Arrange the following steps in the correct sequence of the life of a company.
(A) Commencement of Business
(B) Incorporation
(C) Promotion
(D) Flotation
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (C), (B), (D), (A)
A company passes through these stages in a fixed order, because each stage needs the one before it:
(C) Promotion — first. The promoters conceive the idea, study whether it is workable and prepare the documents (Memorandum and Articles of Association) needed to register the company.
(B) Incorporation — second. The documents are filed with the Registrar of Companies, and on registration the company comes into existence as a separate legal person (certificate of incorporation).
(D) Flotation — third. A company that wants funds from the public issues a prospectus and raises capital through shares and debentures. It can do this only after it exists as a company.
(A) Commencement of Business — last. Once the required capital has been raised, the company starts its actual business operations.
Note: This topic is not covered in any edition of the NCERT Accountancy textbook.