Accountancy MCQs
Topic Notes: Accountancy
General Description
Plato
- Biography: Ancient Greek philosopher (427–347 BCE), student of Socrates and teacher of Aristotle, founder of the Academy in Athens.
- Important Ideas:
- Theory of Forms
- Philosopher-King
- Ideal State
21
What term describes the process of identifying business opportunities and organizing the necessary resources, funds, and management to establish a new venture?
Answer:
Promotion
Promotion is the initial stage in the formation of a company. It involves the discovery of a business idea, conducting feasibility studies, and assembling the necessary capital, property, and management team required to bring the business into existence before it is officially incorporated.
22
Which corporate document outlines the internal regulations and management procedures of a business entity?
Answer:
Articles of association
The Articles of Association serve as the internal rulebook for a company. While the Memorandum of Association defines the company's external relationship and objectives, the Articles of Association detail the specific bylaws, procedures, and governance structures required for the day-to-day internal management and operations of the organization.
23
Which type of company is legally required to prepare and file a statutory report?
Answer:
Public Limited Companies
Under the Companies Act, public limited companies are mandated to hold a statutory meeting and file a statutory report with the Registrar of Companies. This requirement ensures transparency and provides shareholders with essential information regarding the company's formation, capital structure, and initial business activities. Private companies are generally exempt from this specific procedural requirement.
24
Which business structure is recognized as a separate legal entity where total capital is divided into multiple shares?
Answer:
Company
A company, particularly a corporation, is a legal entity distinct from its owners. This structure allows for the division of ownership into shares, which can be transferred or traded. This separation provides limited liability to shareholders and allows the entity to enter into contracts, sue, and be sued in its own name, independent of the individuals who own it.
25
Which document is considered the primary constitutional charter of a company?
Answer:
Memorandum of association
The Memorandum of Association (MOA) is the fundamental document that defines the company's name, registered office, objectives, and the scope of its activities. It establishes the company's relationship with the outside world and acts as the foundation upon which the company is built.
26
Which of the following is NOT a characteristic feature of a corporate company?
Answer:
Affected by insolvency of an individual member
A company is a separate legal entity with perpetual succession. This means that the death, retirement, or insolvency of an individual shareholder or member does not affect the existence or continuity of the company. The company continues to operate independently of its members, distinguishing it from a partnership or sole proprietorship where such events might trigger dissolution.