Formation of a Company

MCQ Based Questions on Class 11 Business studies for chapter-7 Formation of a Company

Find below MCQ Based Questions on Class 11 Business studies for chapter 7 Formation of a Company all the MCQ questions are explained with correct answers and explanations. To check the correct answer click on the answer. 

Find MCQ questions for class 11 Business studies7 Formation of a Company

Business Studies - MCQ on Formation of a Company

Class XI

Q1.Any group of persons united to pursue a common interest is called

I. Industry

II. Company

III. NGO

IV. None

Answer:

II.Company

Explanation: Group of people united to pursue interest is called a company.

Q2.How many members are required to form a public limited company?

I. Two

II. Seven

III. Ten

IV. Unlimited

Answer:

II.Seven

Explanation: Seven members are required to sign the Memorandum of Association of a public limited Company.

Q3. How many members are required to form a private limited company?

I. Two

II. Seven

III. Ten

IV. Unlimited

Answer:

I.Two

Explanation: Two members are required for the Memorandum of Association of a private company.

Q4. What is required for a private company to commence the business?

I. Certificate to commence business.

II. Memorandum of Association

III. Certificate of Incorporation

IV. None

Answer:

III.Certificate of Incorporation

Explanation: A private company can commence business after obtaining Certificate of Incorporation

Q5. Certificate to commence business is required by

I. Public limited company

II. Private limited company

III. NGO

IV. Joint Hindu Family

Answer:

I.Public limited company

Explanation: . A public company can commence business after obtaining certificate to commence business

Q6. Which document specify the objectives of the company?

I. Article of Association

II. Certificate of Incorporation

III. Memorandum of Association

IV. None

Answer:

III.Memorandum of Association

Explanation: Memorandum of Association specifies the objects of the company.

Q7. Which document is issued by a company to invite public to purchase its shares?

I. Article of Association

II. Certificate of Incorporation

III. Memorandum of Association

IV. Prospectus

Answer:

IV.Prospectus

Explanation: Prospectus is issued by a company to invite public to purchase its shares.

Q8.A company comes into existence from the date of __________

I. Promotion

II. Subscription of Capital

III. Commencement of Business.

IV. Incorporation.

Answer:

IV.Incorporation.

Explanation: Incorporation of a company means the registration of company as a corporate body under the provisions of Companies Act 1956.

Q9. The work of the promoter starts

I. After the formation

II. Before the formation

III. At the time of prospectus

IV. When memorandum is formed

Answer:

II.Before the formation

Explanation: A promoter is the person who does the required work before the formation of the company for its incorporation. A promoter plans and organizes the business and fulfills all the legal formalities

Q10.Who issues the certificate of Incorporation?

I. Directors

II. Government

III. Registrar

IV. DM

Answer:

III.Registrar

Explanation: A certificate of Incorporation is a certificate issued by the Registrar of the companies that company is incorporated

Q11. Certificate of commencement is

I. Birth Certificate

II. To start functioning of company

III. For issue of shares

IV. None

Answer:

II.To start functioning of company

Explanation: The company can start its functioning after getting certificate of commencement.

Q12.What is the limit of minimum subscription according to SEBI?

I. 95%

II. 90%

III. 60%

IV. 80%

Answer:

II.90%

Explanation: According to SEBI guidelines minimum subscription has been fixed at 90% of the entire issue.

Q13. A statement consisting of all the details related to the allotment of shares is called

I. Issue of shares

II. Return on allotment

III. Allotment of shares

IV. Prospectus

Answer:

II.Return on allotment

Explanation: Return on Allotment is a statement consisting of all the details related to the allotment of shares It is signed by directors.

Q14.The contract signed before incorporation is

I. Preliminary contract

II. Provisional contract

III. Social Contract

IV. None

Answer:

I.Preliminary contract

Explanation: These are signed before incorporation . These are signed by the promoters

Q15. Any act of the company outside the scope of activities as laid down in the memorandum is said to be

I. Virus

II. Ultra vires

III. Illegal

IV. None

Answer:

II.Ultra vires

Explanation: The activity which is outside the scope of activities is called Ultra Vires activity.

Q16. The rules & regulation for the internal management of the company is in

I. Memorandum of association

II. Article of Association

III. Certificate of Incorporation

IV. Certificate to commence Business

Answer:

II. Article of Association

Explanation: These rules and regulations are framed to carry the objects of the company as stated in the memorandum of association.

Q17.Which document is unalterable?

I. Memorandum of association

II. Article of Association

III. Certificate of Incorporation

IV. Certificate to commence Business

Answer:

I. Memorandum of association

Explanation: It is an unalterable document .Alteration can only be done by the permission of court

Q18.The company Act was formed in

I. 1957

II. 1956

III. 1958

IV. 1980

Answer:

II. 1956

Explanation: The Company Act was formed in 1956.

Q19.Preliminary contract is signed by

I. Directors

II. Company

III. Promoter

IV. Employees

Answer:

III.Promoter

Explanation: The preliminary contract is signed by promoters

Q20.How many signatories are required to the memorandum of Association of a Private company?

I. One

II. Two

III. Seven

IV. Ten

Answer:

II.Two

Explanation:Minimum two members are required for memorandum of Association

Q21. The following activity is not a part of company promotion stage:

I. Finding the business idea

II. Feasibility Study

III. Entering into preliminary contracts

IV. Incorporation of the company

Answer:

IV. Incorporation of the company

Explanation: Incorporation of a company means the registration of company as a corporate body under the provisions of Companies Act 1956.A company comes into existence from the date of incorporation.

Q22.Qualification shares are subscribed by:

I. Directors of the company

II. Auditors of the company

III. Bankers of the company

IV. Employees of the company

Answer:

I. Directors of the company

Explanation: The directors of the company subscribe the qualification shares.

Q23.Statement in lieu of Prospectus is filed with

I. Directors

II. Promoters

III. Partners

IV. Registrar

Answer:

IV.Registrar

Explanation:A statement in lieu of prospectus is drafted in accordance wirh the particulars of the companies Act.

Q24.When the cause states that the liability of the members is limited are called?

I. Name Clause

II. Object Clause

III. Liability Clause

IV. Capital Clause

Answer:

III.Liability Clause

Explanation: The liability of each member of the company limited or unlimited is stated by Liability Clause

Q25. The company has to declare about the permission to

I. Registrar

II. Stock Exchange

III. Promoter

IV. Incorporator

Answer:

Stock Exchange

Explanation: The company has to declare that it has applied for or obtained permission for its shares on a recognized stock exchange

Q26.Whether a promoter is an agent or a trustee of a company

I. Agent

II. Trustee

III. Neither of them

IV. Both of them

Answer:

III.Neither of them

Explanation: A promoter is not an agent because of non-existent principal nor he is a trustee because he works in good faith

Q27.Enterpreeur who promotes a company and manages affairs after incorporation is called

I. Professional Promoter

II. Occasional Promoter

III. Entrepreneur Promoter

IV. Financier Promoter

Answer:

II.Occasional Promoter

Explanation: They are not promoters by occupation but they help in promotion after the incorporation.

Q28.The registration fee will vary according to the

I. Director

II. Some Previous Company

III. Authorized Capital

IV. Nature of the company

Answer:

III. Authorized Capital

Explanation: The amount of the registration fee will vary with the authorized capital of the company

Q29.The public company has to pass through how many stages for starting business operations?

I. One

II. Two

III. Three

IV. Four

Answer:

II.Two

Explanation: A public company having share capital has to pass through two more stages before starting business operations.

Q30.Which is called the charter of the company?

I. Memorandum of association

II. Article of Association

III. Certificate of Incorporation

IV. Certificate to commence Business

Answer:

I.Memorandum of association

Explanation: Memorandum of association is the most important document of a company It contains the fundamental on which a company is incorporated. It is called the charter of the company.