Chapter formation-of-a-company: Formation of a Company Assertion-Reason Questions | business studies Class 11 CBSE

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 1

Logic Check

Assertion (A): Promotion is the first stage in the formation of a company. Reason (R): Promotion involves conceiving a business idea and taking initiative to form a company to exploit a business opportunity.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 2

Logic Check

Assertion (A): A private company does not need to issue a prospectus. Reason (R): A private company is prohibited from raising funds from the general public.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 3

Logic Check

Assertion (A): The Certificate of Incorporation is conclusive evidence of the legal existence of a company. Reason (R): Once the Certificate of Incorporation is issued, no one can question the validity of the company's incorporation even if there were defects in the registration process.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 4

Logic Check

Assertion (A): Promoters are the agents of the company. Reason (R): Promoters enter into contracts on behalf of the company during the promotion stage.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 5

Logic Check

Assertion (A): The objects clause is the most important clause of the Memorandum of Association. Reason (R): A company cannot legally undertake any activity that is not stated in its objects clause.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): Articles of Association are subsidiary to the Memorandum of Association. Reason (R): The Articles of Association cannot contain any provision that contradicts or exceeds the Memorandum of Association.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 7

Logic Check

Assertion (A): Underwriters must be appointed by every public company before issuing shares to the public. Reason (R): Underwriters guarantee subscription of shares not taken up by the general public.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 8

Logic Check

Assertion (A): A company becomes a legal entity on the date mentioned on the Certificate of Incorporation. Reason (R): The Certificate of Incorporation grants the company perpetual succession and the right to enter into valid contracts.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): Preliminary contracts are legally binding on the company after incorporation. Reason (R): A company can ratify preliminary contracts after coming into existence.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 10

Logic Check

Assertion (A): SEBI approval is required before a public company invites funds from the general public. Reason (R): SEBI ensures adequate disclosure of information to protect the interest of investors.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 11

Logic Check

Assertion (A): A One Person Company can have more than one member. Reason (R): The Companies Act, 2013 allows flexibility in the number of members in an OPC to encourage entrepreneurship.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 12

Logic Check

Assertion (A): The Memorandum of Association defines the relationship of the company with its members. Reason (R): The Articles of Association define the relationship of the company with outsiders.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 13

Logic Check

Assertion (A): The capital clause of the Memorandum specifies the maximum share capital a company can raise. Reason (R): A company cannot issue share capital exceeding the amount specified in its capital clause without amendment.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 14

Logic Check

Assertion (A): Economic feasibility study alone is sufficient to decide whether a business opportunity should be pursued. Reason (R): Technical and financial feasibility are less important than economic feasibility.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 15

Logic Check

Assertion (A): Promoters are entitled to claim the expenses incurred during promotion as a legal right. Reason (R): Promoters take significant risks and perform important functions to form a company.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 16

Logic Check

Assertion (A): The registered office clause in the Memorandum must state the exact address of the registered office. Reason (R): Only the name of the state is required in the Memorandum; the exact address can be notified within 30 days of incorporation.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 17

Logic Check

Assertion (A): If minimum subscription is not received, a company cannot proceed with allotment of shares. Reason (R): Companies Act and SEBI guidelines require at least 90% of the issue size to be subscribed before allotment can be made.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 18

Logic Check

Assertion (A): A Director Identification Number (DIN) must be obtained before being appointed as a director of a company. Reason (R): No individual can hold more than one DIN at any given time.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 19

Logic Check

Assertion (A): An act performed by a company beyond the scope of its Memorandum of Association can be ratified by a unanimous vote of members. Reason (R): Members have the ultimate authority to approve any act of the company.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 20

Logic Check

Assertion (A): A company is legally born on the date mentioned on the Certificate of Incorporation. Reason (R): The Registrar of Companies issues the Certificate of Incorporation after verifying all registration documents.

Reasoning Options

ByteNotes

Chapter sections

Chapter formation-of-a-company: Formation of a Company | Assertion-Reason

Assertion (A): Promotion is the first stage in the formation of a company. Reason (R): Promotion involves conceiving a business idea and taking initiative to form a company to exploit a business opportunity.

Assertion (A): A private company does not need to issue a prospectus. Reason (R): A private company is prohibited from raising funds from the general public.

Assertion (A): The Certificate of Incorporation is conclusive evidence of the legal existence of a company. Reason (R): Once the Certificate of Incorporation is issued, no one can question the validity of the company's incorporation even if there were defects in the registration process.

Assertion (A): Promoters are the agents of the company. Reason (R): Promoters enter into contracts on behalf of the company during the promotion stage.

Assertion (A): The objects clause is the most important clause of the Memorandum of Association. Reason (R): A company cannot legally undertake any activity that is not stated in its objects clause.

Assertion (A): Articles of Association are subsidiary to the Memorandum of Association. Reason (R): The Articles of Association cannot contain any provision that contradicts or exceeds the Memorandum of Association.

Assertion (A): Underwriters must be appointed by every public company before issuing shares to the public. Reason (R): Underwriters guarantee subscription of shares not taken up by the general public.

Assertion (A): A company becomes a legal entity on the date mentioned on the Certificate of Incorporation. Reason (R): The Certificate of Incorporation grants the company perpetual succession and the right to enter into valid contracts.

Assertion (A): Preliminary contracts are legally binding on the company after incorporation. Reason (R): A company can ratify preliminary contracts after coming into existence.

Assertion (A): SEBI approval is required before a public company invites funds from the general public. Reason (R): SEBI ensures adequate disclosure of information to protect the interest of investors.

Assertion (A): A One Person Company can have more than one member. Reason (R): The Companies Act, 2013 allows flexibility in the number of members in an OPC to encourage entrepreneurship.

Assertion (A): The Memorandum of Association defines the relationship of the company with its members. Reason (R): The Articles of Association define the relationship of the company with outsiders.

Assertion (A): The capital clause of the Memorandum specifies the maximum share capital a company can raise. Reason (R): A company cannot issue share capital exceeding the amount specified in its capital clause without amendment.

Assertion (A): Economic feasibility study alone is sufficient to decide whether a business opportunity should be pursued. Reason (R): Technical and financial feasibility are less important than economic feasibility.

Assertion (A): Promoters are entitled to claim the expenses incurred during promotion as a legal right. Reason (R): Promoters take significant risks and perform important functions to form a company.

Assertion (A): The registered office clause in the Memorandum must state the exact address of the registered office. Reason (R): Only the name of the state is required in the Memorandum; the exact address can be notified within 30 days of incorporation.

Assertion (A): If minimum subscription is not received, a company cannot proceed with allotment of shares. Reason (R): Companies Act and SEBI guidelines require at least 90% of the issue size to be subscribed before allotment can be made.

Assertion (A): A Director Identification Number (DIN) must be obtained before being appointed as a director of a company. Reason (R): No individual can hold more than one DIN at any given time.

Assertion (A): An act performed by a company beyond the scope of its Memorandum of Association can be ratified by a unanimous vote of members. Reason (R): Members have the ultimate authority to approve any act of the company.

Assertion (A): A company is legally born on the date mentioned on the Certificate of Incorporation. Reason (R): The Registrar of Companies issues the Certificate of Incorporation after verifying all registration documents.

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