30 Questions
What is the term used to describe the person involved in forming a company?
Promotee
How many persons are required to form an incorporated public company?
7
When can a private company commence its business after incorporation?
Immediately
Which document is required to be filed to get the Certificate of Incorporation from the Registrar?
Memorandum of Association
What is the next step for a public company after obtaining the Certificate of Incorporation?
Obtaining a Certificate of Commencement of Business
What is the minimum number of persons required to form an incorporated private company?
2
What are the three important stages in the formation of a company?
Incorporation, commencement of business, and promotion
How is share capital divided into different divisions?
Authorized, issued, subscribed, and paid up capital
What is the par value of a share known as?
Nominal value
How are shares primarily classified?
Ordinary shares and preference shares
What are the three types of responses for the offer of issue of shares by a company?
Full subscription, under subscription, over subscription
What condition must be met before a public company can commence business?
'Minimum subscription' must be reached
When does a company treat the money received from shareholders as 'calls in advance'?
When the money is received before the call is made
What is the term used when a company receives applications for fewer shares than offered to the public?
Undersubscription
If a company issues shares at a price higher than its face value, what is this premium amount called?
Share premium
What is the term used for the remaining amount that a shareholder must pay on the shares allotted, after the initial payment?
Calls on shares
If a company receives applications for more shares than offered to the public, what is this situation called?
Oversubscription
What is the term used when a company issues shares at a price lower than its face value?
Share discount
What entry is made when a company issues shares for cash at a premium?
Cash Dr 15000, To Equity share capital 10000, To Share premium 5000
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?
10,000 equity shares
What is the entry made when a company issues shares at a discount?
Cash Dr 9500, Discount on Issue of Shares Dr 500, To Equity share capital 10000
For subsequent calls after the first call money receipt, what type of entries will be passed?
Entries similar to the first call money receipt
In the case of winding up of a company, which of the following is the correct order of payment?
Creditors, preference shareholders, equity shareholders
When should a company get approval to issue shares at a discount?
From the company law board
What is the term used to refer to the nominal or face value of a share?
Par value
If a company has issued cumulative preference shares and has unpaid dividends, how are these unpaid dividends treated?
They are treated as a liability
What is the treatment of proceeds when a company issues no-par stock?
The entire proceeds are credited to the share capital account
When issuing both equity and preference shares, what must be used in all circumstances?
The words equity or preference
Which type of shares can be converted into equity shares according to the terms of issue?
Convertible preference shares
What is the term used to refer to the fixed amount into which the share capital of a company is divided?
Share indivisible units
Test your knowledge on the formation of statutory companies, focusing on the important stages of promotion, incorporation, and commencement of business. Learn about the roles of promoters and the number of individuals required for incorporation in public and private companies.
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