Chapter Exam

Chapter 3 COMMERCE : Joint Stock Companies and Formation of a Company — Online MCQ Test

Q: Which of the following is considered an 'artificial person' created by law?

Answer: C. Joint Stock Company — A Joint Stock Company is a legal entity created by law, separate from its members, hence called an artificial person.

Q: What is the primary document that defines the scope of activities and objectives of a company?

Answer: B. Memorandum of Association — The Memorandum of Association acts as the charter of the company, defining its objectives and scope of operations.

Q: If a company acts beyond the objectives mentioned in its Memorandum of Association, the act is considered:

Answer: A. Ultra Vires — Any act performed by the company that goes beyond the powers stated in the MOA is termed 'Ultra Vires' (beyond powers) and is null and void.

COMMERCE · CLASS 11 INTER I YEAR · Andhra State Board

Practice Chapter 3 COMMERCE : Joint Stock Companies and Formation of a Company with a free chapter-wise online MCQ test for Andhra State Board CLASS 11 INTER I YEAR COMMERCE. This chapter covers: This chapter covers joint stock company characteristics types promotion incorporation capital subscription commencement steps and key corporate documents.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 3 COMMERCE : Joint Stock Companies and Formation of a Company — Important Questions & Answers (FAQ)

Frequently asked questions from Andhra State Board CLASS 11 INTER I YEAR COMMERCE — Chapter 3 COMMERCE : Joint Stock Companies and Formation of a Company, with answers and explanations. These are sample questions; the exam has its own separate question set.

Which of the following is considered an 'artificial person' created by law?

A. Sole proprietorship
B. Partnership firm
C. Joint Stock Company ✓
D. Hindu Undivided Family

Answer: C. Joint Stock Company
A Joint Stock Company is a legal entity created by law, separate from its members, hence called an artificial person.

What is the primary document that defines the scope of activities and objectives of a company?

A. Articles of Association
B. Memorandum of Association ✓
C. Prospectus
D. Certificate of Incorporation

Answer: B. Memorandum of Association
The Memorandum of Association acts as the charter of the company, defining its objectives and scope of operations.

What is the key difference between the Memorandum of Association (MOA) and the Articles of Association (AOA)?

A. MOA contains internal rules, AOA contains objectives.
B. MOA defines powers, AOA defines internal management. ✓
C. MOA is optional, AOA is mandatory.
D. MOA is for private companies, AOA for public companies.

Answer: B. MOA defines powers, AOA defines internal management.
The MOA defines the company's external relationship and objectives, while the AOA governs the internal management and operations.

If a company acts beyond the objectives mentioned in its Memorandum of Association, the act is considered:

A. Ultra Vires ✓
B. Intra Vires
C. Legal
D. Voidable

Answer: A. Ultra Vires
Any act performed by the company that goes beyond the powers stated in the MOA is termed 'Ultra Vires' (beyond powers) and is null and void.

In the context of share capital, what is the significance of 'Minimum Subscription'?

A. It is the amount required for the registration fees.
B. It is the minimum amount a director must invest.
C. It is the minimum amount a company must receive from the public before allotting shares. ✓
D. It is the amount paid to the promoters.

Answer: C. It is the minimum amount a company must receive from the public before allotting shares.
Companies cannot proceed with the allotment of shares unless they receive the minimum subscription as stated in the prospectus.

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