Formation of Statutory Companies Quiz

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Questions and Answers

What is the term used to describe the person involved in forming a company?

  • Director
  • Incorporator
  • Registrar
  • Promotee (correct)

How many persons are required to form an incorporated public company?

  • 5
  • 7 (correct)
  • 10
  • 8

When can a private company commence its business after incorporation?

  • After 6 months
  • After filing annual financial statements
  • After obtaining a Certificate of Commencement of Business
  • Immediately (correct)

Which document is required to be filed to get the Certificate of Incorporation from the Registrar?

<p>Memorandum of Association (B)</p> Signup and view all the answers

What is the next step for a public company after obtaining the Certificate of Incorporation?

<p>Obtaining a Certificate of Commencement of Business (D)</p> Signup and view all the answers

What is the minimum number of persons required to form an incorporated private company?

<p>2 (D)</p> Signup and view all the answers

What are the three important stages in the formation of a company?

<p>Incorporation, commencement of business, and promotion (C)</p> Signup and view all the answers

How is share capital divided into different divisions?

<p>Authorized, issued, subscribed, and paid up capital (B)</p> Signup and view all the answers

What is the par value of a share known as?

<p>Nominal value (D)</p> Signup and view all the answers

How are shares primarily classified?

<p>Ordinary shares and preference shares (A)</p> Signup and view all the answers

What are the three types of responses for the offer of issue of shares by a company?

<p>Full subscription, under subscription, over subscription (C)</p> Signup and view all the answers

What condition must be met before a public company can commence business?

<p>'Minimum subscription' must be reached (C)</p> Signup and view all the answers

When does a company treat the money received from shareholders as 'calls in advance'?

<p>When the money is received before the call is made (D)</p> Signup and view all the answers

What is the term used when a company receives applications for fewer shares than offered to the public?

<p>Undersubscription (D)</p> Signup and view all the answers

If a company issues shares at a price higher than its face value, what is this premium amount called?

<p>Share premium (A)</p> Signup and view all the answers

What is the term used for the remaining amount that a shareholder must pay on the shares allotted, after the initial payment?

<p>Calls on shares (A)</p> Signup and view all the answers

If a company receives applications for more shares than offered to the public, what is this situation called?

<p>Oversubscription (D)</p> Signup and view all the answers

What is the term used when a company issues shares at a price lower than its face value?

<p>Share discount (B)</p> Signup and view all the answers

What entry is made when a company issues shares for cash at a premium?

<p>Cash Dr 15000, To Equity share capital 10000, To Share premium 5000 (D)</p> Signup and view all the answers

If a company issues 20,000 convertible preference shares of Rs. 10 par value each, convertible into equity shares at a ratio of 1:2 after 5 years, how many equity shares will be created upon conversion?

<p>10,000 equity shares (B)</p> Signup and view all the answers

What is the entry made when a company issues shares at a discount?

<p>Cash Dr 9500, Discount on Issue of Shares Dr 500, To Equity share capital 10000 (D)</p> Signup and view all the answers

For subsequent calls after the first call money receipt, what type of entries will be passed?

<p>Entries similar to the first call money receipt (D)</p> Signup and view all the answers

In the case of winding up of a company, which of the following is the correct order of payment?

<p>Creditors, preference shareholders, equity shareholders (A)</p> Signup and view all the answers

When should a company get approval to issue shares at a discount?

<p>From the company law board (B)</p> Signup and view all the answers

What is the term used to refer to the nominal or face value of a share?

<p>Par value (A)</p> Signup and view all the answers

If a company has issued cumulative preference shares and has unpaid dividends, how are these unpaid dividends treated?

<p>They are treated as a liability (C)</p> Signup and view all the answers

What is the treatment of proceeds when a company issues no-par stock?

<p>The entire proceeds are credited to the share capital account (C)</p> Signup and view all the answers

When issuing both equity and preference shares, what must be used in all circumstances?

<p>The words equity or preference (B)</p> Signup and view all the answers

Which type of shares can be converted into equity shares according to the terms of issue?

<p>Convertible preference shares (B)</p> Signup and view all the answers

What is the term used to refer to the fixed amount into which the share capital of a company is divided?

<p>Share indivisible units (B)</p> Signup and view all the answers

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