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WAEC Financial Accounting 2001 Question 42

Question 42

Company Accounts

Which of the following are correct about a limited liability company? I. Members have power to bind the company II. Perpetual succession III. Certificate of incorporation IV. Wound-up on death of a shareholder.

  1. A.II and III only
  2. B.I and IV only
  3. C.II and IV only
  4. D.I and III only.
Show the answer and explanation

Answer: A (II and III only)

Explanation

A company continues despite members' deaths (perpetual succession) and is formed by a certificate of incorporation; members cannot bind it.