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Public Company Formation and Liability Concepts

The document is a sample paper consisting of various questions related to business structures, including public companies, sole proprietorships, partnerships, and legal liabilities. It covers topics such as the formation of companies, limited liability, mutual agency in partnerships, and the implications of debts in different business forms. Additionally, it presents a case study involving a sole proprietor facing financial difficulties and the legal consequences of his business decisions.

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Brijpal Singh
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5 views2 pages

Public Company Formation and Liability Concepts

The document is a sample paper consisting of various questions related to business structures, including public companies, sole proprietorships, partnerships, and legal liabilities. It covers topics such as the formation of companies, limited liability, mutual agency in partnerships, and the implications of debts in different business forms. Additionally, it presents a case study involving a sole proprietor facing financial difficulties and the legal consequences of his business decisions.

Uploaded by

Brijpal Singh
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

SAMPLE PAPER - 2

Q 1. Stages in the formation of a Public Company are in the following order: [1]

(a) Promotion, commencement, incorporation, capital subscription

(b) Incorporation, capital subscription, commencement, promotion

(c) Capital subscription, promotion, Incorporation, commencement

(d) Promotion, incorporation, capital subscription, commencement

Q 2 Statement: The limited liability associated with the public limited company results from companies
as legal entities separate from their owns.

Statement II: The limited liability associated with the public limited company result from companies as
Company can borrow funds from banks easily. (1)

(a) Statement I is correct

(b) Statement. II is correct

(c) Statement and II both are correct

(d) Statement I and il both are incorrect

Q 3. Who is called Parent of Company? [1]

(a) Director

(b) Promoter

(c) Registrar

(d) Shareholder

Q 4. A sole proprietorship is a business where all of the following are true except: [1]

(a) The owner has complete control over decision making.

(b) Profits entirely belong to the owner.

(c) The proprietor is liable for losses to the extent of his or her personal assets.

(d) The proprietor can sell his share in business to raise fund.

Q 5. Who among the following can only be beneficiary of business and does not have unlimited liability?
. [1]
(a) Secret Partner

(b) Minor Partner

(c) Active Partner

(d) Sleeping Partner

Q6. Give Three points of difference between Patnership and company. [3]

Q 7. What do you mean by Mutual Agency in a partership? [3]

Q 8. Describe the meaning and three features of Joint Hindu Family [4]

Q9. The business assets of a firm are worth ₹70,000 but the debts remain unpaid are worth 1,00,000.
What course of action can the creditors take in the following cases? [4]

(a) The organisation in sole proprietorship firm.

(b) The organisation in partnership firm with A and B, two partners sharing profits equally

Q 10. Rajiv is the sole owner of a shirt manufacturing factory. He took loan of 30 lac from ain finance
company for expansion of his business. In beginning business was running well but later on he started
facing losses and due to continuous losses he was not able to repay the loan. After receiving many
reminders from finance company, Rajiv planned to close the business. He sold all his machines and other
assets and collected 20 lac. He requested the finance Co. to settle the accounts by taking 20 lac. The
finance company refused and planned to file a case against him in court. In court, Mr. Rajiv gave the
argument that he has sold all his business assets and loan was taken by him for business and not for
personal use. So, finance company must settle the account by taking 20 lac. The court did not agree with
the argument of Rajiv and gave the decision in favour of finance company and ordered Rajiv to pay full
loan amount by selling his personal asset.

(a) Name the form of business carried by Rajiv.

(b) State the feature of sole Proprietorship which is kept in mind by court while taking decision.

(c) Is Rajiv's argument of saying he and business are separate entity correct? [6]

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