Tag: hindu undivided family business

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Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

Head of HUF is known as ______.

  1. karta

  2. coparceners

  3. manager

  4. head
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Joint hindu family business is regulated by the Hindu succession act. According to it the business is owned and managed by the karta, the head of the family and  the members of the family are its co parceners. Hence, the head of the family business is  called as karta.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

In case of HUF what are liabilities of coparcener and Karta?

  1. Both have unlimited liability

  2. Coparcener's liability is limited while Karta's liability is unlimited

  3. Karta's liability is limited while Coparcener's liability is unlimited

  4. Both have limited liability
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Joint Hindu family business is regulated by the Hindu succession act. According to it the business is owned and managed by the karta, the head of the family and the members of the family are its co parceners. Hence, the head of the family business is  called as karta. The liability of coparcener is limited whereas the liability of karta is unlimited.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

When partnership is between two HUF than ____________.

  1. members of both the HUF are taken in account for the calculation of maximum number of person who can form a partnership firm including minors

  2. members of both the HUF are taken in account for the calculation of maximum number of person who can form a partnership firm excluding minors

  3. there can not be a partnership between two HUF

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When two HUFs enter into a partnership, the members of the HUFs are considered for the maximum number of partners, but minors are excluded from this count as they cannot be full partners in a firm.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

Identify which statement is true and which is false?
1. Any person can become member of HUF.
2. In a HUF business, in the event of death of any of the co-parcener, his wife can claim share of profit.
3. In a HUF business, the liability of the karta is Unlimited.
Select the correct answer from the options given below.

  1. 2 and 3

  2. 1 and 3

  3. 3 and 2

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The statement fore mentioned are discussed below:

1. False. As per the Hindu Law all persons lineally descended from a common ancestor are members of a HUF.
2. True. In a HUF business in the event of death of any of the co-parcener , his wife can claim share of profit.
3. True. In a HUF busines the liability of the karta is unlimited.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

Which of the following can be treated as disadvantage of HUF form of business?

  1. HUF business has generally limited financial and managerial resource.

  2. There is always a lack of motivation among the members to work hard.

  3. Since the karta has absolute freedom to manage the business, there is scope for him to misuse it for his personal gains.

  4. All of above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

HUF businesses suffer from limited resources, lack of motivation among members (since they share profits regardless of effort), and potential for Karta to misuse absolute power. All these are recognized disadvantages.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

Profit sharing among members in an HUF is done according to _______.

  1. members status in family

  2. amount of work done by a member

  3. equally

  4. according to the age of the member
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In an HUF, the profit is shared equally among the coparceners, regardless of their age, status, or the amount of work they contribute to the business.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

The liability of the karta is __________.

  1. Llmited

  2. unlimited

  3. not liable

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Karta is the head of the HUF and holds unlimited liability for the debts of the business, meaning their personal assets can be used to pay off business liabilities.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

The business affairs of an HUF is managed by _______.

  1. managing director

  2. parents of minors

  3. karta

  4. eldest male and female member of the family
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The Karta is the eldest male member (or female in some interpretations) who manages the business affairs of the HUF.

Multiple choice organization of commerce and management ownership structures - sole proprietorship and joint hindu family business hindu undivided family business introduction to huf joint hindu family business

An HUF continues to exist even upon the death of the Karta.

  1. Partly false

  2. False

  3. Partly true

  4. True
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

An HUF is a perpetual entity; the death of the Karta does not dissolve the family or the business, as the next eldest member typically takes over as Karta.