Company Accounts and Shares MCQs 2026

A rights issue offers new shares to existing shareholders

1. Afree of charge✓
2. Busually at a price below market, in proportion to their holdings✓
3. Cat par to the general public✓
4. Donly to directors✓

The primary advantage of the company form of organization over a partnership is

1. Aunlimited liability✓
2. Bthe absence of any regulation✓
3. Chaving fewer owners✓
4. Dlimited liability and a separate perpetual legal existence✓

The liability of a shareholder who has fully paid for his shares is

1. Anil (no further liability)✓
2. Bunlimited✓
3. Cequal to the company's debts✓
4. Dthe face value again✓

A capital reserve arising on the issue of shares at a premium is shown under

1. Acurrent liabilities✓
2. Bfixed assets✓
3. Cshareholders' equity (reserves)✓
4. Dcurrent assets✓

Which of the following can a company generally NOT do

1. Aissue shares✓
2. Bpay dividends from profits✓
3. Cissue debentures✓
4. Dissue shares at a discount freely without restriction✓

The buy-back of its own shares by a company results in

1. Aan increase in shares outstanding✓
2. Ba reduction in the company's share capital and shares outstanding✓
3. Cnew capital being raised✓
4. Da bonus issue✓

Dividends on equity shares are usually expressed as

1. Aa fixed rupee amount only✓
2. Binterest✓
3. Ca service fee✓
4. Da percentage of par value or an amount per share✓

The called-up capital is the part of the issued capital that the company has

1. Areceived in full✓
2. Bdemanded (called) from shareholders to pay✓
3. Ckept in reserve✓
4. Dforfeited✓

A bonus issue results in

1. Aan inflow of cash to the company✓
2. Ba reduction in total equity✓
3. Ccapitalization of reserves into share capital✓
4. Dthe creation of a liability✓

Retained earnings appearing in a company's balance sheet represent

1. Aaccumulated profits not yet distributed as dividends✓
2. Bshare capital✓
3. Cloans✓
4. Dgoodwill✓

A company limited by shares means the liability of members is limited to

1. Athe amount unpaid on their shares✓
2. Btheir personal assets✓
3. Czero in all cases✓
4. Dthe company's total debts✓

The face (par) value of a share is its

1. Amarket price✓
2. Bissue price✓
3. Cnominal value stated in the memorandum✓
4. Dbook value✓

Sweat equity shares are issued to

1. Athe general public✓
2. Bdirectors or employees for their know-how or services✓
3. Cdebenture holders✓
4. Dcreditors✓

When shares are issued at a discount, the discount is

1. Aa profit✓
2. Badded to capital✓
3. Ca reserve✓
4. Da loss to the company (largely prohibited under the Companies Act)✓

The allotment of shares is the process of

1. Aforfeiting shares✓
2. Baccepting applications and assigning shares to applicants✓
3. Cpaying dividends✓
4. Dredeeming debentures✓

Underwriting of shares means

1. Aauditing the accounts✓
2. Bvaluing goodwill✓
3. Cselling fixed assets✓
4. Dan arrangement whereby underwriters agree to buy shares not taken up by the public✓

Minimum subscription is the minimum amount that must be raised before a company can

1. Aproceed to allot shares✓
2. Bdeclare a dividend✓
3. Cforfeit shares✓
4. Dappoint auditors✓

Redeemable preference shares are shares that

1. Acan never be repaid✓
2. Bcarry voting rights only✓
3. Ccan be bought back (repaid) by the company after a period✓
4. Dare issued free of cost✓

The transfer of shares from a deceased or insolvent member's estate by operation of law is called

1. Aforfeiture✓
2. Ballotment✓
3. Ctransmission✓
4. Da rights issue✓

Calls in advance are amounts

1. Apaid by a shareholder before they are called up✓
2. Bunpaid on shares✓
3. Cof dividend declared✓
4. Dof premium✓

A share certificate is

1. Aa loan agreement✓
2. Ba sales invoice✓
3. Ca dividend cheque✓
4. Da document that is evidence of ownership of shares✓

Reserves created out of capital profits, not available for dividend, are called

1. Arevenue reserves✓
2. Bcapital reserves✓
3. Cgeneral reserves✓
4. Dsecret reserves✓

Dividends are generally paid out of

1. Ashare capital✓
2. Bauthorized capital✓
3. Cloans✓
4. Dthe company's profits (distributable reserves)✓

A dividend declared between two annual general meetings is called a

1. Afinal dividend✓
2. Bbonus✓
3. Cinterim dividend✓
4. Dpreference dividend✓

A single member company (SMC) in Pakistan can be formed with

1. Aat least 3 members✓
2. Bone member✓
3. Cat least 7 members✓
4. Dat least 50 members✓

The minimum number of members required to form a public limited company in Pakistan is

1. A3✓
2. B1✓
3. C7✓
4. D20✓

A private limited company in Pakistan restricts the transfer of shares and limits its members to a maximum of

1. A7✓
2. B50✓
3. C100✓
4. Dunlimited✓

Interest on debentures is

1. Aa charge against profit, payable whether or not profits are earned✓
2. Ban appropriation of profit✓
3. Ca dividend✓
4. Doptional✓

Debenture holders of a company are its

1. Aowners✓
2. Bpreference shareholders✓
3. Ccreditors (lenders)✓
4. Ddirectors✓

Calls in arrears represent amounts

1. Apaid in advance by shareholders✓
2. Bof dividend due✓
3. Cof premium received✓
4. Dcalled up but not yet received from shareholders✓

On forfeiture of shares, the amount already received is transferred to the

1. Aforfeited shares (share forfeiture) account✓
2. Bshare premium account✓
3. Cprofit and loss account✓
4. Dgoodwill account✓

When a shareholder fails to pay a call, the company may cancel the shares through

1. Aa bonus issue✓
2. Ba rights issue✓
3. Ca stock split✓
4. Dforfeiture of shares✓

Shares issued to existing shareholders free of charge out of accumulated profits are called

1. Arights shares✓
2. Bsweat equity✓
3. Cbonus shares✓
4. Dpreference shares✓

The share premium account can be used for

1. Apaying ordinary dividends✓
2. Bpaying salaries✓
3. Cissuing fully paid bonus shares✓
4. Dbuying inventory✓

When shares are issued at a price above their face value, the excess is called

1. Aa discount✓
2. Bshare premium✓
3. Ca dividend✓
4. Da revenue reserve✓

Preference shareholders generally have

1. Afull voting control✓
2. Bno claim on assets✓
3. Cresidual profits only✓
4. Da preferential right to a fixed dividend and to capital on winding up✓

Equity (ordinary) shareholders are entitled to

1. Aresidual profits and voting rights✓
2. Ba fixed dividend before others✓
3. Cfixed interest✓
4. Drepayment before creditors✓

The portion of the called-up capital actually received from shareholders is the

1. Aauthorized capital✓
2. Bissued capital✓
3. Csubscribed capital✓
4. Dpaid-up capital✓

The maximum amount of share capital a company is authorized to issue is called the

1. Aauthorized (nominal) capital✓
2. Bpaid-up capital✓
3. Ccalled-up capital✓
4. Dreserve capital✓

A prospectus is a document issued by a company to

1. Adeclare dividends✓
2. Bforfeit shares✓
3. Cinvite the public to subscribe for its shares or debentures✓
4. Dappoint auditors✓

The document containing the internal rules and regulations of a company is the

1. Amemorandum of association✓
2. Barticles of association✓
3. Cprospectus✓
4. Dbalance sheet✓

The document that defines a company's objects and scope with the outside world is the

1. Aprospectus✓
2. Bmemorandum of association✓
3. Carticles of association✓
4. Dshare certificate✓

The regulator of companies and the securities market in Pakistan is the

1. AState Bank of Pakistan✓
2. BFederal Board of Revenue✓
3. CSecurities and Exchange Commission of Pakistan (SECP)✓
4. DMinistry of Commerce✓

In Pakistan, companies are incorporated and regulated under the

1. ACompanies Act 2017✓
2. BPartnership Act 1932✓
3. CContract Act 1872✓
4. DSales Tax Act✓

A joint stock company is

1. Aowned by one person✓
2. Ba form of partnership✓
3. Ca government office✓
4. Dan association of persons with a separate legal entity and limited liability✓