Commerce Accountancy · Law Legal Studies

Business Organizations and Corporate Governance

1,402 Questions

Business organizations and corporate governance explore company structures, stakeholder responsibilities, and regulatory frameworks under the Companies Act. These commerce topics are essential for Chartered Accountancy, company secretary exams, and banking probationary officer assessments. Practice these questions to master corporate formation, director roles, and business ownership types.

Companies Act 2013 provisionsCorporate stakeholder rolesPrivate limited company rulesDebenture holder rightsCompany incorporation rulesState-owned enterprises

Business Organizations and Corporate Governance Questions

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Decision on which type of company should be formed depends on _______.

  1. liability

  2. control

  3. both a&b

  4. none of the above.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Liability and control are two important things which forms a platform for a company to start its operation.
Liability of shareholders, owners, directors should be fixed. 
Control of company is the most important factor after deciding over the liability.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Who stands in the fiduciary position of the company?

  1. Directors

  2. Promoters

  3. Auditors

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Certain fiduciary duties, like an agent, have been imposed on him under the Companies Act. As such he is said to be in & fiduciary position (a position full of trust and confidence) towards the company and the original allottee of shares. Consequently, a promoter must make full disclosure of the relevant facts, including any profit made.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

The values, beliefs and traditions shared by the members of a company is called _____________.

  1. Corporate culture

  2. Consortium

  3. Cross selling

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Corporate culture refers to the beliefs and behaviors that determine how a company's employees and management interact and handle outside business transactions. Often, corporate culture is implied, not expressly defined, and develops organically over time from the cumulative traits of the people the company hires. A company's culture will be reflected in its dress code, business hours, office setup, employee benefits, turnover, hiring decisions, treatment of clients, client satisfaction and every other aspect of operations.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

The company has a capacity to sue and be _______.

  1. Incorporated

  2. Sued

  3. Both (a) and (b)

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Under Companies Act, a company becomes a separate legal entity as compared to its members. The company is distinct and different from its members in law. It has its own seal and its own name, its assets and liabilities are separate and distinct from those of its members. It is capable of owning property, incurring debt, and borrowing money, employing people, having a bank account, entering into contracts and suing and being sued separately.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Which of the following are not the disadvantages of incorporation?

  1. Formalities and expenses

  2. Corporate disclosure

  3. Limited liability

  4. Both (a) and (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Limited Liability:
The liability of the members of the company is limited to contribution to the assets of the company upto the face value of shares held by him. A member is liable to pay only the uncalled money due on shares held by him. If the assets of the firm are not sufficient to pay the liabilities of the firm, the creditors can force the partners to make good the deficit from their personal assets. This cannot be done in the case of a company once the members have paid all their dues towards the shares held by them in the company
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

A company may be an ____________.

  1. Incorporated company

  2. Unincorporated company

  3. Both (a) and (b)

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
An incorporated business, or a corporation, is a separate entity from the business owner and has natural rights. Conversely, a business owner and an unincorporated business are the same, and the owner personally bears all results of the business. Unincorporated businesses are usually sole proprietor or partnership companies. The main difference between an incorporated and unincorporated business is the way owners shoulder business activities.
Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Promoter is both an agent and trustee of the proposed company.

  1. True

  2. False

  3. Partly True

  4. Partly False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

False

A promoter is neither a trustee nor an agent of the company which he promotes because there is no trust or principal in existence at the time of his efforts. But certain fiduciary duties, like an agent, have been imposed on him under the Companies Act. As such he is said to be in & fiduciary position (a position full of trust and confidence) towards the company and the original allottee of shares. Consequently, a promoter must make full disclosure of the relevant facts, including any profit made.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

A ________ is one who performs the preliminary duties necessary to bring a company into being and float it. 

  1. Auditor

  2. Promoter

  3. Director

  4. Financer
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A corporate promoter is a firm or person who does the preliminary work incidental to the formation of a company, including its promotion, incorporation, and flotation, and solicits people to invest money in the company, usually when it is being formed.

Multiple choice civics consumers' awareness consumer protection act of 1986 need for consumer awareness consumer : satisfaction and protection

According to the COPRA, the term 'Person' may includes _______________.

  1. A registered or unregistered firm

  2. A Hindu Undivided Family

  3. A Co-operative Society

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Under the Consumer Protection Act, the definition of 'person' is broad and includes firms, Hindu Undivided Families, and co-operative societies.

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

Final Accounts of a company are prepared according to _________ of companies Act, $2013$.

  1. Schedule IV

  2. Schedule II

  3. Schedule III

  4. Schedule I
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The balance sheet of a company is prepared as per the format prescribed in part I of Schedule III of the Companies Act, 2013. The Schedule III prescribes only the vertical format for presentation of financial statements. Thus, a company will now not have an option to use horizontal format for the presentation of financial statements.

Multiple choice business organisation and correspondence meaning and factors of business environment dimensions of business environment business environment and its dimensions business environment

To develop caliber professionals facilitating good corporate governance is ___________of ICSI.

  1. Mission

  2. Vision

  3. Both (A) and (B)

  4. None of above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

To develop professionals of caliber and facilitate good corporate governance is the mission of ICSI. A mission can be defined as a goal or objective of the organization. The mission defines what the organization is all about and its reason for existing.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting policies followed by organizations ______________.

  1. Can be changed every year

  2. Should be consistently followed from year to year

  3. Can be changed after 5 year

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The principle of consistency in accounting requires that policies be applied consistently from year to year to ensure that financial statements are comparable.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting Standard Board was set up by __________________.

  1. Government of India

  2. Institute of chartered accountants of India

  3. Institute of cost and works accountants of India

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In India, Standards of Accounting is issued by the Institute of Chartered Accountants of India (ICAI). 

The Council of the Institute of Chartered Accountants of India constituted Accounting Standards Board (ASB) on 21st April, 1977 recognising the need for Accounting Standards in India.

The Council of the Institute of Chartered Accountants of India has so far issued thirty two accounting standards.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Accounting Standard Board was set up by __________.

  1. Institute of Chartered Accountants of India

  2. Institute of Cost and Works Accountants of India

  3. Institute of Company Secretaries of India

  4. Government of India
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Institute of Chartered Accountants of India (ICAI) constituted the Accounting Standards Board (ASB) on 21st April, 1977 ) to harmonise the diverse accounting policies and practices in use in India. ASB of the ICAI has been issuing accounting standards. 

Since then, it has issued 32 Accounting Standards.

Multiple choice book keeping and accountancy accounting standards: concept and objectives accounting standards accounting standards (as) and ifrs accounting systems and reporting standards

Statements of Standard Accounting Practice and Financial Reporting Standards should be complied with when preparing the final accounts of a limited company because __________.

  1. The Companies Act $1985$ demands that they are used

  2. The auditors will insist they are followed

  3. The directors are under a legal obligation to ensure they are followed

  4. They ensure that the accounts present a 'true and fair view'
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The primary objective of complying with accounting standards is to ensure that financial statements provide a true and fair view of the company's financial position.