PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Ch # 2 Ownership of Business
Easy MCQs

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Q1. Which one of the following is the main attraction of running a business as a sole proprietor?
(a) Profit
(b) Independence

e
(c) Leisure time

ah
(d) Working with employees

Q2. All but which one of the following is NOT the characteristic of sole proprietorship?

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(a) No legal formations to start a business
(b) Profit is not shared by anyone else
(c) Complete control and free to make decisions

ma
(d) Owner’s liability is limited to the investment in the business.

Q3. Which one of the following is NOT the source of fund for public limited company?
sa
(a) Issue of new shares
(b) Reinvesting profit in business
(c) Issue of debentures
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(d) Government grants

Q4. For the financial performance of the company, directors are accountable to:
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(a) Managers
(b) Government
(c) Shareholders
(d) Non-executive directors
db

Q5. Which one of the following statement is NOT correct with reference to sole proprietor business?
(a) Financial reports need not to be published
ile

(b) Can be easily formed and dissolved

(c) Owner shares the profit with his partners
mp

(d) Sole proprietor business lacks continuity

Q6. Each partner has unlimited liability for the debts of the business in case of:
(a) General partnership
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(b) Unlimited partnership

(c) Limited partnership
(d) Specific partnership

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Q7. Which one of the following is NOT correct for limited partnership?
(a) It has at least one general partner who assumes unlimited liability
(b) It has at least one limited partner whose liability is limited to his investment in business
(c) Limited partner participate in the management of the business and share the profit as per
agreement
(d) Limited partnership are formed for risky investment

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Q8. The partnership in which one partner can be protected from the acts of other partners is called:
(a) General partnership

e
(b) Limited partnership

ah
(c) Specific partnership
(d) Limited liability partnership

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Q9. Which one of the following is NOT the feature of public limited company?
(a) Company has separate legal entity

ma
(b) It can sell share in stock market
(c) Owners have limited liability
(d) Ownership is restricted to a family or small group of investors
sa
Q10. The organisational structure of the company has following key components:
(a) Chairman, owner and partners
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(b) Shareholders, directors and management

(c) Managers, skilled workers and labour
(d) President, chief executive and accountant
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Q11. Which of the following type of business is subject to dual taxation?

(a) Sole proprietorship and private limited company
(b) Partnership and public limited company
db

(c) Sole proprietorship and partnership

(d) Private limited company and public limited company

Q12. Not-for-profit organisation exists in:

ile

(a) Public sector

(b) Private sector
mp

(c) Public and private sector

(d) None of the above
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Q13. Which one of the following statements is NOT true for clubs and societies?
(a) They produce profit and loss account
(b) They produce income and expenditure account
(c) They show surplus or deficit of income
(d) They do not seek for profit

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Q14. The organisation that exclusively depends upon government for funds is called:
(a) Non-government organization
(b) Public-sector organization
(c) Co-operative
(d) Public limited company

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Q15. The type of organization in which people make equal contribution to raise capital and accept fair share
of risk and benefit is termed as:
(a) Co-operative

e
(b) Charity

ah
(c) Public limited company
(d) A public school

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Q16. Which of the following business organization must be registered with the securities and exchange
commission of Pakistan?
(a) Private limited company

ma
(b) Public limited company
(c) Partnership
(d) Sole proprietor sa
Q17. The __________ of clubs and societies are the property of the ___________ and most income come from
member’s subscriptions.
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(a) liabilities; management

(b) budget; members
(c) building; government
(d) assets; members
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Q18. Non-government organizations are ________ or ____________ funded from non- government sources.
(a) slowely; clearly
(b) fully; timely
db

(c) partly; wholly

(d) gradually; finitely
ile

Q19. The laws and regulations affecting business entities vary from country to country. In Pakistan, private
and public limited companies are regulated by the ______ issued by the.
(a) Companies Act, 1932; Pakistan Companies Commission
mp

(b) Corporation Act, 1947; Securities and Exchange Commission of Pakistan

(c) Companies Act, 1917; Securities and Exchange Commission of Pakistan
(d) Companies Act, 2017; Competition Commission of Pakistan
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Q20. The laws relating to partnership business in Pakistan is the:

(a) Partnership Act, 1928
(b) Partnership Act, 1947
(c) Partnership Act, 1932
(d) Partnership Act, 1917

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Q21. The _________ includes the procedure for registration and dissolution of a firm, rights and duties of
partners etc.
(a) Companies Act, 1932
(b) Partnership Act, 1928
(c) Business Act, 1947
(d) Partnership Act, 1932

ed
Q22. The Company Act, 2017 regulates companies for protecting interest of shareholders, creditors, other
stakeholders and general public and inculcates principles of good governance.

e
(a) True

ah
(b) False

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ma
sa
ir O
yS
db
ile
mp
Co

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Moderate MCQs
Q1. Which of the followings is an advantage of sole owner/proprietor?
(a) Difficulty in raising funds
(b) Limited skills

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(c) Lack of continuity
(d) Ease and low cost of formation

e
Q2. Find the correct disadvantage of partnership firm

ah
(a) Higher availability to raise funds
(b) Dissolution of partnerships
(c) Combined knowledge

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(d) Limited liability

Q3. An organization, which sometimes earns profits but its main purpose is public welfare only. Such

ma
organization shall be called:
(a) Business
(b) Non-Profit Organization sa
(c) Company
(d) None
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Q4. Public sector organizations are owned/governed by Government.

(a) True
(b) False
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Q5. An international company might locate some operations, for tax reasons, in a country with a favorable
tax system
(a) True
db

(b) False

Q6. Double taxation is the biggest advantage of a Limited Company.

ile

(a) True
(b) False
mp

Q7. In case of limited liability, If the company goes bankrupt, creditors can look only to the assets of the
company for payment and cannot force the shareholders to settle the dues of the company.
(a) True
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(b) False

Q8. As per Companies Act, 2017 there are only two kinds of companies in Pakistan, i.e., Private limited and
Public limited.
(a) True
(b) False

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Q9. A partnership exists when the ownership of a business is shared by at least two people
(a) True
(b) False

Q10. Shareholders have the following rights:

(a) Voting rights

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(b) Right to attend annual general meetings
(c) Right to hold the management accountable

e
(d) All of these

ah
Q11. Profit when comes into the hands of the shareholders of the company, is called:
(a) Drawings

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(b) Distributable profit
(c) Owner's Expense
(d) Dividend

ma
Q12. In place of "Profit & Loss statement", Non-profit organization prepares:
(a) Balance sheet sa
(b) Cashflow statement
(c) Notes to the accounts
(d) Income & Expenditure account
ir O

Q13. A business that is co-owned by two or more people is referred to as a ________. The co-owners of the
business are called partners and they collectively form the ________.
(a) Firm, partnership
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(b) Partnership, firm

(c) Partnership, shareholders
(d) None
db

Q14. Shareholders are also called:

(a) Members
(b) Owners
ile

(c) Stockholders
(d) All of these
mp

Q15. Law that deals with partnership businesses in Pakistan.

(a) Partnership Act, 1932
Co

(b) Partnership Act, 2017

(c) Business Act, 1932
(d) Companies Act, 2017

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Q16. In Clubs, the members are drawn towards.

(a) Specific common interest
(b) Potential profits
(c) Huge investments
(d) None of these

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Q17. The Government regulatory institution that deals with Companies registration and later compliance is
known as:
(a) Registrar of Firms

e
(b) Securities and Exchange Commission of Pakistan (SECP)

ah
(c) Prime Minister Office
(d) None

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Q18. Two types of Partnerships:
(a) General & Limited
(b) General & Specific

ma
(c) Limited & Unlimited
(d) General & Silent

Q19.
sa
Public sector organization are funded by the government to achieve
(a) Growth in GDP of the country
(b) National defense of the country
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(c) Political stability of the country

(d) Social indicators of the country

Q20. ________ are association of persons, means, who voluntarily come together to achieve a common
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economic end by making equitable contributions to raise capital and accepting a fair share of risks and
benefits
(a) Partnership
(b) Cooperatives
db

(c) Non-government organization

(d) Public sector organization
ile

Q21. Social and sports clubs are examples of non-profit making organizations referred to as "clubs and
societies", the main source of their income of which is
(a) Subscription
mp

(b) Government fund

(c) Public fund
(d) All of the above
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Q22. Cooperatives are associations of persons who

(a) Voluntarily come together to achieve common economic end
(b) Make equitable contribution to raise capital
(c) Accept fair share of risk and benefits
(d) All of the above

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Q23. The form of the business ownership that is chosen can affect
(a) The growth of the firm
(b) The profitability of the firm
(c) Risk of the firm
(d) The value of the firm.
(e) All of the above

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Q24. To be successful a sole trader must do which of the following?

e
(a) He must register his business with the government
(b) He must exhibit strong leadership skills, be well organized, and communicate well with

ah
employees
(c) He must share his profits with the individual if any who manages his business

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(d) All of the above

Q25. Responsibility of sole proprietorship forces the sole proprietor to do which of the following?

ma
(a) Sole proprietors must be willing to accept full responsibility for the business's performance.
(b) Sole proprietors must also be willing to work flexible hours.
(c) They are on call at all times and may even have to substitute for a sick employee.
(d) All of the above
sa
Q26. Which of the following is the disadvantage of sole proprietorship?
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(a) Unlimited employees monitored by a single person

(b) Strict government regulation because of its nature of business
(c) Difficulty in finding qualified employees
(d) All of the above
yS

Q27. A ________ has at least one general partner, who assumes unlimited liability, and at least one limited
partner, whose liability is limited to his or her investment in the business.
(a) General partnership.
db

(b) Limited partnership

(c) Limited liability partnership
(d) None of the above.
ile

Q28. Other than general partnership and limited partnerships there are also ________, which are similar to a
mp

general partnership except that the partners are not held responsible for the business debt and
liabilities.
(a) Unlimited liability partnerships
(b) Unlimited partnerships
Co

(c) Limited partnerships

(d) Limited liability partnerships

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Q29. Which of the following is not a type of Limited Company?

(a) Private limited company
(b) Single member company
(c) Family limited company
(d) Public limited company

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Q30. A corporation created through a Charter. It consist of three components. Which of the following is least
likely to be a component?
(a) Government

e
(b) Management

ah
(c) Stockholders
(d) Directors

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ma
sa
ir O
yS
db
ile
mp
Co

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Advanced MCQs
Q 1. A person who takes a risk to produce goods and services in search of profit.
(a) Entrepreneur
(b) Magistrate

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(c) Profiteer
(d) Baliff

e
Q2. What kind of business is BEST described by these statements?

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1. I am the only owner of my business.
2. I take all the risks of doing business.
3. I keep all the profits.

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(a) Proprietorship
(b) Corporation
(c) Partnership

ma
(d) Cooperative

Q3. A form of business organization that is authorized to act as a legal entity regardless of the number of
sa
owners.
(a) Corporation
(b) Proprietorship
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(c) Partnership
(d) Distributor
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Q4. One of the claimed advantages of a sole trader business is that:

(a) Owners have limited liability
(b) Shares can be sold to raise capital
(c) Decisions and responsibilities can be shared
db

(d) The owner has independence

Q5. Which of the following is NOT a feature of a private limited company?

ile

(a) Shares can be issued to raise capital.

(b) Shares can be bought and sold on the Stock Exchange)
mp

(c) All owners of the business have limited liability.

(d) The business continues after the death of shareholders.

Q6. The main reason why the owners of many private limited companies convert into public limited
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companies is that:
(a) They do not want to remain in the private sector
(b) They want to gain the benefits of limited liability
(c) They want to keep the annual accounts secret
(d) They want to raise additional capital to expand the business.

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Q7. Which of the following statements about co-operative business organizations is true?
(a) All co-operatives are only concerned with retailing.
(b) Profits are shared equally amongst members.
(c) They are owned by shareholders.
(d) Workers have no say in decision-making.

ed
Q8. One of the advantages to a business of selling a franchise is that:
(a) The business can expand more quickly

e
(b) The franchisor owns all of the shops
(c) The businesses buying the franchises are certain to be successful

ah
(d) The products sold in each shop will be different.

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Q9. All of the following are claimed advantages of joint ventures except:
(a) The costs of a new project can be split between the companies involved
(b) Manufacturing costs will be divided between the firms in the venture

ma
(c) Joint ventures between firms in different countries can create new market opportunities
(d) Management of the joint venture will never lead to disagreement

Q10.
sa
Which of the following statements best applies to a public limited company (PL(C)?
(a) It is owned by the government and is in the public sector.
(b) It is owned by shareholders who can sell their shares on the Stock Exchange)
ir O

(c) It is quick and easy to set up with few legal formalities.

(d) Its accounts can be kept private, and it receives little coverage in the business

Q11. One of the main drawbacks of many public limited companies is that:
yS

(a) There can be a loss of control by the original owners as additional shares are sold
(b) Firms in the public sector are often less efficient
(c) If the company were to fail, the shareholders could lose all of their assets
db

(d) Workers have to be asked for their opinions before major decisions are taken.

Q12. Which of the following statements about most public limited companies is true?
ile

(a) They are owned and controlled by the workers.

(b) They are owned by the directors but controlled by the shareholders.
(c) They are owned by shareholders but controlled by directors.
mp

(d) They are owned and controlled by the government.

Q13. One of the reasons for a business buying a franchise is because:

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(a) It is always much cheaper than setting up a new business venture

(b) There is complete control over important decisions
(c) The business can use its own name in advertisements
(d) The risks of failure are lower as it is buying a well-known business ide(a)

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Q14. All of the following are claimed advantages of public corporations except:
(a) In cases where monopolies are likely to occur, public corporations will be best for consumers
(b) In declining industries, public corporations, with government subsidies, would attempt to avoid
job losses
(c) By aiming to maximize profits, public corporations will always make money for the government
(d) A public corporation television service could make non-profitable programs.

ed
Q15. Which of the following statement is NOT true about a minor partner?
(a) He has to bear losses also

e
(b) He can inspect books of accounts

ah
(c) He has an option to continue with a firm even after attaining majority
(d) He shares only profits

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Q16. _______ company needs to have only two directors.
(a) Public Company

ma
(b) Sole Proprietorship
(c) Private Company
(d) None of the above
sa
Q17. Which one of the following is the CORRECT sequence of stages in the formation of a company?
(a) Promotion, incorporation, capital subscription, the commencement of business
ir O

(b) Incorporation, capital subscription, promotion, the commencement of business

(c) Promotion, the commencement of business, incorporation, capital subscription
(d) Promotion, Incorporation, Certificate of commencement, capital subscription
yS

Q18. The maximum number of partners allowed in the banking business are
(a) Ten
(b) No limit
db

(c) Twenty
(d) Two

Q19. What do you understand by the term unlimited liability?

ile

(a) The personal assets of the owner can be sold when the assets of the business are not enough to
(b) The personal assets of the owner cannot be sold at all
mp

(c) The personal assets of the owner can be sold, according to the wish of the creditors
(d) The personal assets of the owner can be sold, only to a limited extent
Co

Q20. A prospectus is issued by

(a) Public company
(b) Private company
(c) Statutory Corporation
(d) Departmental undertaking

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Q21. A statutory corporation is a company formed by:

(a) Royal Charter
(b) Legislation other than the Companies Acts
(c) The Companies Acts 1963-2013
(d) By the President

ed
Q22. Which of the following is TRUE of partnerships?
(a) A partnership is a separate legal entity

e
(b) A partnership is not a separate legal entity
(c) A Partnership is managed by directors

ah
(d) A Partnership pays partnership tax

W
Q23. Which of the following is UNTRUE: The authority of a partner may arise by;
(a) Express authority
(b) Implied Authority

ma
(c) Ostensible Authority
(d) Rectified Authority

Q24. The rights of minor in the firm is _________

sa
(a) Not Access to and inspect and copy any of the accounts of the firm
(b) Access to and inspect and copy any of the accounts of the firm
ir O

(c) Admitted to the benefits of partnership

(d) None of these

Q25. The reasons for involving more than one person in ownership or operation of a business entity do not
yS

include:
(a) The ability to shift risks to third persons.
(b) The ability to diversify risks.
db

(c) The ability to achieve economies of scale)

(d) All of the above are reasons to involve more than one person.

Q26. “Agency cost” means:

ile

(a) The commission that is paid an agent for obtaining a contract.

(b) The pay due to one’s employees.
mp

(c) The costs to the principal associated with an agent’s motive to serve him or herself.
(d) Profit-sharing or other arrangements to align an agent’s motives with those of his or her principal.
Co

Q27. Which of the following would not be resolved as a matter of the law of business organizations?
(a) The obligations of corporate officers to the corporation.
(b) The obligations of partners to one another.
(c) The obligations of the corporation to avoid violating various laws of general applicability.
(d) The obligations agents owe principals.

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Q28. The following courts are of co-ordinate jurisdiction except

(a) National Industrial Court
(b) Sharia Court of Appeal
(c) Court of Appeal
(d) Federal High Court

ed
Q29. Which of the following indicates partnership?
(a) Joint tenancy

e
(b) Tenancy in common
(c) Receipt of annuity

ah
(d) Sharing of profits

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Q30. The following clauses must be in the memorandum of association of a Company except;
(a) The name of the Company
(b) That the company is a private or public company

ma
(c) The name of the secretary and auditors
(d) That the registered office of the company shall be situated in Nigeria

Q31.
sa
A director of a company must be at least of the age of
(a) 18
(b) 21
ir O

(c) 25
(d) 28

Q32. Under the Companies and Allied Matters Act, the tests for insolvency do not include;
yS

(a) Inability of a company to pay a debt exceeding $2,000, three weeks after demand
(b) The existence of court process issued in respect of a judgment debt
(c) The existence of company’s liability in excess of its assets
db

(d) Outstanding debts owed the company in excess of one billion naira

Q33. Which meeting must a public company hold within six months of incorporation?
ile

(a) Commencement meeting

(b) Creditor’s meeting
(c) Statutory meeting
mp

(d) General Meeting

Q34. For how many years must a financial institution preserve the record of customer’s identification under
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the Money Laundering (Prohibition) Act?

(a) 5 years
(b) 8 years
(c) 10 years
(d) 12 years

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Q35. The physical element of an offence is known as ___________

(a) Intention
(b) Actusreus
(c) Strict liability
(d) Obiter dicta

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Q36. Which of the following is not an invitation to treat?
(a) Display of goods in a shop window

e
(b) Auction
(c) Advertisement of goods in periodicals

ah
(d) Sale of necessaries

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Q37. Winding up of a company may take any of the following forms except
(a) Creditors’ winding up
(b) Winding up by the court

ma
(c) Winding up subject to supervision by the court
(d) Winding up at the complaint of the liquidator

Q38.
sa
The appointment of a director of a company at a general meeting is by
(a) Extra-ordinary resolution
(b) Ordinary resolution
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(c) Special resolution

(d) Director’s resolution

Q39. The Financial statements of a company shall include the following except;
yS

(a) The balance sheet as at the last day of the year

(b) A profit and loss account, or in the case of a company not trading for profit, an income and
expenditure account for the year
db

(c) Notes on the account

(d) Auditors’ reports

Q40. Agency of necessity may be created in all the following circumstances except where it is;
ile

(a) An emergency
(b) Impossible to communicate with the principal
mp

(c) An action in good faith

(d) To prevent irreparable loss
Co

Q41. The rights of a buyer of goods include the following except;

(a) Action for damages for non-delivery
(b) Specific performance
(c) Stoppage in transit
(d) Repudiation

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Q42. The hirer in a contract for hire purchase has the following rights except;
(a) Use the goods
(b) Quiet possession of the goods
(c) Know the exact instalments to be paid
(d) Choose the insurer if the goods is motor vehicle

ed
Q43. In law, no one has an insurable interest in;
(a) His own life
(b) The assets of a company in which he is a shareholder

e
(c) An event the loss of which will prejudice him

ah
(d) A personal building

Q44. Which of the following are parties to a cheque?

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(a) The bank and its customer
(b) The drawer and the drawee
(c) The bank, drawee and payee

ma
(d) The drawee, payee, and drawer

Q45. Which of the following is NOT a duty of a personal representative?

sa
(a) Gathering and realization of assets
(b) Application to court
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(c) Payment of estate tax

(d) Compounding of assets

Q46. A non-adversarial process through which parties to a dispute seek amicable settlement is referred to
as;
yS

(a) Mini-trial
(b) Conciliation
(c) Arbitration
db

(d) Negotiation
(e) Ombudsman

Q47. The framework for establishing good corporate governance and accountability was originally setup
ile

by;
(a) Nestle committee
mp

(b) Rowntree committee

(c) Cadbury committee
(d) Thornton committee
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Q48. Fraudulent trading may be;

(a) A criminal offence committed only by directors of a limited company
(b) A civil and a criminal offence committed by an employee
(c) A civil and a criminal offence committed only by directors of a limited company
(d) A civil offence committed by an employee

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Q49. According to clause 49 on independent directors. What can be maximum tenure of independent
director;
(a) 2 terms of 5 years each
(b) 3 terms of 5 years each
(c) 2 terms of 10 years each
(d) 3 terms of 4 years each

ed
Q50. An example of a whistle blower whose actions were a form of internal government whistle blowing is:
(a) Sherron Watkins.

e
(b) Coleen Rowley.

ah
(c) Cynthia Cooper.
(d) Lee Iacocca

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Q51. What is triple bottom line?
(a) An accounting tool that looks at the impact on people, planet and profits.

ma
(b) A management strategy which states all the attention should be on profits.
(c) An accounting tool that looks at cost, profit and loss.
(d) A management strategy which focuses on corporate social responsibility.
sa
Q52. Organization is a tool to arrange individual or combined __________ for a particular purpose in an
efficient and effective manner?
ir O

(a) Resources
(b) Energies
(c) Both
(d) None
yS

Q53. A business organization is an entity formed for the purpose of carrying on required activities to achieve
its goals and _________?
(a) Tactics of business
db

(b) Objectives
(c) Both
(d) None
ile

Q54. There are ___________ types of organization?

mp

(a) 2
(b) 3
(c) 5
Co

Q55. There are three basic forms of business ownership?

(a) True
(b) False

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Q56. Which feature distinguish between organization?

(a) Purpose
(b) Ownership
(c) Funding
(d) All

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Q57. Business organizations exist to make a profit
(a) True

e
(b) False

ah
Q58. Public sector organizations are owned by:
(a) Shareholders

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(b) Govt
(c) Both

ma
Q59. Co-operatives are owned by?
(a) Govt
(b) Members sa
(c) Shareholders

Q60. Public sector organizations obtain their funds?

ir O

(a) Govt
(b) Banks
(c) None
yS

Q61. Directors are ____________ to shareholders

(a) Accountable
(b) Not accountable
db

(c) Masters

Q62. Why companies produce their annual report and accounts?

ile

(a) For accountability

(b) For bonus
(c) For showing their knowledge
mp

(d) All are correct

Q63. Local construction firm is example of?

Co

(a) Sole Proprietorship

(b) Company
(c) Company
(d) None

OSAMA WAHEED 49
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q64. _____________ is of the key attractions of running a business as a sole proprietor.

(a) Independence
(b) Interdependence
(c) Both
(d) None

ed
Q65. A sole proprietor is an individual who owns and operates his or her own business
(a) True

e
(b) False

ah
Q66. ________ is critical to understanding the competition and the behavior of customers in a particular
market.

W
(a) Prior experience
(b) Money
(c) Both are necessary

ma
Q67. Advantages of sole proprietorship?
(a) Ease of dissolution
(b) Secrecy
sa
(c) Both
(d) Only a is correct
ir O

Q68. Lower Taxation is advantage of?

(a) company
(b) Sole proprietorship
yS

(c) None
(d) Govt
db

Q69. The owner decides how to use the funds— for expansion of the business, or salary increases, for travel
to purchase additional inventory, or to find new customers?
(a) Company
(b) In partnership
ile

(c) Sole proprietorship

(d) All
mp

Q70. Sole proprietorships have the most freedom from government regulation
(a) True
Co

(b) False

Q71. Unlimited Liability is disadvantage of sole business?

(a) True
(b) False

OSAMA WAHEED 50
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q72. A single person doing anything is restricted in thinking as compared to group this aspect is related to?
(a) Sole proprietorship
(b) Company
(c) None

Q73. Taxation is a benefit but can also have negative impact as compared to marginal rate of taxes of

ed
corporation is this true?
(a) Yes
(b) No

e
ah
Q74. In partnership maximum numbers of owners are?
(a) 20

W
(b) 30
(c) 40
(d) 50

ma
Q75. Partners form?
(a) Firm
(b) Company
sa
(c) Can Form both depending on situations
ir O

Q76. Agreement should be?

(a) Oral
(b) Can be written
(c) Preferably written
yS

(d) All are true

Q77. Advantages of Partnerships?

db

(a) Higher availability to raise funds

(b) Combined Knowledge and Skills
(c) Flexibility of decision making
(d) all are true
ile

Q78. Unlimited liability is ……….of partnership?

mp

(a) Advantage
(b) Disadvantage
Co

Q79. People become owners of a company by purchasing?

(a) Shares
(b) Goods
(c) Laptops
(d) None is correct

OSAMA WAHEED 51
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q80. who selects directors?

(a) Owners
(b) General public
(c) CEO
(d) They are selected by chance

ed
Q81. Ability to attract financing is advantage of?
(a) Company

e
(b) Sole owners
(c) Partnership

ah
(d) All

W
Q82. SECP stands for?
(a) Securities and Exchange Commission of Pakistan
(b) Securities and Exchange Constitution of Pakistan

ma
Q83. Higher regulatory control is disadvantage of
(a) Partnership sa
(b) Company
(c) Joint stock
(d) None
ir O

Q84. These are association of persons, usually of limited means, who voluntarily come together to achieve
a common economic end through the formation of a controlled business organization making equitable
contributions to raise capital and accepting a fair share of risks and benefits?
yS

(a) Cooperatives
(b) Company

Q85. Partnership law is?

db

(a) Partnership act 1932

(b) Partnership act 1933
(c) Partnership act 1990
ile

Q86. An entrepreneurial organization is an entity that is managed by its entrepreneurial owner. Which one
mp

of the following can be a feature of an entrepreneurial organisation:

(a) The Board of Directors take all the main decisions and does not delegate decision-making to
anyone else
(b) There is a formal management structure
Co

(c) Operations and processes are likely to be complex and there is too much to handle for a single
owner
(d) None of the above

OSAMA WAHEED 52
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q87. ______________ can be seen as the process of dividing up activities in an efficient and effective manner to
enable a system of co-operative activities of two or more persons. Fill in the blank.
(a) Business
(b) A company
(c) Process
(d) Organisation

ed
Q88. There are no legal formalities needed to set up a business. This statement is true about which of the
following?

e
(a) Sole Proprietor

ah
(b) Partnership
(c) Private Limited Company
(d) None of the above

W
Q89. There are many advantages of setting up business as a sole-trader. Which of the following CANNOT be
an advantage of a sole trader business?

ma
(a) Low cost of setting up
(b) Combined Knowledge and Skills
(c) Greater flexibility sa
(d) A and C

Q90. Clubs and societies, Non-governmental organisations, Cooperatives and Public sector organisations
ir O

fall in the same type of organisations. What is a term used to refer to these type of organisations?
(a) Social Organisations
(b) Not-for-Profit Organisations
(c) Revenue Organisations
yS

(d) Social sector Organisations

Q91. Companies must pay income taxes on their profits. In addition, any profits (dividends) paid to
db

stockholders are taxed as personal income) Which of the following terms explains this regulation on
companies?
(a) Double regulation
(b) Double taxation
ile

(c) Unlimited taxation

(d) Unlimited liability
mp

Q92. There are two types of companies?

(a) Private and public
Co

(b) Private and semi govt

(c) None is correct

Q93. Companies are required to comply with the requirements of companies act?
(a) True
(b) False

OSAMA WAHEED 53
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q94. SECP was operationalized in?

(a) 1999
(a) 1998
(c) 2000
(d) 2001

ed
Q95. Decisions to relocate operations from one country to another could be affected by the differences in
employment law in the two countries, or by new ________ ?
(a) Employment legislation

e
(b) Director

ah
(c) CEO
(d) CFO

W
Q96. These are not-for-profit organizations that are partly or wholly funded from non-government sources?
(a) On-government organizations:

ma
(b) NPO
(c) Profit organization

Q97. Public sector organizations: These are government organizations that are funded by the government
to achieve social indicators of the country.
sa
(a) True
ir O

(b) False

Q98. The assets of clubs and societies are the property of the ……….and most income comes from member’s
subscriptions.
yS

(a) Members
(b) Gov’t as they are NPOs
(c) Public
db

Q99. A company is created or incorporated through a charter or article of incorporation.

(a) True
(b) False
ile

(c) Partially true

mp

Q100. Publicly held companies can obtain additional funds by issuing new common stock.
(a) True
(b) No they can’t
(c) It is illegal
Co

Q101. Ownership is restricted to a small group of investors?

(a) Private company
(b) Public company

OSAMA WAHEED 54
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q102. CEO is appointed by?

(a) Directors
(b) Shareholders
(c) Both

Q103. CFO is appointed by?

ed
(a) Directors
(b) Shareholders

e
(c) Both

ah
Q104. Directors are appointed for?
(a) 3 years

W
(b) 5 years
(c) 10 years

ma
Q105. Limited liability is related to?
(a) Owners
(b) Directors sa
(c) CEO
(d) CFO
ir O

Q106. _________ continues to exist irregard of ownership?

(a) Companies
(b) Knops
yS

Q107. Perpetual succession is feature of company?

(a) True
(b) False
db

Q108. Sharing of profits is disadvantage of?

(a) Company
ile

(b) Partnership
(c) Sole proprietorship
(d) For all as sharing of money is not good
mp

Q109. Less Regulatory Control is of partnership?

(a) Advantage
Co

(b) Disadvantage

OSAMA WAHEED 55
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q110. Maximum number of partners is 20, although there are some exceptions?
(a) Accountants
(b) Solicitors
(c) Both
(d) None

ed
Q111. Laws and regulations vary between different countries, although international regulation is accepted
in certain areas of commercial activity, such as banking.
(a) True

e
(b) False

ah
Q112. The Act regulates companies for protecting interests of shareholders, creditors, other stakeholders
and general public and inculcate principles of?

W
(a) Good governess
(b) Good profit
(c) Just to dominate

ma
Q113. Listed company is one whose shares are listed on stock exchange?
(a) True
(b) False
sa
ir O

Q114. The companies which do non-compliance with the requirements of the Act will be subject to penalties
imposed for the relevant offence?
(a) True
(b) False
yS

Q115. Holding of annual general meeting is not applicable?

(a) To partnership
(b) Small company
db

(c) It is choice to hold it or not for large companies

Q116. The Partnership Act includes the procedure of registration and dissolution of a firms, rights and duties
ile

of partners etc?
(a) Right
(b) Wrong
mp

Q117. In many industries, companies are faced with environmental legislation or health and safety
legislation, affecting the ways in which they operate, as well as the …. of the products they make and
Co

sell.
(a) Design
(b) Price
(c) Both

OSAMA WAHEED 56
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q118. Limitation of growth is disadvantage of?

(a) Partnership
(b) Company
(c) Both

Q119. Ease of transferring ownership aspect relates to company?

ed
(a) True
(b) False

e
Q120. Cost and complexity of formation. Is _______ for company

ah
(a) Advantage
(b) Disadvantage

W
Q121. The main feature of a limited company is that it has a separate legal identity from that of its owners.
(a) True

ma
(b) False

sa
ir O
yS
db
ile
mp
Co

OSAMA WAHEED 57
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

ICAP Book MCQs

Q1. An entrepreneurial organization is an entity that is managed by its entrepreneurial owner. Which one
of the following can be a feature of an entrepreneurial organization?
(a) the Board of Directors take all the main decisions and does not delegate decision-making to
anyone else

ed
(b) there is a formal management structure
(c) operations and processes are likely to be complex and there is too much to handle for a single

e
owner
(d) None of these

ah
Q2. __________ can be seen as the process of dividing up activities in an efficient and effective manner to
enable a system of co-operative activities of two or more persons.

W
(a) Business
(b) A company
(c) Process

ma
(d) Organization

Q3. There are no legal formalities needed to set up a business. This statement is true about which of the
sa
following?
(a) Sole Proprietor
(b) Partnership
ir O

(c) Private Limited Company

(d) None of the above

Q4. There are many advantages of setting up business as a sole-trader. Which of the following CANNOT be
yS

an advantage of a sole trader business?

(a) Low cost of setting up
(b) Combined Knowledge and Skills
db

(c) Greater flexibility of decision making

(d) A and C

Q5. Clubs and societies, non-governmental organizations, Cooperatives and Public sector organizations fall
ile

in the same type of organizations. What is a term used to refer to these types of organizations?
(a) Social Organizations
mp

(b) Not-for-Profit Organizations

(c) Revenue Organizations
(d) Social sector Organizations
Co

Q6. Legal formalities are not required for ________.

(a) Limited Company
(b) General partnerships
(c) Sole proprietorship
(d) None of these

OSAMA WAHEED 58
 PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

Q7. Which of the following is a disadvantage of single-owner business organizations?

(a) Unlimited Life
(b) Limited Liability
(c) Unlimited Liability
(d) Limited interaction

ed
Q8. Professionals such as lawyers, accountants, and architects often join together in general partnerships.
What is one distinctive feature of a general partnership over limited partnerships?
(a) All partners are owners of the firm

e
(b) Assets of the firm are divided as per the agreement between partners

ah
(c) All partners in a general partnership have unlimited liability
(d) All of the above

W
Q9. The stockholders elect a ________ to govern and handle the overall management of the corporation.
(a) Board of Directors

ma
(b) Board of Stakeholders
(c) Council
(d) Committee
sa
Q10. Limited partners do not participate in the management of the business but share in the profits in
accordance with the terms of a partnership agreement.
ir O

(a) true
(b) false

Q11. The main feature of a limited company is that it has a separate legal identity from that of its owners.
yS

(a) true
(b) false

Q12. Companies must pay income taxes on their profits. In addition, any profits (dividends) paid to
db

stockholders are taxed as personal income. Which of the following terms explains this regulation on
companies?
(a) Double regulation
ile

(b) Double taxation

(c) Unlimited taxation
(d) Unlimited liability
mp
Co

OSAMA WAHEED 59
PRC-05 BY SIR OSAMA WAHEED CHAPTER 2 OWNERSHIP OF BUSINESS

MCQs Key
MCQ Key MCQ Key MCQ Key MCQ Key MCQ Key MCQ Key MCQ Key MCQ Key
EASY MCQS
1 B 4 C 7 C 10 B 13 A 16 B 19 D 22 A
2 D 5 C 8 D 11 D 14 B 17 D 20 C
3 D 6 A 9 D 12 C 15 A 18 C 21 B
MODERATE MCQS
1 D 5 A 9 A 13 B 17 B 21 A 25 D 29 C
2 D 6 B 10 D 14 D 18 A 22 D 26 C 30 A
3 B 7 A 11 D 15 A 19 D 23 E 27 B
4 A 8 A 12 D 16 A 20 B 24 B 28 D
Advanced MCQs
1 A 17 D 33 C 49 A 65 A 81 A 97 A 113 A
2 A 18 C 34 A 50 A 66 C 82 A 98 A 114 A
3 A 19 A 35 B 51 A 67 C 83 B 99 A 115 A
4 D 20 A 36 D 52 A 68 B 84 A 100 A 116 A
5 B 21 B 37 D 53 B 69 C 85 A 101 A 117 C
6 D 22 B 38 B 54 C 70 A 86 D 102 A 118 A
7 B 23 D 39 D 55 A 71 A 87 D 103 A 119 A
8 A 24 B 40 D 56 D 72 A 88 A 104 A 120 B
9 D 25 A 41 D 57 A 73 A 89 B 105 A 121 A
10 B 26 C 42 D 58 B 74 C 90 B 106 A
11 A 27 C 43 D 59 B 75 A 91 B 107 A
12 C 28 C 44 D 60 A 76 C 92 A 108 B
13 D 29 D 45 D 61 A 77 D 93 A 109 A
14 C 30 C 46 B 62 A 78 B 94 A 110 C
15 D 31 B 47 C 63 A 79 A 95 A 111 A
16 C 32 D 48 C 64 A 80 A 96 B 112 A
ICAP MCQs
1 D 3 A 5 B 7 C 9 A 11 A
2 D 4 B 6 C 8 C 10 A 12 B

OSAMA WAHEED 60