All Free Introduction to Business MCQs with Answers

• A. Withdrawn from the firm
• B. Approved by the court
• C. Earned as profit
• D. Invested in the firm

Explanation: A limited partner usually risks only the capital contributed to the partnership.

• A. Shares
• B. Debts
• C. Reserves
• D. Partnership units

Explanation: Share capital is divided into units called shares, which represent ownership interests in the company.

• A. Articles of association
• B. Memorandum of association
• C. Partnership deed
• D. Annual report

Explanation: The memorandum of association sets out the company’s basic constitution, including its objects and permitted scope.

• A. Sole proprietorship
• B. Joint stock company
• C. Cooperative society
• D. Private partnership

Explanation: Cooperative societies generally follow democratic control, giving each member one vote regardless of the amount invested.

• A. Joint stock company
• B. Sole proprietorship
• C. Ordinary partnership
• D. Cooperative partnership

Explanation: Shareholders own the company, while the board of directors provides overall direction and supervision.

• A. Issuing shares to its members
• B. Inviting the general public to subscribe for its shares
• C. Maintaining a separate bank account
• D. Appointing directors to manage its affairs

Explanation: A private company raises capital privately and cannot make a general invitation to the public to subscribe for its shares.

• A. Retirement
• B. Insolvency
• C. Agreement
• D. Notice by one partner

Explanation: Partners may dissolve the firm by mutual agreement because the partnership relationship is based on consent.

• A. Holding company
• B. Public trading company
• C. Limited partnership
• D. Non-profit company

Explanation: A non-profit company is formed to advance stated social, charitable, educational or similar objectives rather than distribute profits to…

• A. Project completion dates
• B. Geographical territories
• C. Customer income levels
• D. Specialised business activities

Explanation: A functional structure groups people by activities such as marketing, finance, production and human resources.

• A. Matrix structure
• B. Divisional structure
• C. Functional structure
• D. Line structure

Explanation: A matrix structure combines functional and project or product authority, so an employee may report to two managers.

• A. Process departmentalisation
• B. Product departmentalisation
• C. Functional departmentalisation
• D. Territorial departmentalisation

Explanation: Product departmentalisation places activities into units based on the products or product lines served.

• A. The number of management levels
• B. The range of products offered
• C. The length of the production cycle
• D. The number of subordinates supervised

Explanation: Span of control is the number of employees who report directly to a manager.

• A. Highly centralised
• B. Highly decentralised
• C. Highly informal
• D. Highly specialised

Explanation: Centralisation means decision-making authority is concentrated at higher organisational levels.

• A. Frequent informal decisions
• B. Dependence on written rules
• C. Unclear reporting relationships
• D. Extensive employee discretion

Explanation: Formalisation is the extent to which jobs and behaviour are guided by written rules, procedures and standards.

• A. Scalar chain
• B. Division of work
• C. Unity of command
• D. Span of control

Explanation: Unity of command requires an employee to have one direct reporting authority, which reduces conflicting instructions.

• A. Coordination
• B. Standardisation
• C. Centralisation
• D. Delegation

Explanation: Delegation involves transferring authority and assigning responsibility to a subordinate for carrying out a task.

• A. It gives direct authority over core operations
• B. It provides specialist advice only
• C. It operates outside the chain of command
• D. It applies only to temporary projects

Explanation: Line authority is the direct authority managers exercise over activities that contribute to the organisation's main objectives.

• A. Stable and highly predictable
• B. Strictly regulated and repetitive
• C. Dynamic and rapidly changing
• D. Based on fixed operating routines

Explanation: Organic structures use flexible roles, decentralised decisions and open communication, making them suitable for changing environments.

• A. Product
• B. Work process
• C. Customer type
• D. Geography

Explanation: Geographical departmentalisation groups activities according to territory or region.

• A. A complete product or market area
• B. Only one specialised business activity
• C. Only the organisation's support services
• D. All decisions made by head office

Explanation: A division is usually organised around a product, service, customer group or region and contains several major functions.