MGT401 Midterm Notes

1 Types of Business Entities

MCQs:

Q1. What is the main objective of profit-oriented entities?

1. Social Welfare
2. Earning Profit
3. Educational Services
4. Charity

Answer: b) Earning Profit

Q2. In a Sole Proprietorship, who bears the risks and returns of the business?

1. Multiple Owners
2. Board of Directors
3. Single Owner
4. Government

Answer: c) Single Owner

Q3. Under the Separate Entity Concept, how is the business treated for accounting purposes?

1. Dependent on Owners
2. Independent of Owners
3. Joint Entity with Owners
4. Owned by Shareholders

Answer: b) Independent of Owners

Q4. What is the main characteristic of a Limited Company regarding liability?

1. Unlimited Liability
2. Joint Liability
3. Limited Liability
4. No Liability

Answer: c) Limited Liability

Q5. What type of company restricts the right of shareholders to transfer their shares to outsiders?

1. Public Limited Company
2. Single Member Company
3. Private Limited Company
4. Limited Liability Company

Answer: c) Private Limited Company

Q6. How many shareholders are typically allowed in a Private Limited Company?

1. 20
2. 50
3. 100
4. Unlimited

Answer: b) 50

Q7. What is the key feature of a Single Member Company?

1. Multiple Shareholders
2. Only one Shareholder
3. No Shareholders
4. Unlimited Shareholders

Answer: b) Only one Shareholder

Q8. What distinguishes Public Listed Companies from Public Unlisted Companies?

1. Number of Shareholders
2. Profit Distribution
3. Share Trading on Stock Exchanges
4. Shareholder Restrictions

Answer: c) Share Trading on Stock Exchanges

Q9. In which type of company are shares not traded on any stock exchange?

1. Private Limited Company
2. Public Listed Company
3. Public Unlisted Company
4. Single Member Company

Answer: c) Public Unlisted Company

Q10. What is the primary purpose of non-profit-oriented entities?

1. Profit Generation
2. Social Welfare
3. Stock Trading
4. Shareholder Benefits

Answer: b) Social Welfare

Q11. Which act governs the formation and regulations of Partnership Firms?

1. Companies Ordinance 1984
2. Partnership Act 1932
3. Separate Entity Act 1950