JAIIB · AFM · Chapter 3

Company Accounts - I

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.

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Q

What is a Joint Stock Company?

A

Association of persons contributing money to common stock, created by law for common purpose.

Q

Why must bankers understand Company Accounts?

A

Lending decisions, KYC, working capital limits depend on capital structure and shareholding pattern.

Q

Define artificial person in company context.

A

Company created by law, distinct from members; can contract, sue, be sued independently.

Q

What is perpetual succession?

A

Company existence unaffected by member death, insolvency, or insanity.

Q

What is limited liability?

A

Member liability restricted to face value of shares held; personal assets safe from company debts.

Q

Distinguish private company from public company membership.

A

Private: max 200 members, min 2; Public: unlimited members, min 7.

Q

What is a Statutory Company?

A

Created by special Act of legislature, government-owned, independent legal status. Examples: LIC, RBI, SBI.

Q

What are the two kinds of share capital under Companies Act 2013?

A

Equity shares with voting rights; Preference shares with fixed dividend and no voting rights.

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