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Maharashtra HSC Organisation of Commerce and Management study materials
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Maharashtra HSC Organisation of Commerce and Management practice questions

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Question 1Introduction to Organisation of Commerce and Management

In the study of Organisation of Commerce and Management, which activity is classified as an economic activity?

  1. A person donating clothes to a flood relief camp
  2. A student helping a neighbour without any reward
  3. A trader selling goods in a wholesale market for profit Correct answer.
  4. A mother cooking food for her own family

Explanation

Economic activities are those undertaken to earn a livelihood or profit and are measured in money. Selling goods in a wholesale market for profit has a clear earning motive and a monetary measure. The other three activities are undertaken out of love, sympathy or social duty and are therefore non-economic.

Question 2Introduction to Organisation of Commerce and Management

Which feature best distinguishes a profession from an occupation such as shopkeeping?

  1. It always earns profit through buying and selling
  2. It is regulated by a professional body and a code of conduct Correct answer.
  3. It can be started without any formal training
  4. It requires a heavy capital investment

Explanation

A profession has a recognised body that certifies members and enforces a code of conduct, and it demands specialised training. Business occupations such as shopkeeping may be started without such certification and are not governed by a professional body. Capital investment and trading for profit are features of business, not of a profession.

Question 3Introduction to Organisation of Commerce and Management

Which of the following is an example of a genetic industry?

  1. Generation of electricity from water
  2. Poultry farming for eggs and chicks Correct answer.
  3. Extraction of coal from mines
  4. Manufacturing of cotton cloth

Explanation

Genetic industries reproduce and multiply living organisms, such as plants and animals, for sale. Poultry farming, nurseries and cattle breeding are standard examples. Mining, manufacturing and power generation are extractive, manufacturing and construction-type activities respectively.

Question 4Introduction to Organisation of Commerce and Management

A firm buys raw material in bulk from farmers and sells it in smaller lots to many retailers. Which function of commerce does this describe?

  1. Storage
  2. Transportation
  3. Insurance
  4. Trade Correct answer.

Explanation

Trade is the buying and selling of goods and services, and it includes both wholesale and retail activity. This firm buys from producers and resells to retailers, which is precisely the trading function. Transport, storage and insurance are auxiliary functions that support trade but do not themselves involve transfer of ownership.

Question 5Introduction to Organisation of Commerce and Management

Which auxiliary to trade protects a business against the risk of loss of goods in transit?

  1. Warehousing
  2. Insurance Correct answer.
  3. Banking
  4. Advertising

Explanation

Insurance is the auxiliary function that transfers the risk of loss, damage or theft to an insurer against payment of a premium. Banking settles payments and provides finance, warehousing stores goods, and advertising communicates with buyers. None of these three transfers risk in the way insurance does.

Question 6Introduction to Organisation of Commerce and Management

Which of the following is a feature of business that separates it from a charitable activity?

  1. It involves production or exchange of goods and services Correct answer.
  2. It is undertaken to satisfy social needs without reward
  3. It is carried out only by government agencies
  4. It depends mainly on donations from the public

Explanation

Business is defined by the production or exchange of goods and services with the object of earning profit. Charitable activity, by contrast, aims to serve society without expecting a monetary return. Dependence on donations and restriction to government agencies are not features of business as such.

Question 7Introduction to Organisation of Commerce and Management

Which objective of business is described as a social objective rather than an economic objective?

  1. Earning a reasonable profit
  2. Providing employment to local people Correct answer.
  3. Increasing market share
  4. Reducing the cost of production

Explanation

Social objectives relate to the obligations of business towards society, such as generating employment, supplying quality goods and avoiding pollution. Profit, market share and cost reduction are economic objectives connected with the firm's own financial performance. Employment generation is therefore the social objective among the four.

Question 8Introduction to Organisation of Commerce and Management

A firm believes that business owes something to the groups affected by its decisions, such as workers, consumers and the community. Which concept does this express?

  1. Economic activity
  2. Social responsibility Correct answer.
  3. Business ethics as legal compliance
  4. Profit maximisation

Explanation

Social responsibility is the obligation of business towards the various interest groups it affects, including employees, consumers, shareholders and society. Profit maximisation looks only at owners' returns, while legal compliance is a narrower minimum standard. The statement therefore describes social responsibility.

Question 9Introduction to Organisation of Commerce and Management

Which of the following best explains why business risk is considered unavoidable?

  1. Employees always demand higher wages
  2. All businesses must borrow money from banks
  3. Future demand, prices and competition cannot be predicted with certainty Correct answer.
  4. Government always changes the tax rates every year

Explanation

Risk arises because business decisions are taken about the future, and future demand, prices, technology and competition are uncertain. Some risk can be reduced by insurance or research, but it cannot be eliminated completely. The other options describe particular situations rather than the general cause of unavoidable risk.

Question 10Introduction to Organisation of Commerce and Management

Which is the correct sequence showing the relationship between commerce and trade?

  1. Trade includes commerce as one of its parts
  2. Commerce includes trade along with auxiliaries to trade Correct answer.
  3. Trade is a part of industry, not of commerce
  4. Commerce and trade are unrelated activities

Explanation

Commerce is the wider term covering trade and the auxiliaries to trade such as transport, banking, insurance, warehousing and advertising. Trade, the buying and selling of goods, is one component within commerce. Hence commerce includes trade plus the supporting services.

Question 11Introduction to Organisation of Commerce and Management

A cooperative society is formed mainly to serve its members. Which statement about its objective is accurate?

  1. It cannot undertake any trading activity
  2. It aims to maximise profit for outside investors
  3. It is owned and controlled by the government
  4. It aims to provide service to members rather than maximise profit Correct answer.

Explanation

A cooperative society is a voluntary association of persons who join to promote their common economic interest, and service to members is its primary aim. Profit is not its main motive, though it may earn a surplus. It is owned by members and may carry on trading, so the other statements are incorrect.

Question 12Introduction to Organisation of Commerce and Management

Which of the following is a characteristic of a sole proprietorship form of business organisation?

  1. Unlimited liability of the single owner Correct answer.
  2. Compulsory registration under the Companies Act
  3. Legal separation of the owner from the business
  4. Sharing of profit among many partners

Explanation

In a sole proprietorship the owner and the business are not legally separate, so the owner bears unlimited liability for all debts of the firm. Profit is not shared, and registration under the Companies Act applies to companies. These features distinguish the sole trader from partnership and company forms.

Question 13Introduction to Organisation of Commerce and Management

A partner who lends his name and reputation to the firm but contributes no capital and takes no part in management is known as which type of partner?

  1. Sleeping partner
  2. Nominal partner Correct answer.
  3. Secret partner
  4. Active partner

Explanation

A nominal partner is one who only lends his name and goodwill to the firm and neither invests capital nor shares in management. A sleeping partner contributes capital but does not take part in management, while an active partner manages the business. A secret partner is an actual member whose association is not disclosed to the public.

Question 14Introduction to Organisation of Commerce and Management

Which document of a company contains the objects for which the company is formed and defines the scope of its activities?

  1. Certificate of Incorporation
  2. Articles of Association
  3. Prospectus
  4. Memorandum of Association Correct answer.

Explanation

The Memorandum of Association is the charter of the company and contains the objects clause, which sets out the purposes for which it is formed. The Articles of Association contain internal rules of management, the prospectus invites the public to subscribe, and the certificate of incorporation brings the company into existence.

Question 15Introduction to Organisation of Commerce and Management

Which of the following is a feature of a public sector enterprise such as a government department undertaking?

  1. Shares are freely traded on a stock exchange
  2. Profit is distributed among private shareholders
  3. Ownership and control rest with the government Correct answer.
  4. It is managed by a board elected by consumers

Explanation

Public sector enterprises are owned, financed and controlled by the government, and their primary aim is public welfare rather than private profit. Free trading of shares and distribution of profit to private shareholders are features of private companies. Management by consumers is not a feature of departmental undertakings.

Question 16Introduction to Organisation of Commerce and Management

A business wants to raise a large amount of capital from many investors while keeping the liability of owners limited. Which form of organisation is most suitable?

  1. Joint stock company Correct answer.
  2. Hindu undivided family business
  3. Sole proprietorship
  4. Partnership at will

Explanation

A joint stock company can raise large capital by issuing shares to many investors, and the liability of shareholders is limited to the amount unpaid on their shares. Sole proprietorship and partnership have limited capacity to raise funds and involve unlimited liability. A Hindu undivided family business is confined to members of one family and is also not suited to large public investment.

Question 17Introduction to Organisation of Commerce and Management

Which of the following is a merit of a joint stock company?

  1. Limited liability of shareholders Correct answer.
  2. Prompt decision-making by a single owner
  3. Complete secrecy of accounts
  4. Absence of any legal formalities

Explanation

In a company, the liability of shareholders is limited to the unpaid amount on their shares, which reduces personal risk and encourages investment. Companies are also subject to many legal formalities and must publish accounts, and decisions are taken collectively. Prompt single-owner decisions and secrecy are merits of a sole proprietorship, not a company.

Question 18Introduction to Organisation of Commerce and Management

A business that has grown large wants to combine with a firm in the same industry to reduce competition and gain market power. Which type of merger does this represent?

  1. Reverse merger
  2. Horizontal merger Correct answer.
  3. Conglomerate merger
  4. Vertical merger

Explanation

A horizontal merger joins two firms that operate at the same stage of the same industry and are often competitors. A vertical merger links firms at different stages of production, a conglomerate merger joins unrelated businesses, and a reverse merger involves a private firm merging into a listed shell. Reducing competition in the same industry therefore points to a horizontal merger.

Question 19Introduction to Organisation of Commerce and Management

Which of the following is an example of an extractive industry?

  1. Fishing in the sea Correct answer.
  2. Building of a bridge
  3. Baking of bread in a bakery
  4. Weaving of cloth in a mill

Explanation

Extractive industries draw natural resources from land, water and air for direct use or for further processing. Fishing, mining and hunting belong to this category. Baking and weaving are manufacturing activities that transform raw material, and bridge construction is a construction activity.

Question 20Introduction to Organisation of Commerce and Management

An entrepreneur starts a small enterprise mainly to create self-employment and to use local resources. Which role of business does this illustrate?

  1. Business as a source of employment generation Correct answer.
  2. Business as a means of tax evasion
  3. Business as a purely charitable trust
  4. Business as a government department

Explanation

Business generates employment not only for the owner but also for workers and suppliers, and it uses local resources productively. Starting an enterprise for self-employment therefore illustrates the employment-generating role of business. Tax evasion, charitable trusts and government departments describe other things entirely.

Question 21Forms of Business Organisation

Under the Indian Partnership Act, 1932, which of the following is an essential feature of a partnership firm?

  1. Registration with the Registrar of Firms before commencing business
  2. Transferability of a partner's share without consent of others
  3. An agreement between partners to share profits of a business Correct answer.
  4. A minimum of seven partners in every firm

Explanation

Section 4 of the Indian Partnership Act, 1932 defines partnership as a relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Registration is optional in most states and does not create the firm, and the Act fixes no minimum of seven partners for a firm. A partner's share is not freely transferable because partnership rests on mutual consent.

Question 22Forms of Business Organisation

A sole proprietor running a stationery shop wants to raise additional capital without sharing control of the business. Which limitation of sole proprietorship is he directly facing?

  1. Separation of ownership from management
  2. Limited liability of the owner
  3. Lack of secrecy in accounts
  4. Limited capacity to raise capital Correct answer.

Explanation

A sole proprietorship depends on the personal resources and credit of one individual, so its ability to raise large capital is limited. The owner cannot issue shares or admit partners without giving up control. Unlimited liability, secrecy and unity of ownership and management are different characteristics of this form.

Question 23Forms of Business Organisation

The maximum number of members in a private company under the Companies Act, 2013 is:

  1. 200 Correct answer.
  2. 100
  3. 50
  4. Unlimited

Explanation

Section 2(68) of the Companies Act, 2013 caps the membership of a private company at 200, excluding present and past employee-members. A public company has no upper limit on the number of members. The figure 50 relates to the minimum paid-up capital concept of older law, not membership.

Question 24Forms of Business Organisation

A cooperative society distributes its surplus among members on the basis of:

  1. The volume of business transacted by each member Correct answer.
  2. The capital contributed by each member
  3. An equal share to every member regardless of dealings
  4. The seniority of membership

Explanation

The cardinal principle of cooperation is service before profit, so surplus is returned as dividend on the basis of patronage, that is, the business each member transacts with the society. This prevents members with large capital from capturing the surplus. Voting in a cooperative society is one member one vote, but surplus distribution follows patronage.

Question 25Forms of Business Organisation

In a Hindu Undivided Family business, the liability of the Karta is:

  1. Limited to the capital contributed by him
  2. Limited to his share in the joint family property
  3. Shared equally with all coparceners
  4. Unlimited and personal, including his separate property Correct answer.

Explanation

The Karta manages the HUF business and his liability is unlimited, extending even to his personal or separate property. Other coparceners are liable only to the extent of their share in the joint family property. This unequal liability is a key limitation of the HUF form.

Question 26Forms of Business Organisation

A public company must have a minimum of how many directors under the Companies Act, 2013?

  1. Two
  2. Three Correct answer.
  3. Seven
  4. One

Explanation

Section 149 of the Companies Act, 2013 requires a public company to have at least three directors, a private company at least two, and a one person company at least one. Three directors are needed because the Act also prescribes that at least one-third of the board be independent directors in certain public companies.

Question 27Forms of Business Organisation

A group of farmers wants to pool their produce for processing and marketing, with each member having one vote irrespective of shares held. Which form of organisation best suits them?

  1. Cooperative society Correct answer.
  2. Partnership firm
  3. Limited liability partnership
  4. Public limited company

Explanation

A cooperative society is formed to promote the economic interests of members on the principle of one member one vote and service before profit. It suits farmers pooling produce for processing and marketing because control does not depend on capital contributed. A company gives votes in proportion to shares, and a partnership gives control by agreement rather than by the one-member-one-vote rule.

Question 28Forms of Business Organisation

Which of the following statements about a Limited Liability Partnership is correct?

  1. It must have at least two partners and at least two designated partners, one of whom must be a resident of India Correct answer.
  2. It cannot own property in its own name
  3. The partners have unlimited liability for the acts of the firm
  4. Its partners cannot be body corporates

Explanation

The LLP Act, 2008 requires a minimum of two partners and at least two designated partners who are individuals, with at least one of them resident in India. An LLP is a body corporate with perpetual succession and can hold property in its own name. Partners enjoy limited liability, their liability being confined to their agreed contribution.

Question 29Forms of Business Organisation

A company issued shares to the public and later wants to alter its Articles of Association. Which statement is correct?

  1. The Articles can be altered only with the prior approval of the Registrar of Companies
  2. The Articles can be altered by a special resolution, subject to the Memorandum and the Companies Act Correct answer.
  3. The Articles can be altered by an ordinary resolution of the board of directors
  4. The Articles can never be altered once registered

Explanation

Section 14 of the Companies Act, 2013 allows a company to alter its Articles by passing a special resolution, provided the alteration does not conflict with the Memorandum or the Act. The alteration is filed with the Registrar, but the Registrar's approval is not a precondition. The board of directors alone cannot alter the Articles.

Question 30Forms of Business Organisation

A partnership firm has five partners. On the death of one partner, what happens to the firm in the absence of a contract to the contrary?

  1. The firm automatically dissolves Correct answer.
  2. The firm continues with the remaining partners as a new firm
  3. The firm is wound up by the Registrar of Firms
  4. The heirs of the deceased partner become partners automatically

Explanation

Section 42 of the Indian Partnership Act, 1932 provides that subject to a contract to the contrary, a firm is dissolved by the death of a partner. Partners may insert a clause in the partnership deed to continue the firm with the remaining partners. Heirs do not automatically become partners because partnership rests on mutual consent.

Question 31Forms of Business Organisation

Which of the following is a characteristic that distinguishes a company from a partnership?

  1. A company's members have unlimited liability
  2. A company has a separate legal entity distinct from its members Correct answer.
  3. Both require registration under the Indian Partnership Act
  4. Both have perpetual succession

Explanation

On incorporation, a company becomes a legal person separate from its shareholders, owning property and incurring debts in its own name. A partnership firm has no separate legal personality; partners own the firm's assets and are personally liable. Perpetual succession and limited liability follow from the company's separate entity, not from partnership.

Question 32Forms of Business Organisation

A One Person Company is formed by a single individual. Which requirement is correct under the Companies Act, 2013?

  1. The sole member must be a body corporate
  2. The OPC can carry on non-banking financial investment activities
  3. The OPC must nominate a natural person as nominee in its Memorandum Correct answer.
  4. The OPC must have at least three directors

Explanation

Section 3 of the Companies Act, 2013 requires the single member of an OPC to nominate a natural person as nominee in the Memorandum, who becomes the member on the member's death or incapacity. Only a natural person who is an Indian citizen may form an OPC. An OPC needs only one director and cannot carry on non-banking financial investment activities.

Question 33Forms of Business Organisation

In a company, the liability of a member holding equity shares with partial payment is limited to:

  1. The unpaid amount on the shares held Correct answer.
  2. Twice the face value of the shares held
  3. The face value of the shares held
  4. The market value of the shares held

Explanation

In a company limited by shares, the liability of a member is limited to the amount unpaid on the shares held, not the full face value once fully paid. This is the essence of limited liability under Section 2(22) of the Companies Act, 2013. The market value of shares is irrelevant to liability.

Question 34Forms of Business Organisation

A cooperative housing society wants to admit a new member. Which principle governs the admission and voting in such a society?

  1. Open and voluntary membership with one member one vote Correct answer.
  2. Restricted membership with votes proportional to shares
  3. Membership only by invitation of the managing committee
  4. Voting rights based on the value of property held

Explanation

Cooperatives follow the principle of open and voluntary membership, and each member has one vote regardless of the capital contributed. This democratic control is a defining feature of the cooperative form. Proportional voting belongs to companies, and restricting membership to invitation contradicts cooperative principles.

Question 35Forms of Business Organisation

Which of the following businesses would most appropriately be organised as a partnership rather than a sole proprietorship?

  1. A large company seeking listing on a stock exchange
  2. A family managing ancestral agricultural land
  3. A single person running a small retail counter
  4. Two chartered accountants setting up a professional practice together Correct answer.

Explanation

Two professionals combining capital, skill and effort in a shared practice fit the partnership form, which requires an agreement to share profits of a business. A partnership allows pooling of resources and分担 of risk among a small group. A single retail counter suits sole proprietorship, listing requires a company, and ancestral land is typically held as an HUF.

Question 36Forms of Business Organisation

A company's Articles of Association contain a clause restricting the transfer of shares. A shareholder wishes to sell his shares. What is the legal position?

  1. The restriction is void because shares are freely transferable in all companies
  2. The restriction is valid only if approved by the Registrar of Companies
  3. The restriction is valid if it is contained in the Articles and consistent with the Act Correct answer.
  4. The shareholder can transfer shares freely because pre-emption clauses are illegal

Explanation

Section 44 of the Companies Act, 2013 makes shares movable property transferable in the manner provided by the Articles. A private company may restrict transfer, and pre-emption clauses in the Articles are lawful. The restriction must be consistent with the Act and the Memorandum. Share transfers are not subject to the Registrar's approval.

Question 37Forms of Business Organisation

Which of the following is a disadvantage common to both a partnership firm and a sole proprietorship?

  1. Separation of ownership from management
  2. Unlimited liability of the owners Correct answer.
  3. Compulsory audit of accounts
  4. Lack of perpetual succession

Explanation

In both a sole proprietorship and a partnership firm, the owners bear unlimited liability, so personal assets can be used to pay business debts. Lack of perpetual succession affects a partnership but not a sole proprietorship, which continues until the owner dies. Compulsory audit and separation of ownership from management are features of companies.

Question 38Forms of Business Organisation

A public company wants to raise funds from the public by issuing a prospectus. Which statement about the prospectus is correct?

  1. It need not disclose the company's capital structure
  2. It must be dated and filed with the Registrar before the offer is made to the public Correct answer.
  3. It can be issued after the allotment of shares
  4. It may contain forward-looking statements without any basis

Explanation

Section 26 of the Companies Act, 2013 requires a prospectus to be dated and filed with the Registrar before it is issued to the public. It must contain the matters prescribed by the Act, including the company's capital structure and risk factors. False or misleading statements in a prospectus attract civil and criminal liability.

Question 39Forms of Business Organisation

A firm of four partners is dissolved. After paying outside creditors, a surplus remains. In the absence of a partnership deed, how is the surplus applied?

  1. Given entirely to the senior-most partner
  2. Returned equally to all partners regardless of capital
  3. Used first to repay partners' advances and capital, then shared equally Correct answer.
  4. Distributed in proportion to the number of years each partner served

Explanation

Section 48 of the Indian Partnership Act, 1932 lays down the order of settlement of accounts: losses and deficiencies are paid first out of profits, then out of capital, and finally by the partners individually. Surplus is applied first in paying each partner's advances and capital, and any residue is divided equally. Seniority and length of service are irrelevant.

Question 40Forms of Business Organisation

A private company has 190 members, of whom 15 are present employees who became members during employment. What is the position regarding the statutory maximum membership?

  1. The company must convert into a public company immediately
  2. The company is within the limit because employee-members are excluded from the count Correct answer.
  3. The company is within the limit because private companies have no cap
  4. The company has exceeded the limit of 200 members

Explanation

Section 2(68) of the Companies Act, 2013 excludes present and past employee-members from the count of 200 for a private company. Here the count is 190 minus 15 employee-members, which is well below 200. The cap applies to private companies, and conversion is not triggered.

Question 41Forms of Business Organisation

Which feature of a company most directly explains why it can survive the death or insolvency of its shareholders?

  1. Statutory audit of accounts
  2. Compulsory transferability of shares
  3. Perpetual succession flowing from its separate legal entity Correct answer.
  4. Limited liability of members

Explanation

Because a company is a separate legal person, it continues to exist irrespective of changes in its membership; this is perpetual succession. Death or insolvency of a shareholder merely transfers the shares. Limited liability protects members' personal assets but does not by itself explain the company's continued existence.

Question 42Forms of Business Organisation

A partnership deed is silent on the rate of interest on a partner's loan to the firm. What rate is payable under the Indian Partnership Act, 1932?

  1. Twelve per cent per annum
  2. No interest is payable
  3. Six per cent per annum Correct answer.
  4. The rate fixed by the Reserve Bank of India

Explanation

Section 13 of the Indian Partnership Act, 1932 provides that in the absence of a contract, a partner who advances money beyond the capital is entitled to interest at six per cent per annum. Interest on capital is not payable unless the deed provides for it. The other rates are not prescribed by the Act.

Question 43Forms of Business Organisation

A cooperative society registered under a state cooperative law wishes to raise funds. Which statement correctly describes its capital-raising position?

  1. It can raise funds by issuing shares to the public at large
  2. It cannot accept any deposits from members
  3. It raises capital mainly from members' subscriptions and deposits and may receive government assistance Correct answer.
  4. It must raise all capital through a prospectus filed with the Registrar of Companies

Explanation

A cooperative society raises capital chiefly from the subscriptions of its members and may accept deposits and receive government aid. It is not a company and does not issue a prospectus to the public at large. Acceptance of member deposits is a normal source of working capital for cooperatives.

Question 44Management: Meaning, Functions and Principles

Which statement best describes the meaning of management in the context of business organisation?

  1. Management is the process of converting raw materials into finished goods on the shop floor.
  2. Management is the recruitment of shareholders for a public limited company.
  3. Management is the recording of financial transactions in the books of accounts.
  4. Management is the process of getting things done through others to achieve organisational goals efficiently and effectively. Correct answer.

Explanation

Management is a goal-oriented process of planning, organising, staffing, directing and controlling the work of others. It focuses on achieving objectives through people with efficient use of resources. The other activities are specialised functions, not the whole managerial process.

Question 45Management: Meaning, Functions and Principles

According to the functional view of management, which sequence represents the core functions performed by a manager?

  1. Planning, organising, staffing, directing, controlling Correct answer.
  2. Controlling, planning, directing, organising, staffing
  3. Directing, staffing, planning, controlling, organising
  4. Staffing, controlling, organising, planning, directing

Explanation

The widely accepted functional framework lists planning first, followed by organising, staffing, directing and controlling. Planning sets objectives, organising and staffing build the structure and team, directing activates people, and controlling checks performance against plans.

Question 46Management: Meaning, Functions and Principles

A manager divides the firm's work into departments, assigns duties and fixes authority relationships. Which management function is being performed?

  1. Directing
  2. Controlling
  3. Organising Correct answer.
  4. Staffing

Explanation

Organising is the function of identifying and grouping work, defining responsibility and delegating authority. It creates the structure within which people work. Dividing work into departments and fixing authority relationships is exactly this function.

Question 47Management: Meaning, Functions and Principles

Which principle of management states that a subordinate should receive orders from only one superior?

  1. Esprit de corps
  2. Unity of direction
  3. Scalar chain
  4. Unity of command Correct answer.

Explanation

Unity of command means one subordinate should have only one boss, so that responsibility is clear and conflicting instructions are avoided. Unity of direction, in contrast, concerns one head and one plan for activities with the same objective.

Question 48Management: Meaning, Functions and Principles

In Fayol's framework, what does the principle of 'division of work' primarily aim to achieve?

  1. Specialisation that increases efficiency and output Correct answer.
  2. Free flow of communication across all levels
  3. Equal pay for all employees at every level
  4. Centralisation of all authority in the top manager

Explanation

Division of work splits tasks into smaller specialised parts so that the same person repeatedly performs a task and gains speed and skill. Fayol treated it as a natural means of improving efficiency, applicable to managerial and technical work alike.

Question 49Management: Meaning, Functions and Principles

A supervisor tells a worker to report to the production manager for machine schedules and to the quality manager for inspection standards. Which principle of management is being violated?

  1. Equity
  2. Unity of command Correct answer.
  3. Order
  4. Stability of tenure

Explanation

Under unity of command each subordinate must answer to only one superior, otherwise accountability becomes confused. Assigning two bosses for related instructions creates dual command. Order, equity and stability of tenure deal with placement, fairness and job security respectively.

Question 50Management: Meaning, Functions and Principles

Which of the following is a feature that distinguishes management as a profession from management as a mere occupation?

  1. Use of physical resources in production
  2. Presence of a hierarchical organisational structure
  3. Existence of a body of specialised knowledge and a code of conduct Correct answer.
  4. Dependence on government subsidies

Explanation

A profession rests on a systematic body of knowledge, formal training and an ethical code enforced by an association. Management shows these features partially, which is why it is often called a developing profession rather than a fully established one.