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Class : 11
Unit : Business


Explain the merits of sole trading concern.

Ans : The merits of sole trading concern are explained below: i) Sole Ownership:- Sole trading concern is established by a single person investing his own capital. He manages business by utilizing his own resources and abilities. Other person or institution may invest money in the concern but they invest in terms of loan. ii) Sole management and control:- The sole trader has sole managerial authority of the concern. He has complete control over his business. He independently involves for buying and selling of goods and taking decision relating to the business himself. iii) Easy to establish:- Sole trading concern is easy to establish even with minimum capital and knowledge and simple to earn. After obtaining registration certificate from the concerned department of the government of Nepal, sole trade can perform formal business and can get facilities provides by the government. iv) Easy to dissolve:- It is simple to dissolve a sole trading concern. A sole trader can dissolve the business if he thinks the scope of economic gain from business is not possible. Only submission of an application in the concerned department of the government is sufficient. v) No sharing of profit:- The sole proprietor invest capital, actively participate in management, and takes risk of uncertainty of the business. Therefore, he has sole ownership in the profit of the concern. He only enjoys all the profit of the business concern. vi) Maintain secrecy:- The maintenance of the secrecy is the one of the characteristics of sole trading concern. According to legal procedure, it is not bound to publish it’s internal matter such as book of account, future plans and other information for the knowledge of the general public. vii) Flexibility in operation:- Sole proprietors has full control over his business. It can expand business to large scale on the basis of scope of economic gain. Similarly, he can minimize business volume if risk of loss is realized. It is necessary to fulfill government procedure to change business activities.
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