LIQUIDATION (WINDING UP OF COMPANY) – 30 MCQs
1. Liquidation means:
A) Formation of a company
B) Winding up of a company
C) Amalgamation of companies
D) Reconstruction of a company
Answer: B
2. Who conducts the liquidation process?
A) Promoter
B) Liquidator
C) Auditor
D) Director
Answer: B
3. The person appointed to wind up the affairs of the company is called:
A) Promoter
B) Liquidator
C) Registrar
D) Secretary
Answer: B
4. Liquidator is appointed by:
A) Shareholders
B) Tribunal / Court
C) Board of Directors
D) Registrar of Companies
Answer: B
5. The process of winding up is also known as:
A) Dissolution
B) Liquidation
C) Termination
D) Both A and B
Answer: D
6. The order of payment in liquidation is known as:
A) Payment hierarchy
B) Order of priority
C) Settlement order
D) None
Answer: B
7. The final statement prepared by the liquidator is called:
A) Final Accounts
B) Statement of Affairs
C) Liquidator’s Final Statement of Account
D) Trial Balance
Answer: C
8. Liquidator’s statement of account shows:
A) Assets realized and payments made
B) Only liabilities
C) Only capital
D) None
Answer: A
9. Liquidation may be due to:
A) Insolvency
B) Mismanagement
C) Court order
D) All of the above
Answer: D
10. The final stage in liquidation is:
A) Realisation of assets
B) Payment of liabilities
C) Dissolution of company
D) Appointment of liquidator
Answer: C
11. Who gets payment first in liquidation?
A) Shareholders
B) Secured Creditors
C) Liquidator’s expenses
D) Government dues
Answer: C
12. Preferential creditors are paid:
A) Before secured creditors
B) After secured creditors
C) After shareholders
D) Last of all
Answer: B
13. Which of the following is a preferential creditor?
A) Debenture holder
B) Government for taxes
C) Equity shareholder
D) Creditor for goods
Answer: B
14. Fully secured creditors are paid from:
A) Realisation of pledged assets
B) General pool of assets
C) Capital Reserve
D) Liquidator’s fund
Answer: A
15. Unsecured creditors are paid:
A) After preferential creditors
B) Before secured creditors
C) After shareholders
D) Before liquidator’s expenses
Answer: A
16. Order of payment during liquidation starts from:
A) Liquidator’s expenses
B) Debenture holders
C) Government dues
D) Shareholders
Answer: A
17. Liquidator’s remuneration is paid:
A) Before any payment
B) After preferential creditors
C) After unsecured creditors
D) After shareholders
Answer: A
18. Calls on partly paid shares are collected by:
A) Directors
B) Liquidator
C) Registrar
D) Auditor
Answer: B
19. If liquidator is unable to pay all creditors in full, it is called:
A) Deficiency
B) Surplus
C) Profit
D) Balance
Answer: A
20. Surplus after paying all liabilities is paid to:
A) Government
B) Shareholders
C) Debenture holders
D) Creditors
Answer: B
21. Equity shareholders are paid:
A) First
B) After preference shareholders
C) Before preference shareholders
D) Along with debenture holders
Answer: B
22. Preference shareholders are paid:
A) Before debenture holders
B) After equity shareholders
C) Before equity shareholders
D) After unsecured creditors
Answer: C
23. Liquidation account is prepared by:
A) Auditor
B) Accountant
C) Liquidator
D) Director
Answer: C
24. Statement of Affairs is prepared by:
A) Liquidator
B) Company’s Directors
C) Shareholders
D) Registrar
Answer: B
25. The amount received on sale of assets is called:
A) Realisation
B) Capital gain
C) Redemption
D) Recovery
Answer: A
26. When all payments are made, the company is:
A) Amalgamated
B) Reconstructed
C) Dissolved
D) Revived
Answer: C
27. Which of the following is NOT paid during liquidation?
A) Creditors
B) Shareholders
C) Debenture interest after liquidation
D) Liquidator’s commission
Answer: C
28. Liquidator’s final statement is prepared in the form of:
A) Receipts and Payments Account
B) Trading Account
C) Cash Book
D) Balance Sheet
Answer: A
29. Which of the following is not an asset for the liquidator?
A) Goodwill
B) Outstanding Expenses
C) Land and Building
D) Debtors
Answer: B
30. If total assets realised = ₹10,00,000, total payments = ₹9,80,000, then surplus = ?
A) ₹20,000
B) ₹2,00,000
C) ₹10,000
D) ₹80,000
Answer: A
