AP Inter 1st Year Commerce Study Material Chapter 4 Joint Hindu Family Business & Co-op Society

Andhra Pradesh BIEAP AP Inter 1st Year Commerce Study Material 4th Lesson Joint Hindu Family Business & Co-op Society Textbook Questions and Answers.

AP Inter 1st Year Commerce Study Material 4th Lesson Joint Hindu Family Business & Co-op Society

Essay Answer Questions

Question 1.
What is Joint Hindu Family Business and discuss its main features? [May 17 – T.S.]
Answer:
Joint Hindu Family Business is a form of business, which is owned and managed by the members of a Joint Hindu Family. It is also known as a Hindu undivided family business. It is a unique Indian business institution, governed by the provisions of Hindu law. It is managed by the head of the family, known as Karta. The other members are called ‘Co-parceners’. All of them have equal ownership right over the properties of the business.

The membership of the JHF is acquired by virtue of birth in the same family. There is no restriction for minors to become members of the business. The Joint Hindu Family Business is governed by two Hindu laws. They are

  1. Dayabhaga
  2. Mitakshara

Features :
The important features of the Joint Hindu Family Business are as under.

1) Formation :
In JHF business there must be at least two members in the family, having some ancestral property. It is not created by an agreement but by operation of law.

2) Legal Status :
The Joint Hindu Family business is a jointly owned business. It is governed by the Hindu Succession Act, 1956.

3) Membership:
Outsiders are not allowed as members in the JHF. Only the members of undivided family acquire coparcenership rights by birth.

4) Profit Sharing :
Profits are distributed among coparceners in the JHF equally.

5) Management :
JHF is managed by the eldest male member of the family called Karta.

6) Liability:
The liability of Karta alone is unlimited while liability of other coparceners is limited to their share or interest in the coparcenary.

7) Continuity :
Death of any coparceners does not affect the continuity of business. Even on the death of the Karta, it continues to exist as the eldest of the coparceners takes position of Karta. However, JHF business can be dissolved either through mutual agreement or by partition suit in the court.

Question 2.
Define the Cooperative Society. Explain its features.
Answer:
The term ’cooperation’ is derived from the Latin word ’co-operari’. The word ‘Co’ means ’with’ and ’operari’ means ’to work’. Thus, the term cooperation means working together. So, those who want to work together with some common economic objective can form a society, which is termed as Cooperative Society.

Cooperative Society – Definition : “A society which has its objectives for the promotion of economic interests of its members in accordance with cooperative principles.” – The Indian Cooperative Societies Act 1912, Section – (4).

Features:
1) Voluntary association :
In cooperative society the membership is voluntary. Anybody having a common interest is free to join a cooperative society.

2) Number of members :
A minimum of 10 members are required to form a cooperative society. In case of multi-state cooperative societies, the minimum number of members should be 50 from each state in case the members are individuals. However, after the formation of the society, the member may specify the maximum number of members.

3) Separate legal entity :
A cooperative society is based on the service motive of its members. Its main objective is to provide service to the members and not to maximize profit.

4) Limited liability :
The liability of the members of the cooperative society is restricted to the extent of shares subscribed by them.

5) Capital :
The capital of the cooperative society is contributed by its members. Since the members’ contribution is very limited, it often depends on the loan from government, and apex cooperative institutions or on the grants and assistance from state and central government.

6) Service motive :
The primary objective of all cooperative societies is to provide services to its members.

7) Equal voting rights:
In a cooperative society, the principle of one man one vote is adopted.

8) Democractic management:
The management of a cooperative society is based on democratic lines. The members of the society elect directors to conduct and control the business.

9) Distribution of surplus :
After giving a limited dividend to the members of the society, the surplus is distributed in the form of bonus, keeping aside a certain percentage as reserve and for general welfare of the society.

10) Registration of the society :
In India, cooperative societies are reistered under the Cooperative Society Act 1912 or under the State Cooperative Societies Act. The Multi-state Cooperative Societies are registered under the Multi-state Cooperative Societies Act 2002. Once registered, the society becomes a separate legal entity and attains certain characteristics.

AP Inter 1st Year Commerce Study Material Chapter 4 Joint Hindu Family Business & Co-op Society

Question 3.
A cooperative form of organisation is a method of ‘Self Help’ – Discuss.
Answer:
The term ‘cooperation’ is derived from the Latin word ‘co-operari’. The word ‘Co’ means ‘with’ and ‘operari’ means ‘to work’. Thus, the term cooperation means working together. So, those who want to work together with some common economic objective can form a society, which is termed as ‘Cooperative Society’.

Cooperative Society is a voluntary association of persons who work together to promote their economic interests. It works on the principle of slef-help and mutual help. The primary objective is to provide support to the members. The motto of a cooperative society is “Each for all and all for each”. People come forward as a group, pool their individual resources, utilise them in the best possible manner and derive some common benefits out of it.

The primary objective of all cooperative societies is to provide services to its members. The membership is open to all those haying a common economic interest. Any person can become a member irrespective of his/her caste, creed, religion, colour, sex, etc. Cooperative societies are started not for profit but for service. The members are provided with goods at cheaper rates. Financial help is also given to members at concessional rates. A feeling of cooperation is created among members. So, a cooperative form of organisation is a method of “self help through mutual help”.

Question 4.
State the advantages and disadvantages of Hindu undivided family business organisation.
Answer:
Joint Hindu Family Business in the form of business which is owned and managed by the members of a Joint Hindu Family. It is also known as Hindu undivided family business.

JHF – Advantages:
1) Continuity :
It is not dissolved by the death or insanity of a coparcener.

2) Centralized and efficient management:
The management of Joint Hindu Family firm is vested in the hands of Karta only. This results in the unity of command and disciplined management.

3) No limit to membership:
It can have any number of members unlike other organisations. The members of the family become members only by birth. So there is no limit to membership.

4) Better credit:
This form of business firm is having better credit worthiness than the sole trader.

5) Limited liability :
The liability of the members is limited. But the liability of Kartha is unlimited.

JHF – Disadvantages:
1) Lack of direct relationship :
Karta alone looks after the business of the firm. But benefits are shared by all the coparceners. Thus incentive to Karta for efficient and painstaking management may be lacking.

2) Limited managerial ability :
For expansion and growth of the business in Joint Hindu Undivided Family, the managment and control of the business becomes difficult, as the Kartha alone has to manage.

3) Limited resources :
The resources of a Joint Hindu Family are limited as compared with the patnership and joint stock company.

AP Inter 1st Year Commerce Study Material Chapter 4 Joint Hindu Family Business & Co-op Society

Question 5.
Discuss the merits and demerits of cooperative form of organization.
Answer:
Cooperative Societies – Merits:
1) Simple Formation :
It is easy and simple to form a cooperative society. There is no need to comply with a number of legal formalities as in the case of a joint stock company. Cooperative society can be formed with minimum 10 members. The procedure for registration is very simple.

2) Democractic management:
Every member has only one vote irrespective of the number of shares held by him. Meeting are well attended and voting by proxy is not allowed. As such the management of the society is democratic.

3) Voluntary service :
The members serve the society voluntarily. Hence the management expenses are minimized. “Self help#through mutual help” is the main principle.

4) Low operating cost :
The administrative expenses of a cooperative society are usually low. Many members provide administrative services honorarily.

5) Limited liability :
The liability of the members, is limited to the extent of the value of their shares.

6) Perpetual existence :
A cooperative enterprise is not effected by the retirement, death, or insanity by any .member. It has continuous existence.

7) State patronage :
The government is helping cooperative organisation to their r success. A number of concessions and tax relief are given by the government for encouraging society form of organization.

8) Aim of mutual prosperity :
Cooperatives function on the principle of “Each for all . and all for each” with the aim of mutual prosperity.

Cooperative Societies – Demerits :
1) Limited financial resources :
Restriction on divided and the principle of “one member, one vote” discourage rich people from joining the society. Due to shortage of funds, there is limited scope for expansion and growth.

2) Lack of unity among members:
Many cooperatives fail because of constant group rivalry and quarrels among members.

3) Non-transferability of shares :
A member cannot transfer his shares freely but he can be allowed to withdraw his capital.

4) Political interference :
Government nominates members to the managing commit¬tees. Every government tries to send their own party members to these societies.

Short Answer Questions

Question 1.
Briefly explain the different types of cooperative societies.
Answer:
The main object of cooperative society is rendering services to its members. The members associate together on the basis of equity. They contribute capital to the business on democratic lines. Every person has one vote irrespective of the capital contributed by him. They undertake reasonable risk.

Types of Cooperative societies :
According to services rendered, cooperatives may be classified into the following categories.

  1. Consumers’ cooperative societies
  2. Producers’ cooperative societies
  3. Marketing cooperative societies
  4. Housing cooperative societies
  5. Farming cooperative societies
  6. Credit cooperative societies

1) Consumers’ cooperative societies :
A consumers cooperative society is set up to ensure a steady supply of essential goods of standard quality at fair prices.

2) Producers’ cooperative societies :
These societies are formed to protect the interest of small producers and artisans by making available items of their need for production, like raw materials, tools and equipments, etc.

3) Marketing cooperative societies :
Small producers form together as marketing cooperative societies to solve the marketing problems of their products.

4) Housing cooperative societies :
The housing cooperative societies are formed to provide residential accommodation to their members either on ownership basis or at fair rents. Housing cooperative buys land and constructs flats which are allotted to members.

5) Farming cooperative societies:
These societies are formed by the small farmers to get the benefit of large scale farming.

6) Credit cooperative societies :
There societies are started by persons who are in need of credit. They accept deposits from the members and grant them loans at reasonable rate of interest.

Very Short Answer Questions

Question 1.
Karta
Answer:
The business of a Joint Hindu Family is managed by the senior most male member of the family Who is known as Karta. The Karta has only the legal right to enter into contracts on behalf of the family business. Other members cannot question the decisions taken by the Karta.

AP Inter 1st Year Commerce Study Material Chapter 4 Joint Hindu Family Business & Co-op Society

Question 2.
Coparcener
Answer:
In a Joint Hindu Family business, the members of a Hindu Joint Family own the business jointly. Only the male members of the family up to three successive genera¬tions become members by virtue of their birth. They are called “Coparceners”.

Question 3.
Dayabhaga
Answer:
This school of Hindu law prevails only in West Bengal, Assam states. According to this law, if the deceased male coparcener has not left behind a male issue his widow (or in her absence daughter) will become a coparcener.

Question 4.
Mitakshara
Answer:
This school of HUF prevails in entire India except in West Bengal and Assam. Family members of male line and their wives, unmarried daughters are its members. By birth in the family, he gets the right on existing property. By birth a member gets a share in common propety, it continues till his death. In this way shares in the property get fluctuated in accordance with number of coparceners.

Question 5.
What do you mean by Cooperative Society?
Answer:
Cooperative society is a voluntary association of persons who work together to promote their economic interest. It works on the principle of self-help and mutual help. The primary objective is to provide support to the members. The motto of a cooperative society is “Each for all and all for each”.

Question 6.
Consumers’ cooperative societies
Answer:
Consumers’ cooperative societies are set up to ensure a steady supply of essential goods of standard quality at reasonable rates.
Eg : Vijay Krishna super markets.

Question 7.
Producers’cooperative societies
Answer:
These societies are formed to protect the interest of small producers and artisans by making available items of their need for production, like raw material, tools and equipments, etc.

Question 8.
Credit cooperative societies
Answer:
These societies are started by persons who are in need of credit. They accept deposits from the members and grant them loans at reasonable rate of interest.

Question 9.
Housing cooperative societies
Answer:
The housing cooperative societies are formed to provide residential accommodation to their members either on ownership basis or at fair rents. Housing cooperative buys land and constructs flats which are allotted to members.

AP Inter 1st Year Commerce Study Material Chapter 4 Joint Hindu Family Business & Co-op Society

Question 10.
Farming cooperative societies
Answer:
These societies are formed by the small farmers to get the benefit of large scale farming.

Question 11.
Marketing cooperative societies
Answer:
Small produces form together as marketing cooperative societies to solve the marketing problems of their products.

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