Entrepreneurial Planning MCQ Quiz - Objective Question with Answer for Entrepreneurial Planning - Download Free PDF
Last updated on Apr 11, 2025
Latest Entrepreneurial Planning MCQ Objective Questions
Entrepreneurial Planning Question 1:
What are the Requirements for Registration of a Public Limited Company?
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 1 Detailed Solution
The correct answer is - Minimum of 3 Directors are required to form a Public Limited Company
Key Points
- Minimum of 3 Directors are required to form a Public Limited Company
- A Public Limited Company (PLC) is a type of company that offers its shares to the general public.
- According to the Companies Act, 2013 in India, a minimum of 3 directors is required to establish a Public Limited Company.
- This requirement ensures that there is sufficient governance and oversight in the company’s operations.
- Having multiple directors helps in decision-making processes and ensures that the company adheres to legal and regulatory compliances.
Additional Information
- Minimum of 2 Directors are required to form a Private Limited Company
- A Private Limited Company in India requires a minimum of 2 directors.
- It restricts the right to transfer its shares and limits the number of its members to 200.
- Minimum of 4 Directors are required to form a One Person Company
- A One Person Company (OPC) in India can be formed with just one director and one member.
- This type of company provides a single entrepreneur with the benefits of a corporate framework.
- Minimum of 6 Directors are required to form a Large Scale Public Limited Company
- There is no specific requirement for a minimum of 6 directors to form any type of company under Indian law.
- None of the above
- This option is incorrect as the correct requirement is clearly specified as a minimum of 3 directors.
Entrepreneurial Planning Question 2:
How can a member resign from a cooperative society?
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 2 Detailed Solution
The correct answer is - Withdrawing his capital
Key Points
- Withdrawing his capital
- A member can resign from a cooperative society by withdrawing his capital investment.
- This process involves the member formally notifying the cooperative society of their intent to resign and requesting the return of their invested capital.
- The cooperative society will then process the request according to its bylaws and return the member's capital after settling any outstanding dues or obligations.
- Withdrawing capital signifies the member's exit from the society and relinquishment of any rights or responsibilities associated with membership.
Additional Information
- Transferring his share to another person
- This option is generally not allowed as cooperative societies often have specific rules regarding membership and share transferability.
- Transfer to an external person who is not a member of the cooperative society may not comply with the society's regulations.
- Transfer his shares to a fellow member
- While this might be allowed in some societies, it usually requires approval from the society's board and adherence to specific procedures.
- Not a straightforward method for resignation as it involves internal transactions and approvals.
- By transferring all his shares to his relatives
- Similar to transferring to another person or fellow member, this method also requires compliance with the society's rules and may not be a direct method of resignation.
- Relatives may not automatically qualify as members, making this option less viable.
- None of the above
- This option is incorrect as there is a clear method for a member to resign from a cooperative society by withdrawing their capital.
Entrepreneurial Planning Question 3:
Minimum Number of members a Private Company should have?
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 3 Detailed Solution
The correct answer is - 2
Key Points
- Minimum Number of Members in a Private Company
- According to the Companies Act, 2013, a private company must have at least 2 members.
- This requirement distinguishes private companies from public companies, which need a minimum of 7 members.
- Private companies enjoy certain exemptions and privileges under the Companies Act, including less stringent regulatory requirements compared to public companies.
Additional Information
- Other Options Explained
- Option 1 (5 members): This number is incorrect for a private company but is closer to the minimum requirement for some other types of business structures.
- Option 3 (6 members): This number does not correspond to any specific legal requirement for private companies under current Indian corporate law.
- Option 4 (7 members): This is the minimum number required for a public company, not a private company.
- Option 5 (8 members): This number exceeds the minimum required for both private and public companies, but it is not a legal requirement for either.
Entrepreneurial Planning Question 4:
Requirements for registering a Public Limited Company
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 4 Detailed Solution
The correct answer is - Minimum 7 shareholders
Key Points
- Minimum 7 shareholders
- A Public Limited Company requires a minimum of 7 shareholders to be registered.
- This requirement ensures a broader base of ownership and greater public participation.
- It facilitates the ability to raise capital from the public through the issuance of shares.
- Having more shareholders helps in better decision-making and distribution of risk.
Additional Information
- Minimum 5 shareholders
- This number is more commonly associated with Private Limited Companies, which require a minimum of 2 and a maximum of 200 shareholders.
- Minimum 10 shareholders
- While more shareholders can be beneficial, requiring a minimum of 10 is not a standard criterion for Public Limited Companies.
- Minimum 6 shareholders
- This number does not align with the legal requirements for a Public Limited Company, which specifically require 7 shareholders.
- Minimum 8 shareholders
- Having 8 shareholders exceeds the minimum requirement and is not necessary according to the legal standards.
Entrepreneurial Planning Question 5:
A __________ partner is an invested person who is involved in the daily operations of the partnership
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 5 Detailed Solution
The correct answer is - Active partner
Key Points
- Active partner
- An active partner is a person who is actively involved in the day-to-day operations and management of the partnership.
- This partner contributes both capital and expertise to the business.
- They are responsible for making business decisions and carrying out the policies of the partnership.
- Active partners share in the profits and losses of the partnership and are usually listed as general partners.
- They often have unlimited liability for the debts of the partnership, meaning their personal assets can be used to settle business debts.
Additional Information
- Inactive partner
- An inactive partner, also known as a silent partner, does not participate in the daily operations of the business.
- They invest capital into the business and share in its profits and losses, but they do not have a role in managing the business.
- Sleeping partner
- A sleeping partner is similar to an inactive partner, in that they invest capital into the business but do not take part in its daily operations.
- They are not known to the public as a partner of the business.
- Nominal partner
- A nominal partner does not invest capital or participate in the operations of the business.
- They lend their name and reputation to the partnership, often for a fee or a share in the profits.
- They have no real authority or responsibility in the business.
- Secret partner
- A secret partner is involved in the business and shares in its profits and losses, but their association with the business is not disclosed to the public.
- They participate in management decisions but their identity as a partner is kept confidential.
Top Entrepreneurial Planning MCQ Objective Questions
Entrepreneurial Planning Question 6:
What are the Requirements for Registration of a Public Limited Company?
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 6 Detailed Solution
The correct answer is - Minimum of 3 Directors are required to form a Public Limited Company
Key Points
- Minimum of 3 Directors are required to form a Public Limited Company
- A Public Limited Company (PLC) is a type of company that offers its shares to the general public.
- According to the Companies Act, 2013 in India, a minimum of 3 directors is required to establish a Public Limited Company.
- This requirement ensures that there is sufficient governance and oversight in the company’s operations.
- Having multiple directors helps in decision-making processes and ensures that the company adheres to legal and regulatory compliances.
Additional Information
- Minimum of 2 Directors are required to form a Private Limited Company
- A Private Limited Company in India requires a minimum of 2 directors.
- It restricts the right to transfer its shares and limits the number of its members to 200.
- Minimum of 4 Directors are required to form a One Person Company
- A One Person Company (OPC) in India can be formed with just one director and one member.
- This type of company provides a single entrepreneur with the benefits of a corporate framework.
- Minimum of 6 Directors are required to form a Large Scale Public Limited Company
- There is no specific requirement for a minimum of 6 directors to form any type of company under Indian law.
- None of the above
- This option is incorrect as the correct requirement is clearly specified as a minimum of 3 directors.
Entrepreneurial Planning Question 7:
How can a member resign from a cooperative society?
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 7 Detailed Solution
The correct answer is - Withdrawing his capital
Key Points
- Withdrawing his capital
- A member can resign from a cooperative society by withdrawing his capital investment.
- This process involves the member formally notifying the cooperative society of their intent to resign and requesting the return of their invested capital.
- The cooperative society will then process the request according to its bylaws and return the member's capital after settling any outstanding dues or obligations.
- Withdrawing capital signifies the member's exit from the society and relinquishment of any rights or responsibilities associated with membership.
Additional Information
- Transferring his share to another person
- This option is generally not allowed as cooperative societies often have specific rules regarding membership and share transferability.
- Transfer to an external person who is not a member of the cooperative society may not comply with the society's regulations.
- Transfer his shares to a fellow member
- While this might be allowed in some societies, it usually requires approval from the society's board and adherence to specific procedures.
- Not a straightforward method for resignation as it involves internal transactions and approvals.
- By transferring all his shares to his relatives
- Similar to transferring to another person or fellow member, this method also requires compliance with the society's rules and may not be a direct method of resignation.
- Relatives may not automatically qualify as members, making this option less viable.
- None of the above
- This option is incorrect as there is a clear method for a member to resign from a cooperative society by withdrawing their capital.
Entrepreneurial Planning Question 8:
Minimum Number of members a Private Company should have?
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 8 Detailed Solution
The correct answer is - 2
Key Points
- Minimum Number of Members in a Private Company
- According to the Companies Act, 2013, a private company must have at least 2 members.
- This requirement distinguishes private companies from public companies, which need a minimum of 7 members.
- Private companies enjoy certain exemptions and privileges under the Companies Act, including less stringent regulatory requirements compared to public companies.
Additional Information
- Other Options Explained
- Option 1 (5 members): This number is incorrect for a private company but is closer to the minimum requirement for some other types of business structures.
- Option 3 (6 members): This number does not correspond to any specific legal requirement for private companies under current Indian corporate law.
- Option 4 (7 members): This is the minimum number required for a public company, not a private company.
- Option 5 (8 members): This number exceeds the minimum required for both private and public companies, but it is not a legal requirement for either.
Entrepreneurial Planning Question 9:
Requirements for registering a Public Limited Company
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 9 Detailed Solution
The correct answer is - Minimum 7 shareholders
Key Points
- Minimum 7 shareholders
- A Public Limited Company requires a minimum of 7 shareholders to be registered.
- This requirement ensures a broader base of ownership and greater public participation.
- It facilitates the ability to raise capital from the public through the issuance of shares.
- Having more shareholders helps in better decision-making and distribution of risk.
Additional Information
- Minimum 5 shareholders
- This number is more commonly associated with Private Limited Companies, which require a minimum of 2 and a maximum of 200 shareholders.
- Minimum 10 shareholders
- While more shareholders can be beneficial, requiring a minimum of 10 is not a standard criterion for Public Limited Companies.
- Minimum 6 shareholders
- This number does not align with the legal requirements for a Public Limited Company, which specifically require 7 shareholders.
- Minimum 8 shareholders
- Having 8 shareholders exceeds the minimum requirement and is not necessary according to the legal standards.
Entrepreneurial Planning Question 10:
A __________ partner is an invested person who is involved in the daily operations of the partnership
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 10 Detailed Solution
The correct answer is - Active partner
Key Points
- Active partner
- An active partner is a person who is actively involved in the day-to-day operations and management of the partnership.
- This partner contributes both capital and expertise to the business.
- They are responsible for making business decisions and carrying out the policies of the partnership.
- Active partners share in the profits and losses of the partnership and are usually listed as general partners.
- They often have unlimited liability for the debts of the partnership, meaning their personal assets can be used to settle business debts.
Additional Information
- Inactive partner
- An inactive partner, also known as a silent partner, does not participate in the daily operations of the business.
- They invest capital into the business and share in its profits and losses, but they do not have a role in managing the business.
- Sleeping partner
- A sleeping partner is similar to an inactive partner, in that they invest capital into the business but do not take part in its daily operations.
- They are not known to the public as a partner of the business.
- Nominal partner
- A nominal partner does not invest capital or participate in the operations of the business.
- They lend their name and reputation to the partnership, often for a fee or a share in the profits.
- They have no real authority or responsibility in the business.
- Secret partner
- A secret partner is involved in the business and shares in its profits and losses, but their association with the business is not disclosed to the public.
- They participate in management decisions but their identity as a partner is kept confidential.
Entrepreneurial Planning Question 11:
A partner who allows the partnership firm to use his/her name but does not contribute any capital or take part in the management and affairs of the business is
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 11 Detailed Solution
The correct answer is - Nominal partner
Key Points
- Nominal Partner
- A nominal partner allows their name to be used by the partnership firm but does not invest capital or participate in the management.
- They lend their name and reputation to the business, potentially enhancing the firm's credibility.
- Despite not being involved in day-to-day operations, a nominal partner can be held liable to third parties for the obligations of the firm.
- This role is often taken by individuals who have a significant reputation but do not wish to engage actively in the business.
Additional Information
- In Active Partner
- An inactive partner (more commonly known as a "sleeping partner") does not participate in the day-to-day operations but contributes capital and shares in the profits and losses.
- Sleeping Partner
- A sleeping partner, also known as a silent partner, invests capital into the business but does not partake in the management or daily operations.
- They have a share in the profits and losses but remain behind the scenes.
- Secret Partner
- A secret partner is involved in the business but their association is not known to the public.
- They can participate in management and share in the profits and losses without public awareness.
- Active Partner
- An active partner (also known as a general partner) takes an active role in the management and day-to-day operations of the business.
- They invest capital and share in the profits and losses, actively engaging in business decisions.
Entrepreneurial Planning Question 12:
A __________ is a person who provides some of the capital for a business but who does not take an active part in managing the business.
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 12 Detailed Solution
The correct answer is - Sleeping partner
Key Points
- Sleeping partner
- A sleeping partner, also known as a silent partner, is an individual who invests capital in a business but does not participate in its day-to-day operations.
- This type of partner typically earns a share of the profits without being involved in management decisions or the operational aspects of the business.
- The primary role of a sleeping partner is to provide financial support, while leaving the management and running of the business to the active partners.
Additional Information
- Inactive partner
- An inactive partner is a general term that can refer to any partner who is not involved in the daily operations of the business, including a sleeping partner.
- However, the term is not as specific as "sleeping partner" and can include other types of partners who might not be active for various reasons.
- Nominal partner
- A nominal partner is someone who allows their name to be used by the business for the benefit of its reputation, but does not invest capital or participate in management.
- This type of partner does not share in the profits or losses of the business.
- Secret partner
- A secret partner is an individual whose association with the business is not publicly known.
- This partner invests capital and shares in the profits and losses, but their involvement is kept confidential to the public.
- Active partner
- An active partner, also known as a managing partner, is involved in the daily operations and management of the business.
- This type of partner takes an active role in making decisions, overseeing business activities, and handling the operational aspects of the business.
Entrepreneurial Planning Question 13:
In case of ___________, registration is compulsory.
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 13 Detailed Solution
The correct answer is - Company
Key Points
- Company
- A company is a legal entity formed by a group of individuals to engage in and operate a business enterprise.
- Registration of a company is mandatory under the Companies Act, 2013 in India (or respective company law in other countries).
- Registration provides the company with a separate legal identity, limited liability for its shareholders, and perpetual succession.
- Through registration, the company can own assets, incur liabilities, sue, and be sued in its own name.
- It also ensures compliance with statutory requirements and helps in gaining the trust of stakeholders, including investors, customers, and employees.
Additional Information
- Sole Proprietorship
- A sole proprietorship is a type of business entity owned and run by one individual, where there is no distinction between the owner and the business.
- Registration is not compulsory for sole proprietorships, but it may be beneficial for legal and tax purposes.
- Partnership
- A partnership is a business organization where two or more individuals manage and operate a business in accordance with terms set out in a partnership agreement.
- Registration of a partnership firm is optional but recommended for legal clarity and to facilitate dispute resolution among partners.
- Joint Hindu Family Business
- A Joint Hindu Family Business is a unique form of business organization found only in India, governed by Hindu Law.
- It is managed by the head of the family known as 'Karta' and includes all members of the Hindu Undivided Family (HUF).
- Registration is not required for a Joint Hindu Family Business as it is formed by operation of law.
Entrepreneurial Planning Question 14:
Which is NOT a Disadvantages of Private Limited Company
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 14 Detailed Solution
The correct answer is - Ease of Raising Capital
Key Points
- Ease of Raising Capital
- This is actually an advantage of a Private Limited Company.
- Private Limited Companies can raise capital more easily compared to sole proprietorships or partnerships.
- They can issue shares to existing shareholders or new investors, making it easier to gather funds for expansion.
- This ability to raise capital contributes to their growth and development, which is why it's not considered a disadvantage.
Additional Information
- Complex Accounts
- Private Limited Companies are required to maintain detailed financial records and comply with various accounting standards.
- This complexity can be a disadvantage due to the need for professional accounting services.
- Shared Ownership
- Ownership in a Private Limited Company is divided among shareholders.
- This shared ownership can lead to conflicts and disagreements among shareholders, particularly if their interests do not align.
- Lack of Flexibility
- Private Limited Companies have to adhere to strict regulatory frameworks and corporate governance standards.
- This can limit the flexibility in making quick decisions, as compared to sole proprietorships.
- Personal Financial Liability
- Unlike sole proprietorships, the liability of the shareholders is limited to their investment in the company.
- This means they are not personally liable for the company’s debts and liabilities, which is actually an advantage, not a disadvantage.
Entrepreneurial Planning Question 15:
In a cooperative society,the principle followed is
Answer (Detailed Solution Below)
Entrepreneurial Planning Question 15 Detailed Solution
The correct answer is - One Man One Vote
Key Points
- One Man One Vote
- In a cooperative society, the principle of "One Man One Vote" ensures that each member has equal voting power, regardless of the number of shares they hold.
- This principle promotes democratic decision-making within the cooperative society, giving all members an equal voice in the governance and operation of the society.
- The "One Man One Vote" principle is fundamental to the cooperative movement, ensuring fairness and equality among members.
- This principle helps prevent domination by a few members and ensures that the interests of all members are considered in decision-making processes.
Additional Information
- One Man Multiple Votes
- This option would allow individuals to have more than one vote, which contradicts the democratic principles of cooperatives.
- Such a system could lead to unequal influence and control by a few members, undermining the cooperative's democratic nature.
- One Share, One Vote
- This principle is typically followed in corporate or shareholder-based organizations where voting power is proportional to the number of shares held.
- In a cooperative society, this would go against the principle of equality and fairness among members.
- No Vote
- This option would imply that members have no voting rights, which is contrary to the cooperative model that emphasizes member participation and democratic control.
- Without voting rights, members would have no say in the decision-making processes of the cooperative.
- None of the above
- This option indicates that none of the provided answers are correct, which is not the case here as "One Man One Vote" is the correct answer.