Joint Stock Company Interview Questions & Answers

Question 1. What Is A Joint Stock Company?

Answer :

A company is an artificial person created by law having separate legal entity with a permanent existence and common seal.

Question 2. What Do You Mean By Common Seal Of A Joint Stock Company?

Answer :

A company lives its own name but it cannot sign its documents like natural person so a seal with the name of company is used instead of signatures.

Question 3. Under Which Ordinance Company Is Formed?

Answer :

Joint stock company is formed under the companies ordinance 1984.

Question 4. What Is The Liability Of Share Holders In Joint Stock Company?

Answer :

liability fo share holders in Joint stock company is limited upto the value of shares purchased.

Question 5. Can Share Holders Transfer Their Shares Of Joint Stock Company?

Answer :

Yes, they can transfer their shares though stock exchange.

Question 6. Is There Any Restriction On Maximum Number Of Share Holders In Public Limited Company?

Answer :

There is no limit on maximum number of share holders in Public limited company.

Question 7. Give Any Three Characteristics Of A Company?

Answer :

1. An artificial person
2. Separate legal entity
3. Limited liability.

Question 8. Give Any Three Advantages Of Joint Stock Company?

Answer :

1. Large capital
2. Limited liability
3. Specialization

Question 9. Give Any Three Disadvantages Of Joint Stock Company?

Answer :

1. Double Taxation
2. Complex Formation
3. Lack of secrecy

Question 10. Classify The Company According To Incorporation?

Answer :

1. Chartered company
2. Statutory company
3. Registered company

Question 11. Classify Company With Respect To Liability?

Answer :

1. Company limited by shares
2. Company limited by guarantee
3. Unlimited company

Question 12. Write Any Three Kinds Of Company According To Ownership?

Answer :

1. Public company
2. Private company
3. Subsidiary company

Question 13. How Many Are The Types Of Public Limited Company?

Answer :

1. Company limited by guarantee
2. Company limited by shares.

Question 14. Define Memorandum Of Association?

Answer :

A document which set out the constitution of the company and as such the foundation upon which the structure of the company is based is called memorandum Association.

Question 15. Define Articles Of Association?

Answer :

Rules and regulations subordinate to memorandum of association which deals with the internal management of company is called Articles of Association.

Question 16. What Do You Know About Promoters?

Answer :

The persons who undertake to form a company with reference to given objects and set its going and takes the necessary steps to accomplish these purposes are called promoters.

Question 17. What Is Incorporation?

Answer :

To register company with the register of company by promoters according to company ordinance 1984 is called Incorporation.

Question 18. What Is Incorporation Certificate?

Answer :

A certificate issued by a registrar of a company after registering the company according to company ordinance 1984 to promoters of company is called Incorporation Certificate.

Question 19. What Is The Major Difference Between The Memorandum Of Association And The Articles Of Association?

Answer :

Memorandum of Association is a primary document and Articles of Association is a subsidiary document.

Question 20. What Do You Know About Preliminary Expenses?

Answer :

Expenses which are incurred by the promoters in the process of formation of a company are called preliminary expenses.

Question 21. What Is Statutory Company?

Answer :

The company which has more than 50% shares of another company is called holding company.

Question 22. What Is Holding Company?

Answer :

A company which has more than 50% shares of another company is called holding company.

Question 23. What Is Subsidiary Company?

Answer :

A company whose more than 50% shares are in the hand of any other company is called Subsidiary company.

Question 24. What Is Chartered Company?

Answer :

A company which is formed by the royal order is called chartered company.

Question 25. Name Any One Major Difference Between The Public Company And Private Company?

Answer :

A public company can issue prospectors to invite public for purchase of shares while private company cannot issue prospectus.

Question 26. What Is Unlimited Company?

Answer :

A company in which the liability of its shareholders is unlimited called unlimited company.

Question 27. What Is Company Limited By Guarantee?

Answer :

A Company in which each shareholder provides a guarantee to contribute a specified amount to company in the result of its being wound up due to certain circumstances.

Question 28. What Is Company Limitted By Shares?

Answer :

A company in which the liability of its shareholders is limited to the extent of value of their shares is called company limited by shares.

Question 29. What Is Registered Company? Give Its Two Kinds?

Answer :

A company which is incorporated under company ordinance 1984 called registered company.

1. Unlimited company
2. Company limited by shares.

Question 30. Give Any Three Characteristics Of Private Limited Company?

Answer :

1. It cannot transfer its shares.
2. Restricted number of shareholders.

Question 31. What Is Prospectus?

Answer :

A document published by the promoters after the formation of a company to invite the public to buy shares of the company is called prospectus.

Question 32. What Is Statement In Lieu Of Prospectus?

Answer :

If a Public company cannot deposit prospectus due to certain reasons in the registrar office, for time being a statement like prospectus deposited in registrar office, is called statement in lieu of prospectus.

Question 33. What Is Capital Of A Company?

Answer :

The amount invested by the shareholders in a company is called capital.

Question 34. What Is Authorized Capital?

Answer :

A maximum amount of capital about which a company is authorized to issue is called authorized capital.

Question 35. What Is Issued Capital?

Answer :

A part of authorized capital for which people are invited to purchase the shares is called issued capital.

Question 36. What Is Paid Up Capital?

Answer :

Amount of capital which is subscribed by people against issued capital is called paid up capital.

Question 37. What Is A Share?

Answer :

An authorized capital of a company is divided into equal units which are called shares A single unit is called share.Or A certificate issued by the company against some subscription which gives the right and profit to its holder is called share.

Question 38. What Is Share Certificate?

Answer :

Documents of title of a share held in a company by the shareholder is called share certificate.

Question 39. What Is Dividend?

Answer :

A profit of a company which is distributed among shareholders is called dividend.

Question 40. Who Is Underwriter?

Answer :

A person (Institution) who promises to promoters to buy the remaining shares of a company that are not bought by general public is called underwriter.

Question 41. What Is Underwriting Commission?

Answer :

A commission which is paid to underwriters is called underwriting commission.

Question 42. What Do You Know About Minimum Subscription?

Answer :

The amount fixed by the Directors and mentioned in the Articles of Association and prospectus which must be subscribed by the public before allotment of shares is called minimum subscription.

Question 43. Name Any Two Types Of Shares?

Answer :

• Ordinary shares
• Preference shares.

Question 44. Define Preference Shares?

Answer :

Those shares of a company on which fixed rate of dividend is paid before ordinary shares.

Question 45. When Shares Applications Are Received, What Entry Will Be Passed?

Answer :

Bank a/cTo Share applications A/c

Question 46. When Extra Shares Applications Are Refunded, What Entry Will Be Passed?

Answer :

Share applications a/cTo Bank a/c

Question 47. Name Different Terms Of Issue Of Shares?

Answer :

1. At par                    
2. At premium                      
3. At discount

Question 48. When Shares Are Allotted To Shareholders At Par What Entry Will Be Passed?

Answer :

Share application s a/cTo share capital a/c

Question 49. What Entry Will Be Passed If Shares Are Issued At Premium?

Answer :

Share application a/cTo Share capital a/c To Premium on issue of shares a/c.

Question 50. What Entry Will Be Passed, If Shares Are Issued At Discount?

Answer :

Share applications a/Discount on issue of shares a/c To Share capital a/c.

Question 51. What Do You Know About The Term At Par In Issuance Shares?

Answer :

If the share is issued at actual price it means at price equal to the nominal value for example share of Rs. 10 is issued at Rs. 10.

Question 52. What Is Meant By At Premium In Issuance Of Shares?

Answer :

If the share is issued at a price above than its nominal value such issued price is called at premium, for example, share of Rs. 10 is issued at Rs. 15.

Question 53. What Is Meant By At Discount In Issuance Of Shares?

Answer :

If the share is issued at a price below the nominal value of face value of shares.

For example share of Rs. 10 is issued at Rs. 9.

Question 54. What Entry Will Be Passed When Shares Are Issued Other Than Cash?

Answer :

Vendors a/c To Share capital a/c

Question 55. What Entry Will Be Passed For Writing Off The Discount On Issue Of Shares?

Answer :

Share Premium a/c or reserves a/cTo discount on issue of shares a/c.

Question 56. What Is Debenture?

Answer :

A certificate issued to creditors (Investors) by the company for security of debts under the seal of a company is called debenture.

Question 57. Names Different Types Of Debentures According To Security?

Answer :

1. Naked debentures
2. Mortgage debentures.

Question 58. Define Naked Debentures?

Answer :

Debentures which are secured against the charge on assets of company are called mortgage Debentures.

Question 59. Define Mortgage Debentures?

Answer :

Debentures which are secured against the charge on assets of company are called mortgage Debentures.

Question 60. Name Different Kinds Of Debentures According To Redemption Point Of View?

Answer :

1. Redeemable debentures
2. Irredeemable debentures

Question 61. What Are Redeemable Debentures.?

Answer :

debentures which are redeemed to company by debenture holders after a specified period of time against payment are called Redeemable Debentures.

Question 62. What Are Irredeemable Debentures.?

Answer :

Debentures which are not redeemed during the life of a company are called irredeemable debentures.

Question 63. Name Different Kinds Of Debentures According To Conversion?

Answer :

1. Convertible debentures.
2. Non Convertible debentures.

Question 64. Define Convertible Debentures?

Answer :

Debentures which can be converted into shares after fulfillment of certain conditions are called convertible Debentures.

Question 65. Define Non Convertible Debentures?

Answer :

Debentures which cannot be converted into shares during the life of a company are called Non convertible debentures.

Question 66. Write Different Kinds Of Debentures According To Recording Point Of View?

Answer :

1. Bearer Debentures
2. Registered Debentures

Question 67. What Are Bearer Debentures?

Answer :

The debentures which are payable to bearer are called bearer debentures.

Question 68. What Are Registered Debentures?

Answer :

The debentures in which name of their holders are registered in the books of a company are called registered debentures.

Question 69. What Entry Will Be Passed, When Debentures Are Issued At Par?

Answer :

Bank a/cTo Debentures a/c

Question 70. What Entry Will Be Passed When Debentures Are Issued At Premium?

Answer :

Bank a/cTo Debentures a/c To Debenture Premium a/c.

Question 71. Pass The Journal Entry Of Debentures Are Issued At Discount?

Answer :

Discount on issue of debentures a/cTo Debentures a/c.

Question 72. Pass The Journal Entry Of Debentures Are Issued Other Than Cash?

Answer :

Vendors a/cTo Debentures a/c.

Question 73. If Debentures Are Issued At Par And Redeemable At Par What Journal Entry Should Be Passed?

Answer :

Bank a/cTo Debentures a/c.

Question 74. What Is Under Subscription?

Answer :

If a company receives less applications for issue capital, this situation represents under subscription.

Question 75. What Method Is Adopted For Allotment Of Shares By Company To Surplus / Over Shares Applications Submitted By Public?

Answer :

Company will refund these applications along with their application money to applicants.

Question 76. What Is Debenture Stock?

Answer :

A converted debenture into share represents debentures stock.