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Types of Companies

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Questions and Answers

What is the origin of the term 'company'?

Derived from the Spanish words 'compania' meaning association and 'panaderia' meaning bakery

Derived from the Latin words 'com' meaning with/together and 'panis' meaning bread (correct)

Derived from the Greek words 'co' meaning common and 'pan' meaning all

Derived from the French words 'compagnie' meaning group and 'pain' meaning pain

What distinguishes a company from a partnership firm?

A company has more members than a partnership firm

A company's members contribute money, while a partnership firm's members contribute goods or services

A company is an incorporated association created by law, while a partnership firm is not (correct)

A company always deals with larger amounts of capital than a partnership firm

What denotes the capital of a company?

The number of shareholders in the company

The total assets of the company

The annual revenue generated by the company

The common stock contributed in money (correct)

How is a company formed?

<p>By an Act of Parliament, Royal Charter, or registration under company law</p> Signup and view all the answers

What can dissolve a company?

<p>Law alone can dissolve it</p> Signup and view all the answers

Study Notes

Origins and Characteristics of a Company

Originated from the Latin word 'compania', meaning 'companion' or 'association'
Refers to a group of people united for a common goal, typically for business purposes

Key Distinctions from a Partnership Firm

A company is a separate legal entity from its owners, with limited liability
Partners in a partnership firm have unlimited personal liability

Capital of a Company

Denoted by its share capital, which is divided into shares of a fixed amount
Each share represents a unit of ownership in the company

Formation of a Company

Formed by incorporating with the relevant government agency, such as the Securities and Exchange Commission (SEC)
Requires a memorandum of association, articles of association, and other legal documents