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DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : R.Dasharatham
Designation : Lecturer
Branch : D.C.C.P.
Institute : GPW, Warangal
Year : I year
Subject : Business Organization
Subject code : CCP-104
Topic : Forms of Business Organization-Sole
Trading and Partnership
Duration : 50 mts
Sub topic : Sole Trading-merits and demerits
Teaching Aids :P.P.T., Animation, Photos

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Objectives
On completion of this lesson, you would be
able to:
• List and explain Merits of Sole Trading.

• List and explain demerits of sole trading

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Recap
We know:
• Meaning of sole trader
• Features of sole trader

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Merits of sole trading proprietorship

 Let us now see some of the merits of Sole


trading

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Merits

1. Formation is simple and easy.

2. More profit.

3. Economy and efficiency.

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Merits

4. Personal contact with customers.

5. Quick decisions.

6. Secrecy of Business.

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Merits

7. Better employee relations.

8. Cautious Business.

9. Flexibility of Operations.

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Merits

10. Smooth Management.

11.Easy to wind up

12.Tax benefits

13.Independence

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Demerits

 Let us now see some of the demerits of sole trading

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Demerits

 1. Limited Capital.

 2. Limited managerial ability.

 3. Unlimited liability.

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Demerits

4. Short life

5. Singleness of responsibility.

6. Burden of loss

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Demerits

 Absence of Division of Labour

 Limited area of operation.

 Dependence on paid assistants

 Limited scope for expansion

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Summary

We have discussed about

• Merits of a sole trader


• Demerits of a sole trader

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QUIZ

1. Which one of the following merits of


Sole Trading Proprietorship?

A) unlimited liability
B) short life.
C) Formation is easy.
D) All the above.

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2. Which of the following is the demerit
of Sole Trading Proprietorship?

A) More profit.
B) Smooth management
C) Easy to wind up.
D) Limited Capital.

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Frequently asked questions

 What are the merits of Sole trading proprietorship?

 What are the demerits of sole trading proprietorship?

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Assignment

 Mr. Ram Gopal Varma comes to you for


starting a business. What is your advice?
Justify.

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Thank you

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