SECTION A- MULTIPLE CHOICE QUESTIONS [10 MARKS] Answer all questions. Each question carries ONE (1) mark. Choose the best alternative answer. 1. The term ‘indemnity’ in a contract of insurance means to__________________. A. Pay compensation B. Pay remedies for what someone has lost C. Compensate for death D. None of the above 2. Which of the following statements defines limited liability? A. Personal assets of shareholders are risk free B. Shareholders are eligible for payments that a company has C. Personal shareholder is limited to do some things D. An individual in not involved in taking position of the business 3. The process of declaring a person insolvent on application of creditors is referred to as__________________. A. Sequestration B. Unlimited liability C. Liquidated claim D. Rehabilitation 4. Lifting the corporate veil is______________________. A. Cutting the veil B. Disregarding the principle of separate legal personalities C. Lifting a suspension D. Increase the profitability of the company 5. Which of the following documents are necessary for the registration of a business with the registrar of companies? A. Memorandum and articles of association B. Companies act and association C. Articles of associations and other necessary documents D. Memorandum 6. An artificial legal persona has its own___________________. A. Rights and obligations B. Statues C. Prejudices D. House of lords 7. Unlimited liability is a main feature of a ___________________. A. Sole trader B. Company C. Public limited company D. Cooperative societies 8. Who starts and floats a company? A. Owners B. Shareholders C. Promoters D. Management 9. _____________ capital is divided into equal portions of interest or rights. A. Debentures B. Loans C. Prospectus D. Shares 10. When partners are getting into agreement which document is drawn so as to minimize future disputes? A. Contribution of capital B. Profit sharing C. Partnership of deed D. Retiring of a partner
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