<o:
p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Perpetual existence<o:p
></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Scope for expansion<o:p

></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Professional
management<o:p></o:p>
,"sans-serif";
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Complexity in
formation<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Lack of secrecy<o:p></o
:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Impersonal work
environment<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Numerous regulations<o:

p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Delay in decision
making<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Oligarchic management<o
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Conflict in interest<o:
p></o:p>
,"sans-serif";
color:#222222'>10. Types
of Companies On the basis of ownership the companies can be
classified in to following categories<o:p></o:p>
,"sans-serif";
color:#222222'>(1) Privat
e
Company According to the Companies Amendment Act, (2000),
a private company is one which<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Has a minimum of two
and maximum of 50 members excluding the employees.<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Restricts the right of
members to transfer their shares.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Does not offer its
shares to general public.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Does not invite
general public to invest deposits in the company.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Has minimum paid up
capit.al of~ one lakh.<o:p></o:p>
,"sans-serif";
color:#222222'>(ii) Publi
c
Company A public company is the one which<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Has a minimum of seven
members and maximum no limit.<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Permits easy transfer
of its shares.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Invites general public
to subscribes to its public deposits.<o:p></o:p>

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Invites general public
to subscribes to its shares and debentures.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Has minimum paid up
capital of five lakh.<o:p></o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Any private company
which is subsidiary of a public company.<o:p></o:p>
,"sans-serif";
color:#222222'>11. Choice

of Form of Business Organisation<o:p><
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Cost and ease in
setting up the organisation<o:p></o:p>
bsp;
pan>
bsp;
span>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Management ability<o:p>
</o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Capital consideration<o

bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Degree of control<o:p><
/o:p>
bsp;
mso-fareast-font-family:"Times New Roman";color:#222222'>Nature of business<o:p>
</o:p>
</div>
</div>
</div>
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