Company Accounts and Shares MCQs 2026

A rights issue offers new shares to existing shareholders

1. A free of charge ✓
2. B usually at a price below market, in proportion to their holdings ✓
3. C at par to the general public ✓
4. D only to directors ✓

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

1. A unlimited liability ✓
2. B the absence of any regulation ✓
3. C having fewer owners ✓
4. D limited liability and a separate perpetual legal existence ✓

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

1. A nil (no further liability) ✓
2. B unlimited ✓
3. C equal to the company's debts ✓
4. D the face value again ✓

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

1. A current liabilities ✓
2. B fixed assets ✓
3. C shareholders' equity (reserves) ✓
4. D current assets ✓

Which of the following can a company generally NOT do

1. A issue shares ✓
2. B pay dividends from profits ✓
3. C issue debentures ✓
4. D issue shares at a discount freely without restriction ✓

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

1. A an increase in shares outstanding ✓
2. B a reduction in the company's share capital and shares outstanding ✓
3. C new capital being raised ✓
4. D a bonus issue ✓

Dividends on equity shares are usually expressed as

1. A a fixed rupee amount only ✓
2. B interest ✓
3. C a service fee ✓
4. D a 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. A received in full ✓
2. B demanded (called) from shareholders to pay ✓
3. C kept in reserve ✓
4. D forfeited ✓

A bonus issue results in

1. A an inflow of cash to the company ✓
2. B a reduction in total equity ✓
3. C capitalization of reserves into share capital ✓
4. D the creation of a liability ✓

Retained earnings appearing in a company's balance sheet represent

1. A accumulated profits not yet distributed as dividends ✓
2. B share capital ✓
3. C loans ✓
4. D goodwill ✓

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

1. A the amount unpaid on their shares ✓
2. B their personal assets ✓
3. C zero in all cases ✓
4. D the company's total debts ✓

The face (par) value of a share is its

1. A market price ✓
2. B issue price ✓
3. C nominal value stated in the memorandum ✓
4. D book value ✓

Sweat equity shares are issued to

1. A the general public ✓
2. B directors or employees for their know-how or services ✓
3. C debenture holders ✓
4. D creditors ✓

When shares are issued at a discount, the discount is

1. A a profit ✓
2. B added to capital ✓
3. C a reserve ✓
4. D a loss to the company (largely prohibited under the Companies Act) ✓

The allotment of shares is the process of

1. A forfeiting shares ✓
2. B accepting applications and assigning shares to applicants ✓
3. C paying dividends ✓
4. D redeeming debentures ✓

Underwriting of shares means

1. A auditing the accounts ✓
2. B valuing goodwill ✓
3. C selling fixed assets ✓
4. D an 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. A proceed to allot shares ✓
2. B declare a dividend ✓
3. C forfeit shares ✓
4. D appoint auditors ✓

Redeemable preference shares are shares that

1. A can never be repaid ✓
2. B carry voting rights only ✓
3. C can be bought back (repaid) by the company after a period ✓
4. D are issued free of cost ✓

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

1. A forfeiture ✓
2. B allotment ✓
3. C transmission ✓
4. D a rights issue ✓

Calls in advance are amounts

1. A paid by a shareholder before they are called up ✓
2. B unpaid on shares ✓
3. C of dividend declared ✓
4. D of premium ✓

A share certificate is

1. A a loan agreement ✓
2. B a sales invoice ✓
3. C a dividend cheque ✓
4. D a document that is evidence of ownership of shares ✓

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

1. A revenue reserves ✓
2. B capital reserves ✓
3. C general reserves ✓
4. D secret reserves ✓

Dividends are generally paid out of

1. A share capital ✓
2. B authorized capital ✓
3. C loans ✓
4. D the company's profits (distributable reserves) ✓

A dividend declared between two annual general meetings is called a

1. A final dividend ✓
2. B bonus ✓
3. C interim dividend ✓
4. D preference dividend ✓

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

1. A at least 3 members ✓
2. B one member ✓
3. C at least 7 members ✓
4. D at least 50 members ✓

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

1. A 3 ✓
2. B 1 ✓
3. C 7 ✓
4. D 20 ✓

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

1. A 7 ✓
2. B 50 ✓
3. C 100 ✓
4. D unlimited ✓

Interest on debentures is

1. A a charge against profit, payable whether or not profits are earned ✓
2. B an appropriation of profit ✓
3. C a dividend ✓
4. D optional ✓

Debenture holders of a company are its

1. A owners ✓
2. B preference shareholders ✓
3. C creditors (lenders) ✓
4. D directors ✓

Calls in arrears represent amounts

1. A paid in advance by shareholders ✓
2. B of dividend due ✓
3. C of premium received ✓
4. D called up but not yet received from shareholders ✓

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

1. A forfeited shares (share forfeiture) account ✓
2. B share premium account ✓
3. C profit and loss account ✓
4. D goodwill account ✓

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

1. A a bonus issue ✓
2. B a rights issue ✓
3. C a stock split ✓
4. D forfeiture of shares ✓

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

1. A rights shares ✓
2. B sweat equity ✓
3. C bonus shares ✓
4. D preference shares ✓

The share premium account can be used for

1. A paying ordinary dividends ✓
2. B paying salaries ✓
3. C issuing fully paid bonus shares ✓
4. D buying inventory ✓

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

1. A a discount ✓
2. B share premium ✓
3. C a dividend ✓
4. D a revenue reserve ✓

Preference shareholders generally have

1. A full voting control ✓
2. B no claim on assets ✓
3. C residual profits only ✓
4. D a preferential right to a fixed dividend and to capital on winding up ✓

Equity (ordinary) shareholders are entitled to

1. A residual profits and voting rights ✓
2. B a fixed dividend before others ✓
3. C fixed interest ✓
4. D repayment before creditors ✓

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

1. A authorized capital ✓
2. B issued capital ✓
3. C subscribed capital ✓
4. D paid-up capital ✓

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

1. A authorized (nominal) capital ✓
2. B paid-up capital ✓
3. C called-up capital ✓
4. D reserve capital ✓

A prospectus is a document issued by a company to

1. A declare dividends ✓
2. B forfeit shares ✓
3. C invite the public to subscribe for its shares or debentures ✓
4. D appoint auditors ✓

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

1. A memorandum of association ✓
2. B articles of association ✓
3. C prospectus ✓
4. D balance sheet ✓

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

1. A prospectus ✓
2. B memorandum of association ✓
3. C articles of association ✓
4. D share certificate ✓

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

1. A State Bank of Pakistan ✓
2. B Federal Board of Revenue ✓
3. C Securities and Exchange Commission of Pakistan (SECP) ✓
4. D Ministry of Commerce ✓

In Pakistan, companies are incorporated and regulated under the

1. A Companies Act 2017 ✓
2. B Partnership Act 1932 ✓
3. C Contract Act 1872 ✓
4. D Sales Tax Act ✓

A joint stock company is

1. A owned by one person ✓
2. B a form of partnership ✓
3. C a government office ✓
4. D an association of persons with a separate legal entity and limited liability ✓