Chapter Exam

Unit 3: Formation of Company as per Companies Act 2013 — Online MCQ Test

Q: Who is known as the person who takes initiative to form a company and conceives the idea of the business?

Answer: A. Promoter — A promoter is the person who conceives the idea of forming a company and takes steps to bring it into existence.

Q: The document that contains the fundamental conditions on which a company is incorporated is called:

Answer: B. Memorandum of Association — The Memorandum of Association states the basic constitution and scope of a company.

Q: Which document lays down the internal rules and regulations for the management of a company?

Answer: B. Articles of Association — The Articles of Association contain rules regarding internal management, duties, and powers within the company.

COMMERCE & ACCOUNTANCY · CLASS 11 INTERMEDIATE 1 YEAR · Telangana State Board

Practice Unit 3: Formation of Company as per Companies Act 2013 with a free chapter-wise online MCQ test for Telangana State Board CLASS 11 INTERMEDIATE 1 YEAR COMMERCE & ACCOUNTANCY. This chapter covers: Focusing on corporate legal requirements this chapter covers promotion stage incorporation steps capital subscription promoter roles Memorandum of Association Articles of Associati.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Unit 3: Formation of Company as per Companies Act 2013 — Important Questions & Answers (FAQ)

Frequently asked questions from Telangana State Board CLASS 11 INTERMEDIATE 1 YEAR COMMERCE & ACCOUNTANCY — Unit 3: Formation of Company as per Companies Act 2013, with answers and explanations. These are sample questions; the exam has its own separate question set.

Who is known as the person who takes initiative to form a company and conceives the idea of the business?

A. Promoter ✓
B. Director
C. Shareholder
D. Auditor

Answer: A. Promoter
A promoter is the person who conceives the idea of forming a company and takes steps to bring it into existence.

The document that contains the fundamental conditions on which a company is incorporated is called:

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

Answer: B. Memorandum of Association
The Memorandum of Association states the basic constitution and scope of a company.

Which document lays down the internal rules and regulations for the management of a company?

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

Answer: B. Articles of Association
The Articles of Association contain rules regarding internal management, duties, and powers within the company.

A company issues a prospectus with misleading information. Which outcome is most likely?

A. It increases the company’s legal immunity
B. Investors may be induced to subscribe on false grounds ✓
C. The company automatically becomes a partnership
D. The Memorandum becomes invalid immediately

Answer: B. Investors may be induced to subscribe on false grounds
Misleading statements in a prospectus can affect investor decisions and may lead to legal consequences.

Which of the following is the best reason why Articles of Association are subordinate to the Memorandum of Association?

A. Articles can override the company's basic objects
B. Memorandum defines the external framework, while Articles govern internal management ✓
C. Articles are issued by the government, but Memorandum is private
D. Memorandum is optional, but Articles are compulsory

Answer: B. Memorandum defines the external framework, while Articles govern internal management
The Memorandum sets the company's fundamental scope and constitution, while Articles regulate internal affairs and must remain within the Memorandum.

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