The Professionals’ Academy of Commerce

Pakistan’s Leading Accountancy Institute

Certificate in Accounting and Finance Stage Mock Examinations

February 20, 2021
3 hours – 100 marks
Additional reading time - 15 minutes

Business Law
Instructions to examinees:
(i) Answer ALL questions.
(ii) Answer in black pen only.

Section A – Multiple Choice Questions

Q.1
1. Which one of the following is NOT a difference between civil law and criminal law
a) The person filing civil case is called claimant/plaintiff and the one who files criminal case is
called State/complainant.
b) Their purpose is to provide justice through punishment in criminal law and compensation in civil
law
c) A wrongdoing in civil law can be taken as tort and in criminal law a crime.
d) Burden of proof in civil law is a balance of probabilities and in criminal law proving a case
beyond reasonable doubt.
2. Which one of the following is NOT an essential of a valid contract?
a) The Agreement must be in writing
b) Parties must have free consent
c) Consideration or object must be lawful
d) Parties must be competent to contract
3. Abid after a bargain agreed to take an immediate ride on rikshaw with Saleem for Rs. 500/- to Mall
Road Lahore. This is called:
a) An implied contact
b) A quasi contract
c) An unenforceable agreement
d) An express agreement
4. Javed purchased a knife from Saqib as Javed intended to kill his wife with it. The agreement between
Javed and Saqib:
a) Is void because the purpose is illegal.
b) Is void because the consideration is illegal
c) Is voidable at Saqib’s option because he never knew what Javed intended.
d) Is valid because Saqib never knew what Javed wanted to do with the knife.
5. Which one of the following is not an exception to the rule that “an agreement without consideration is
void”?
a) An agreement in near relations made out of love and affection and in writing and registered.
b) An agreement to give amount in charity
c) An agreement to compensate past voluntary action
d) An agreement of completed gift.
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6. Asim told Saqlan that Asim would upload on YouTube his Valentine’s Day video with Saqlan’s wife if
Saqlan didn’t sell his Rupees ten million car to Asim in just one million. If Saqlan agrees then it would
be a case of
a) Coercion
b) Undue Influence
c) Fraud
d) Misrepresentation
7. Saqib agreed to give James Rs. 100,000/- as commission if James finds one buyer of Saqib’s collection
of 100 vantage cars. This is an example of
a) Contingent contract
b) Wagering agreement
c) Executory contract
d) Both executory and contingent contract
8. According to Contract Act 1872, which of the following rule regarding performance of contract is
INCORRECT?
a) If it was agreed that promise will be performed by the promisor himself, then such promise must
be performed by the promisor
b) If the contract is of personal nature, on death of promisor, his legal representative can perform
the contract.
c) Only a promisee can demand the performance of the promise
d) When two or more persons make a joint promise, the promisee may compel anyone or more of
such joint promisors to perform the whole of the promise
9. Atif (the Seller) promised to give possession of the house next week and Salman (the buyer) promised
to pay remaining amount on delivery of possession or till the end of month. This is a situation of
reciprocal promises, which are:
a) Mutual and concurrent
b) Mutual and dependent
c) Mutual and Independent
d) Non of the above options
10. Which one of the following is not a valid excuse of supervening impossibility:
a) Atif agreed to sing in a concert but was critically injured before the concert.
b) Salman had a booking of flight with PIA but the plane was grounded due to Covid 19 restriction.
c) Shar Khan agreed to deliver goods on Monday but roads were blocked due to protests of
religious leaders.
d) Imran agreed to marry one of the twin daughters of Shan. The one with Imran was engaged died.
11. Asim was engaged to be married with Maryam on 14th of February. On 1st of February as the
preparations for marriage were in process Asim came to know Maryam’s plan of running away with
her ex. In this anticipatory breach, which one of the following legal action can Asim take against
Salma?
a) Asim will ask court to grant stay order against Salma from running away with someone else.
b) Asim repudiates the engagement and files a suit for damages against Salma to pay damages for
the breach.
c) Asim decides to wait till 14th February and then file a suit for damages against Salma.
d) Asim has the choice of taking either option (b) or (c).
12. In which of the following situations restitution can be awarded as remedy for breach of contract.
a) Asim agreed to buy a car from Bilal but later on they both decided not to execute the deal.
b) Asim gave Rs. 20,000 to Bilal for pick and drop from college but later on the college was
closed due to Covid 19 restrictions.
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c) Asim sold new seal packed mobile to Bilal for Rs. 50,000 but later on Bilal found that
mobile was refurbished and Asim lied about it.
d) Asim promised to work as waiter in Bilal’s restaurant but later Asim refused to carry out the
job.
13. In which of the following situations an aggrieved party CANNOT take the advantage of ignorance
about other party’s death.
a) When the offeree accepts an offer without the knowledge of offeror’s death
b) When the creditor transact with principal debtor in continuing guarantee without the knowledge
of surety’s death.
c) When the bank makes payment from customer’s account on a cheque without the knowledge of
customer’s death.
d) When the partner continues to act as a partner without notice of death of one of the partners.
14. Which one of the following is not considered a relation of agency:
a) Company and the director
b) Partners and the firm
c) Lawyer and the client
d) Doctor and the patient
15. Asim was indebted to Salman and Salman was indebted to Qasim. Which one of the following
negotiable instruments in this situation Salman can make to ensure payment to Qasim
a) Bill of Exchange
b) Cheque
c) Promissory note
d) Currency note
16. The company shall ensure that all cash transactions with its directors are conducted only through
_____________
17. Subsequent chief executive shall be appointed by board
a) within 14 days from the date of election of directors
b) within 7 days from the date of election of directors
c) At the time of election of directors
d) None of above
18. Approval of SECP is not required by the Company to appoint any sole purchase, sale or distribution
agent where such agent is:
a) appointed by Company incorporated outside Pakistan and major portion of the business of such
Company is conducted in Pakistan
b) appointed by Company incorporated in Pakistan and major portion of the business of such
Company is conducted in Pakistan
c) appointed by Company incorporated outside Pakistan and major portion of the business of such
Company is not conducted in Pakistan
d) None of above
19. Which of the following is true in relation with ordinary shareholders?
a) Shareholders have Prior right ahead of preference shareholders to receive dividends
b) Shareholders Not entitled to vote at general meetings of company
c) Shareholders receives interim dividend which is approved by members
d) Shareholders receives dividend after all unpaid cumulative preference dividends payable have
been paid to preference shareholders
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20. The company, if allowed by its articles and by passing __________can alter the capital clause of its
memorandum of association.
21. Which of the following is true related to characteristics of shares and share certificates?
a) must be paid for in full when it is allotted to the shareholder
b) shall be distinguished by its distinctive number.
c) shall be the main evidence of the title of the person to such shares
d) All of above
22. A prospectus shall not be published in newspaper:
a) less than 7 days or more than 30 days before the commencement of the public subscription.
b) less than 30 days before the commencement of the public subscription.
c) less than 7 days before the commencement of the public subscription.
d) less than 21 days or more than 30 days before the commencement of the public subscription.
23. Which of the following is not a valid reason as per Companies Act, 2017 to withhold dividend by the
company
a. Where there is a dispute regarding the right to receive the dividend
b. If dividend cannot be paid due to operation of any law,
c. If Co. has withheld the payment of dividend against any sum recoverable from shareholder
d. Company has to finance purchase of an asset
24. Statutory report shall contain a summary of receipts and payments prepared to a date which is not
earlier by _______ days of the date of report.
25. First annual general meeting of the company shall be held:
a) within 16 months from the date of incorporation of company
b) within 120 days from the incorporation of company
c) within 16 months from the date of obtaining certificate of commencement of business
d) before the end of calendar year in which company is incorporated
26. Which of the following is not an ordinary business?
a) Consideration of financial statements and the reports of the directors and auditors
b) Appointment of chief executive
c) The declaration (approval) of a dividend
d) The appointment of auditors
27. In order to be effective, proxies shall be lodged with the Co. at least _________ before the meeting.
28. Financial statements of second quarter shall be posted on the company‘s website for the information of
its members and also be transmitted electronically to the Commission, securities exchange and with the
registrar
a) Within 30 days of close of quarter
b) Within 60 days of close of quarter
c) Within 30 days of review by the statutory auditors
d) Within 60 days of review by the statutory auditors
29. Board shall prepare a directors’ report for each financial year. However, this requirement is not
applicable to:
a) private company not being a subsidiary of public company and having the paid up capital not
exceeding Rupees 3 million
b) private company being a subsidiary of public company and having the paid up capital not
exceeding Rupees 3 million
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c) private company not being a subsidiary of public company and having the paid up capital not
exceeding Rupees 10 million
d) private company not being a subsidiary of public company and having the paid up capital
exceeding Rupees 10 million
30. when the chief executive is not available in Pakistan, then the Financial Statements may be signed by:
a) At least two directors
b) Independent director
c) At least one director and chief financial officer
d) All the executive directors

Section B – Mercantile Law

Q.2 Parliament is responsible to make laws in a country. In the light of government restrictions to control wide
spread of corona virus, ICAP decides to change the rules for conducting its examinations. What do these
changes signify and what are the advantages and disadvantages of ICAP’s authority to make such changes?
(05)
Q.3
a) Give illustration to explain negative confirmation regarding offer and acceptance in a contract.
(02)
b) Salma texted her neighbor that if he is interested in purchasing her mobile then he must come to the
roof at 8:00 PM to exchange cash with mobile. Neighbor sent his mother with cash to Salma’s house to
get her mobile. How Salma should respond to this situation? (03)
c) Imran owed Bajwa different amounts of debts, which Imran took from Bajwa on different occasions.
Imran sent Rs. 10,000 to Bajwa without mentioning the debt Imran wanted to settle. Bajwa was in jail
when his representatives received the amount.
What is meant by appropriation of payment? Briefly explain the rules for appropriation of payment in
the above situation. (05)
Q.4
a) Give one example each to explain following remedies in a breach of contract
i) Specific performance of contract
ii) Injunction
iii) Exemplary/vindictive damages (06)
b) If creditor agrees to extend time of payment for principal debtor without the consent of surety then
surety is discharged from his liability. Illustrate two different examples where extension in time of
payment does not discharge the surety from liability. (04)

Q.5
a) Saqib was partner with 4 other partners in a firm. Saqib due to his bad habbit of backbiting was
expelled from the firm. However neither Saqib nor the firm gave notice about Saqib’s expulsion from
the firm. In the context of this scenario explain the essentials of the principle of holding out. (03)
b) Saqib with 2 other partners were carrying out the business of selling home appliances on installments.
Saqib was not authorized to deal with the customers due to his rude behavior. According to rules of
business a customer was liable to pay full outstanding amount in 15 days when demanded by the firm.
Saqib on 1st of February made an unauthorized demand of outstanding amount from one of the
customers named Bilal. The customer Bilal didn’t pay till 25th of February, when other partners ratified
Saqib’s unauthorized demand of 1st February.
You are required to explain principle of ratification by the firm of a partner’s unauthorized action and
the status of ratification in the given scenario. (02)
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c) Draw a comparison of Promissory Note, Bill of Exchange and Cheque. (05)

Section C – Company Law

Q.6 Alfalah Hospital is operating as an association not for profit having license from the Commission.
In view of the provisions of Companies Act 2017 you are required to explain the circumstances under
which the license may be revoked by Commission. (06)

Q.7
a. What is a conclusive evidence of the fact that a company has been duly registered under the Companies
Act, 2017? (02)
b. Before confirming an alteration of memorandum of association the Commission must satisfy itself that
certain conditions have been fulfilled. What are those conditions? (02)

Q.8 Kamran is the chief executive of MNO Limited, a listed company. Kamran has been appointed as the chief
executive by virtue of his professional qualifications and holds the minimum qualification shares. MNO
Limited plans to enter into a major contract with PQR Limited. 30 % of PQR's shares are held by STU
Limited in which Kamran is also director.
Explain the relevant provisions of Companies Act, 2017 which would be required to be complied with by
Kamran in above situation. (06)

Q.9 Superior Plastics Limited is a wholly owned subsidiary of a foreign company and has its registered office in
Lahore.
(a) List the books of account the company is required to maintain. (04)
(b) State the conditions which the directors shall be required to comply with if they want to keep the books
of account at Superior’s factory located in Peshawar. (02)

Q.10 Mr. Shakeel has significant shareholdings in various public and private companies. He is not satisfied with
some of the resolutions passed by such companies by show of hands. You are required to advise him as
regards the following:
(a) What conditions would he need to satisfy if Mr. Shakeel wishes to request for a poll? (02)
(b) Explain whether a company is required to oblige him if he wishes to satisfy himself about the validity
of the results of voting by poll. (02)

Q.11 (a) Halal Limited AGM was scheduled on 1 Jan 21. However, due to absence of quorum, meeting was
adjourned on 8th Jan 21. An alteration in articles were made by a special resolution in the adjourned
meeting In view of the provisions of Companies Act, 2017, what shall be the last date to submit altered
copy of articles to registrar. (03)
(b) Directors of ABC Limited which is listed on Pakistan Stock Exchange wants to pass the resolution of
members and directors through circulations. Advise them in the light of provisions of Companies Act,
2017 whether they can pass such resolutions and discuss the process to pass such resolutions?
(06)
(The End)