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.