Corporate and Other Laws Chapter Quiz

The company's general meeting determines the remuneration of statutory auditors, not the board of directors.

A partner must inform the LLP within 15 days of any change in their name or address.

The LLP is required to file a notice with the Registrar within 30 days of a partner's change in name or address.

The LLP must file a notice with the Registrar within 30 days of a partner becoming or ceasing to be a partner.

The notice filed with the Registrar regarding partner changes must be in a prescribed format, signed by the designated partner, and authenticated.

The notice filed with the Registrar regarding a new partner must include a statement of consent from the new partner, signed and authenticated.

XYZ LLP has not complied with the legal requirements for partner address changes as Priya did not inform the LLP about the change and subsequently LLP did not file a notice with the Registrar.

The LLP's failure to file a notice regarding a partner's address change with the Registrar can have legal consequences.

Revenue recognition for a sale where the seller also agrees to resell the goods at a predetermined price later, covering the holding cost of the buyer. The revenue recognized as of the balance sheet date is based on the stage of completion of the sales transaction, assuming the transaction is expected to be completed.

When a company acquires a long-lived asset and later has to replace a major component, the cost of the new component can be capitalized as an asset if it significantly extends the useful life of the original asset. This is subject to certain accounting standards (AS 10) and requires careful consideration of the specific facts and circumstances.

The accountant's treatment of adjusting the cost of raw materials based on the difference between the exchange rate at the time of purchase and the rate at the time of payment may not be justified under AS 11. AS 11 generally requires foreign currency transactions to be recorded using the exchange rate at the transaction date. You should consider the specific provisions of AS 11 to determine the appropriate accounting treatment.

The process of repeatedly reviewing and practicing previously learned material to strengthen memory and retention.

Practice questions designed to test knowledge and understanding of a topic.

A collection of multiple-choice questions used for assessment, often covering a broad range of topics.

A compilation of practice questions and answers related to a specific exam, designed to help students prepare.

A comprehensive collection of materials used for studying a specific subject, often divided into sections for easier learning.

A collection of legal acts that govern business entities and financial transactions in India.

The practice of solving problems under time constraints, simulating actual exam conditions.

A strategic approach to studying that focuses on maximizing efficiency and understanding, aiming for a high score.

A provision should be created for the claim from customer K as there is a high probability of losing the case and the estimated damage amount is reasonably certain. This aligns with accounting standards that mandate recognizing probable and quantifiable losses.

Debit: Loss on account of legal claim (estimated damages) - This is the amount recorded as an expense. Credit: Provision for legal claims - This is a liability account reflecting the estimated amount to be paid.

The claim against supplier F should be recorded as a contingent asset on the balance sheet. Since there's a high probability of success, it's not recognized as an asset but disclosed in the notes to the financial statements.

A change in the estimated amount of the provision does not constitute a change in accounting policy. It's a change in accounting estimate, typically a result of new information or revised assumptions.

The provision for the claim from customer K should be adjusted in the accounting records to reflect the revised estimate of damages, as these estimates are continually assessed.

Companies must consider the legal requirements for recording provisions. A provision should be recognized when it is probable that future outflows of resources will be required and a reliable estimate can be made of the amount. This follows principles for recognizing liabilities.

Contingent assets, like the claim against supplier F, are not recognized as an asset in the financial statements. They are disclosed in the notes to the financial statements because the outcome is uncertain but a possibility exists for an inflow of economic benefits.

The accounting treatment for contingent assets includes disclosure in the notes to the financial statements. This disclosure should include the nature of the contingent asset, its estimated value, and the factors that will determine the ultimate outcome. This helps users understand potential future benefits.

The difference between the total lease rentals received and the present value of the minimum lease payments is considered unearned finance income. The present value is calculated using the internal rate of return (IRR) and the discounted rates provided for each year.

Basic EPS is calculated by dividing the profit after tax attributable to equity shareholders by the weighted average number of shares in issue during the year. Diluted EPS considers the potential dilution of earnings if all dilutive securities, such as options, are converted into shares. In case of no change in income from the conversion of options, the diluted EPS will be the same as the basic EPS.

The straight-line method allocates an equal amount of depreciation expense to each year of the asset's useful life. This method assumes that the asset's value decreases uniformly over time.

Tax savings arise from the difference between the tax depreciation allowed and the accounting depreciation. In this case, ABC Ltd. can deduct 100% of the purchase price in the first year for tax but only depreciates the asset over three years for accounting purposes.

The fair market value of the asset is the price that a willing buyer and seller would agree on in an open market.

The residual value is an estimate of the asset's worth at the end of its useful life. It represents the amount that a company expects to recover from selling or using the asset at the end of its lease term. In this case, the expected residual value is higher than the guaranteed residual value, meaning that Money Limited expects to recover more than Hello Ltd. guarantees to pay.

The lease term is the duration of the lease agreement. In this case, it is 5 years. This means Hello Ltd. will be leasing the machine for a period of 5 years.

The internal rate of return (IRR) is a measure of the profitability of an investment. It is the discount rate that makes the net present value (NPV) of all cash flows from an investment equal to zero. In this case, Money Limited used the IRR of 15% to calculate the present value of the lease payments.

A company's general meeting can authorize a change in the purpose for which funds were originally raised, but it requires a special resolution and shareholder approval. Shareholders have the right to voice their concerns about such deviations from the original objective.

Sweat equity shares are granted to employees or directors in recognition of their contributions to a company's growth and development. They are issued at a discount or for no consideration, representing their work's value instead of cash payments.

Before issuing sweat equity shares, companies must ensure they comply with the Companies Act's provisions, which may include factors like the company's paid-up capital and limitations on the total number of shares issued. The board needs to draft a special resolution defining the terms of the issuance, including eligibility criteria and the number of shares allotted.

Good faith refers to an honest belief and intention in a transaction or legal action, with no intention to deceive or harm. A 'good faith' purchase implies that the buyer had no prior knowledge of any illegality associated with the goods. Even if there was no deliberate wrongdoing, acting without due care or negligence can still invalidate ownership.

To determine valid ownership, courts consider both the buyer's intention ('good faith') and their actions. If a buyer acted negligently, even if 'good faith' was present, the ownership may be invalid. This highlights the importance of due diligence when acquiring goods.

A prospectus is a legal document outlining a company's plans for raising funds, including the purpose of the funds. If a company later diverges from the original purpose stated in the prospectus without proper authorization, shareholders may challenge the validity of this change.

When deciding on the validity of a company's actions, courts analyze the legal framework, including the Companies Act, 2013. This Act provides guidelines on shareholder rights, corporate governance, and ensuring that companies operate fairly and transparently.

Shareholders have a right to participate in company decisions and to challenge actions that deviate from the original purpose of the funds raised through a prospectus. This right ensures a fair and transparent process regarding the use of company funds.