Question

Q.Justify the following statements.
1)The Liability of a 'Sole trader' is Unlimited.
2) Karta is the sole manager of "Joint Hindu Family Business
3) The main objective of co-operative society is to provide services to its members.
4) A Joint Stock Company can raise huge capital.
5) The liability of Co-parceners is limited in "Joint Hindu Family Business.
6) Sole proprietorship is useful for small business.​

Answer 1

The liability of sole trader is unlimited .

Sole trader is the person who only controls and manage the business of sole proprietorship. His liabilities is unlimited because

• Unlimited liability means that liability in which person have to sacrifice for their business upto that point whenever it's business assets will be more than liabilities .
• In other words personal assets of singular person also liable for the business to increase their assets more than its liabilities .

In sole tradership ,sole trader is the only person ,hence when ever need arises to help the business sole trader have to sacrifice its personal assets against business . Therefore his liabilty is unlimited .

Karta is the sole manager of joint hindu family .

Joint Hindu family is the private owned business in which head of the family named Karta , control the family business .

• He is the sole manager in his business because it is written in the Joint Hindu Family Act ,1956 that only head of the family will be the Karta and control business .
• It is the continuous business because after the death of karta , next head of family members will be in its position .

(3) The main objective of coorperative society is to provide services to it's members.

Cooperative societies are those which are the type of private owned business ,but its main and primary motive is to render the services to its members

• .It's reason is that The society formed under coorperative society Act ,1912 will be volunteer in nature .
• Hence it's main motive is to render service not to earn profit .

A joint stock company raises huge capital .

A company is the group of persons that are working together with limited liability and common seal .

• Group of persons required to run a company , that's why there is a need of huge capital to raise .

Sole proprietorship is useful for small business .

Sole proprietorship is the business run ,managed and owned by only one person .Hence small business means that business which need not more capital to run as well as no huge risk .

• Hence small business needs sole trader to run the business as less risk and less capital is required .

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