Check the below NCERT MCQ Questions for Class 11 Business Studies Chapter 7 Formation of a Company with Answers Pdf free download. MCQ Questions for Class 11 Business Studies with Answers were prepared based on the latest exam pattern. We have provided Formation of a Company Class 11 Business Studies MCQs Questions with Answers to help students understand the concept very well.

Formation of a Company Class 11 MCQs Questions with Answers

Question 1.
Preliminary Contracts are
(a) binding on the Company
(b) binding on the Company, if ratified after incorporation
(c) binding on the Company, after incorporation
(d) not binding on the Company

Answer

Answer: (d) Not binding on the Company


Question 2.
Stages in the formation of a public company are in the following order
(a) Promotion, Commencement of Business, Incorporation, Capital Subscription
(b) Incorporation, Capital Subscription. Commencement of Business, Promotion
(c) Promotion, Incorporation, Capital Subscription, Commencement of Business
(d) Capital Subscription, Promotion, Incorporation, Commencement of Business

Answer

Answer: (c) Promotion, Incorporation, Capital Subscription, Commencement of Business


Question 3.
A proposed name of Company is considered undesirable if
(a) It is identical with the name of an existing company
(b) It resembles closely with the name of an existing company
(c) It is an emblem of Government of India, United Nations etc.
(d) In case of any of the above

Answer

Answer: (d) In case of any of the above


Question 4.
Minimum number of members to form a public company is
(a) 5
(b) 7
(c) 12
(d) 21

Answer

Answer: (b) 7


Question 5.
The company needs to obtain prior permision from central government when it changes the address of its registered office from
(a) one city to another city
(b) with in the same city
(c) one state to another
(d) one country to another country

Answer

Answer: (c) one state to another


Question 6.
A person cannot hold directorship in more than ____ public companies
(a) 3
(b) 10
(c) 20
(d) 7

Answer

Answer: (c) 20


Question 7.
Powers, rights, remuneration, qualification and duties of directors are discussed clearly in
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) none of the above

Answer

Answer: (b) Articles of Association


Question 8.
__________ means the total amount of called up capital on the shares issued and subscribed by the shareholders on capital account.
(a) Called-up capital
(b) subscribed capital
(c) nominal capital
(d) Paid-up capital

Answer

Answer: (a) Called-up capital


Question 9.
_____________ share capital has priority both in repayment of dividend as well as capital.
(a) Equity
(b) non preference
(c) Preference
(d) all of the above

Answer

Answer: (c) Preference


Question 10.
Par value of shares means the __________ value of the shares
(a) Actual
(b) face
(c) Market
(d) dividend

Answer

Answer: (b) face


Question 11.
The Prospectus must be issued to the public within ______________ days of its date
(a) 30
(b) 60
(c) 90
(d) 100

Answer

Answer: (c) 90


Question 12.
A copy of the ________________ must accompany each from of application for shares offered to the public.
(a) Memorandum of association
(b) Prospectus
(c) Articles of association
(d) None of the above

Answer

Answer: (b) Prospectus


Question 13.
___________ cannot give invitation to the public to subscribe for any shares in or debentures of the company
(a) Subsidiary company
(b) Statutory Company
(c) Private company
(d) Registered company

Answer

Answer: (c) Private company


Question 14.
A private company means a company which has a minimum paid up capital of Rs.————-
(a) 1,00,000
(b) 5,00,000
(c) 50,00,000
(d) none of the above

Answer

Answer: (a) 1,00,000


Question 15.
The shares of a _______________ company can be freely transferable
(a) Private ltd
(b) Public ltd
(c) Partnership
(d) all of the above

Answer

Answer: (b) Public ltd


Question 16.
“Men may come and men may go but the company exist”- this explains which characteristics of the company as per companies Act 1956
(a) Separate legal entity
(b) Perpetual Succession
(c) Capacity to sue
(d) None of the above

Answer

Answer: (b) Perpetual Succession


Question 17.
Which of the following clause of Memorandum of Association cannot be altered
(a) Name
(b) Object
(c) situation
(d) liability

Answer

Answer: (d) liability


Question 18.
Which of the following is not a clause of memorandum of association
(a) situation
(b) capital
(c) subscription
(d) directors

Answer

Answer: (d) directors


Question 19.
The company will be considered as separate person and different from its members from the date (when the) _____________
(a) start of business
(b) Apply for registration
(c) receive incorporation certificate
(d) mentioned in certificate

Answer

Answer: (d) mentioned in certificate


Question 20.
The certificate of capital will be issued by
(a) Registrar of companies Act
(b) Controller of companies Act.
(c) Registrar of capital issues
(d) controller of capital issues

Answer

Answer: (d) controller of capital issues


Question 21.
A statement of nominal capital must be given at the time of incorporation by the company when the share capital is less than
(a) 50 Lakh
(b) 1 crore
(c) 10 Lakh
(d) 25 Lakh

Answer

Answer: (d) 25 Lakh


Question 22.
The address of the registered office of the company must be notified to the registrar within _________ days of registration, if it is not done at the time of incorporation
(a) 15
(b) 30
(c) 60
(d) 45

Answer

Answer: (b) 30


Question 23.
The application for registration of a company should be presented to the _______________ of the state appointed under Companies Act 1956
(a) Controller
(b) registrar
(c) Governor
(d) registration officer

Answer

Answer: (b) registrar


Question 24.
Minimum number of members required to apply for incorporation certificate in a public ltd company is
(a) 3
(b) 2
(c) 7
(d) 50

Answer

Answer: (c) 7


Question 25.
Preliminary Contracts are signed
(a) Before the incorporation
(b) After incorporation but before capital subscription
(c) After incorporation but before commencement of business
(d) After commencement of business

Answer

Answer: (a) Before the incorporation


Question 26.
A prospectus is issued by
(a) A private company
(b) A public company seeking investment from public
(c) A public enterprise
(d) A public company

Answer

Answer: (b) A public company seeking investment from public


Question 27.
Application for approval of name of a company is to be made to
(a) SEBI
(b) Registrar of Companies
(c) Government of India
(d) Government of the State in which Company is to be registered

Answer

Answer: (b) Registrar of Companies


Question 28.
Minimum number of members to form a private company is
(a) 2
(b) 3
(c) 5
(d) 7

Answer

Answer: (a) 2


Question 29.
Private company prohibits any invitation or acceptance of deposits from persons other than its ___________
(a) Members
(b) directors
(c) Partners
(d) banks

Answer

Answer: (a) Members


Question 30.
A company is known as the _______company of another company if it has control over that other company.
(a) subsidiary
(b) holding
(c) controlling
(d) statutory

Answer

Answer: (b) holding


Question 31.
For example Par value is Rs10 and it is issued at Rs15 then Rs5 is the ___________ amount
(a) Profit
(b) Market value
(c) dividend
(d) premium

Answer

Answer: (d) premium


Question 32.
__________ means the total amount of called up share capital which is actually paid to the company by the members
(a) nominal capital
(b) reserve capital
(c) called up capital
(d) Paid-up capital

Answer

Answer: (d) Paid-up capital


Question 33.
The dividend payable to ___________ share holders is payable on fixed figure or percent
(a) Equity
(b) non preference
(c) Preference
(d) all of the above

Answer

Answer: (c) Preference


Question 34.
_______________ capital means the sum mentioned in the capital clause of Memorandum of Association
(a) Full capital
(b) Maximum capital
(c) share capital
(d) Nominal Capital

Answer

Answer: (d) Nominal Capital


Question 35.
If the company can make arrangements for raising the capital privately so that pubic appeal is unnecessary, the company is required to prepare a _________________
(a) Prospectus
(b) statement in lieu of Prospectus
(c) certificate of Prospectus
(d) none of the above

Answer

Answer: (b) statement in lieu of Prospectus


Question 36.
A Government Company means any company in which not less than 51% of the paid-up share capital is held by
(a) Central Government
(b) State government
(c) Both a & b
(d) Neither a nor b

Answer

Answer: (c) Both a & b


Question 37.
A private company means a company which has a minimum paid up capital of Rs.————-
(a) 1,00,000
(b) 5,00,000
(c) 50,00,000
(d) none of the above

Answer

Answer: (b) 5,00,000


Question 38.
_________ are the company created by special act of the legislature
(a) Registered company
(b) Public Ltd Company
(c) Private ltd company
(d) Statutory company

Answer

Answer: (d) Statutory company


Question 39.
The liability of the members of the company can be limited by
(a) Share
(b) Guarantee
(c) Both a & b
(d) Neither a nor b

Answer

Answer: (c) Both a & b


Question 40.
When the registered office of a company is changed within a city then it has to be intimated to the registrar within ________ days of such change
(a) 60
(b) 45
(c) 30
(d) 7

Answer

Answer: (c) 30


Question 41.
If a company is instructed to change its name which resembles the name of an existing company then the company can change the name by
(a) Passing a special resolution
(b) obtaining permission from central government
(c) Passing an ordinary resolution
(d) Both a & b

Answer

Answer: (c) Passing an ordinary resolution


Question 42.
Number of clauses in Memorandum of Association is
(a) 5
(b) 6
(c) 7
(d) 8

Answer

Answer: (b) 6


Question 43.
The articles of association needs to be signed by
(a) all proposed directors
(b) registrar
(c) subscribers of memorandum
(d) none of the above

Answer

Answer: (c) subscribers of memorandum


Question 44.
If the proposed nominal capital is more than 25 lakh at the time of incorporation then the company needs to submit ________________ along with the application
(a) statement of capital
(b) certificate of incorporation
(c) certificate of capital
(d) certificate of incorporation

Answer

Answer: (c) certificate of capital


Question 45.
Among the following which documents are not mandatory to be submitted to the registrar along with incorporation application by a private company.
(a) Address of Registered office & undertaking
(b) Undertaking and statement of capital
(c) statement of capital & list of directors
(d) list of directors and statement of capital

Answer

Answer: (a) Address of Registered office & undertaking


Question 46.
Number of documents to be submitted, by a public ltd company, to the registrar while applying for incorporation of the company is
(a) 3
(b) 2
(c) 7
(d) 50

Answer

Answer: (c) 7


Question 47.
The application for registration of a company should be presented to the registrar of the state in which the _______________ of the company is to be situated
(a) Manufacturing plant
(b) first branch
(c) business office
(d) any of the above.

Answer

Answer: (c) business office


Question 48.
Section 12 of Companies Act 1956, deals with
(a) Incorporation
(b) Share capital
(c) Number of Directors
(d) Share holders

Answer

Answer: (a) Incorporation


True/False Questions

1. It is necessary to get every company incorporated, whether private or public.

Answer

Answer: True


2. Statement in lieu of prospectus can be filed by a public company going for a public issue.

Answer

Answer: True


3. A private company can commence business after incorporation.

Answer

Answer: True


4. Experts who help promoters in the promotion of a company are also called promoters.

Answer

Answer: False


5. A company can ratify preliminary contracts after incorporation.

Answer

Answer: False


6. If a company is registered on the basis of fictitious names, its incorporation is invalid.

Answer

Answer: False


7. ‘Articles of Association’ is the main document of a company.

Answer

Answer: False


8. Every company must file Articles of Association.

Answer

Answer: Flase


9. A provisional contract is signed by promoters before the incorporation of the company.

Answer

Answer: False


10. If a company suffers heavy issues and its assets are not enough to pay off its liabilities, the balance can be recovered from the private assets of its members.

Answer

Answer: False


One Mark Questions

1. Mention minimum and maximum number if members in private company. Minimum of two members and maximum is

Answer

Answer: fifty


2. Mention minimum and maximum number of members in public company.

Answer

Answer: Minimum of seven members and maximum is unlimited.


3. Which type of company issue prospectus?

Answer

Answer: Public Company issue prospectus.


4. Is it necessary to get company incorporated?

Answer

Answer: Yes.


5. At what stage private company a can commence its business.

Answer

Answer: A private company can commence its business after getting incorporation certificate.


6. ‘ Which is the main document of Joint Stock Company?

Answer

Answer: Memorandum of Association and Article of Association are the main documents of Joint Stock Company.


7. Name two stages in formation of company.

Answer

Answer: (a) Promotion
(b) Incorporation


8. Mention two certificates required for Joint Stock Company.

Answer

Answer: (a) Incorporation certificate
(b) Commencement of Business Certificate.


9. What is Article of association?

Answer

Answer: Article of association are the rules regarding internal management of a company.


10. Mention any one type of Joint Stock Company.

Answer

Answer: Public company is one of the type of Joint Stock Company


11. Name the company in which shares are freely transferable.

Answer

Answer: Public company shares are freely transferable.


12. State the minimum capital required in public companies.

Answer

Answer: Public companies should have a minimum Paid up capital of Rs.5,00,000.


13 State the minimum capital required in private companies.

Answer

Answer: Private companies should have a minimum Paid up capital of Rs. 1,00,000.


14. Mention any one function of promoters.

Answer

Answer: Identification of Business Opportunity


15. What are qualification shares?

Answer

Answer: It refers to the requirement that a member of the board must hold a vested interest in the operation of the enterprise in the form of company stock.


16. At what stage public company can start its business?

Answer

Answer: After getting commencement of business certificate a public company can start its business


17. Name the act which governs Joint Stock Companies in India.

Answer

Answer: Company act of 1956.


18. How many members have to sign the Memorandum of Association in public limited companies?

Answer

Answer: At least 7 members have to sign the Memorandum of Association in public limited companies


19. How many members have to sign the Memorandum of Association in private limited companies?

Answer

Answer: At least 2 members have to sign the Memorandum of Association in public limited companies


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