Plugin custom post type – Internal server Error

What does add_action('init', 'register_wp_questions'); do in your plugin. At this stage this is your problem. You are hooking a function to init that does not exist, thus giving you an error.

I suppose that you need to register and hook your CPT to the init hook. You should actually put all that code in a function and then add it to the init hook. Your code should be

<?php  
/**
* Plugin Name: Name Of The Plugin
* Plugin URI: http://URI_Of_Page_Describing_Plugin_and_Updates
* Description: A brief description of the Plugin.
* Version: The Plugin's Version Number, e.g.: 1.0
* Author: Name Of The Plugin Author
* Author URI: http://URI_Of_The_Plugin_Author
* License: A "Slug" license name e.g. GPL2
*/

add_action('init', 'register_wp_questions');

function register_wp_questions() {
$labels = array(
'name' => __( 'Questions', 'wp_question' ),
'singular_name' => __( 'Question', 'wp_question' ),
'add_new' => __( 'Add New', 'wp_question' ),
'add_new_item' => __( 'Add New Question', 'wp_question' ),
'edit_item' => __( 'Edit Questions', 'wp_question' ),
'new_item' => __( 'New Question', 'wp_question' ),
'view_item' => __( 'View Question', 'wp_question' ),
'search_items' => __( 'Search Questions', 'wp_question' ),
'not_found' => __( 'No Questions found', 'wp_question' ),
'not_found_in_trash' => __( 'No Questions found in Trash','wp_question' ),
'parent_item_colon' => __( 'Parent Question:', 'wp_question'),
'menu_name' => __( 'Questions', 'wp_question' )
);


$args = array(
'labels' => $labels,
'hierarchical' => true,
'description'  => __( 'Questions and Answers', 'wp_question' ),
'supports'     => array( 'title', 'editor', 'comments' ),
'public'       => true,
'show_ui'       => true,
'show_in_menu'       => true,
'show_in_nav_menus'       => true,
'publicly_queryable'       => true,
'exclude_from_search'       => true,
'has_archive'       => true,
'query_var'       => true,
'can_export'       => true,
'rewrite'       => true,
'capability_type'       => true
);

register_post_type ('wp_question', $args);

}

?>