Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

What is the purpose of a company's common seal?

Options:

To indicate the company's limited liability

To authenticate official signatures of the company

To limit the company's contractual obligations

To represent the company's branding

Correct Answer:

To authenticate official signatures of the company

Explanation:

The common seal is used to confirm that a document or contract has been authorized and approved by the company. Its use ensures that the document is legally binding and has undergone the necessary corporate approval process.