CBSE Class 12 Accountancy Accounting For Share Capital and Debenture Assignment

Question. Choose the correct answer from the given options:
A company purchased machinery for Rs 6,00,000, out of which Rs1,00,000 was paid immediately and the balance amount was discharged by issue of equity shares of Rs 10 each at 25% premium. How many shares will be issued
by the company to the vendor?
(a) 50,000 shares
(b) 40,000 shares
(c) 60,000 shares
(d) 48,000 shares
Answer. B

Question. Reserve Capital is not a part of:
(a) Authorised Capital
(b) Subscribed Capital
(c) Unsubscribed Capital
(d) Issued Share Capital
Answer. C

Question. A company forfeited 4,000 shares of Rs 10 each on which application money of Rs 3 has been paid. Out of these 2,000 shares were reissued as fully paid up and Rs 4,000 has been transferred to capital reserve. Calculate the rate at which these shares were reissued.
(a) Rs 10 Per share
(b) Rs 9 Per share
(c) Rs 11 Per share
(d) Rs 8 Per share
Answer. B

Question. Shares for which amount is paid by public are called ______ shares.
(a) Authorised
(b) Paid up
(c) Bonus shares
(d) All of these
Answer. B

Question. Vinod Ltd. forfeited a share of Rs 50 issued at a premium of 20% for non-payment of first call of Rs 15 per share and final call of Rs 5 per share. At what minimum price it can be reissued?
(a) Rs 50
(b) Rs 30
(c) Rs 40
(d) Rs 20
Answer. D

Question. The Directors of Vinod Ltd. forfeited 70,000 Equity Shares of Rs 10 each, Rs 10 called up, for non-payment of final call of Rs 1 per share. Half of the forfeited shares were reissued at Rs 20 per share fully paid up. On reissue of forfeited shares, the following amount will be transferred to the Capital Reserve Account:
(a) Rs 70,000
(b) Rs 1,40,000
(c) Rs 4,20,000
(d) Rs 3,15,000
Answer. D

Question. Money received in advance from shareholders before it is actually called-up by the directors is:
(a) Debited to calls in advance account
(b) Credited to calls in advance account
(c) Debited to calls account
(d) None of these
Answer. B

Question.Which of the following capital is not shown in company’s Balance Sheet:
(a) Authorised capital
(b) Issued and subscribed capital
(c) Called and paid up capital
(d) Reserve Capital
Answer. D

Question. Vinod Ltd. forfeited 150 Equity Shares of Rs 10 each issued at a premium of Rs 5 per share, for non-payment of allotment money of Rs 8 per share (including premium 5) the first call of Rs 2 and final call of Rs 3 per share. Out of these 100 shares were reissued at 14 per share. The capital reserve will be:
(a) Rs 750
(b) Rs 300
(c) Rs 400
(d) Rs 200
Answer. D

Question. When shares are forfeited, the share capital account is debited with ______ and the share forfeiture account is credited with:
(a) Paid-up capital of shares forfeited; Called up capital of shares forfeited.
(b) Called up capital of shares forfeited; Calls in arrear of shares forfeited.
(c) Called up capital of shares forfeited; Amount received on shares forfeited.
(d) Calls in arrears of shares forfeited; Amount received on shares forfeited.
Answer. C

Question. A Company invited applications for 1,00,000 shares and it received applications for 1,50,000 shares. Applications for 30,000 shares were rejected and the remaining shares were allotted on prorata basis. How many shares an applicant for 3,000 shares will be allotted:
(a) 2,500 Shares
(b) 3,600 Shares
(c) 4,500 Shares
(d) 2,000 Shares
Answer. A

Question. When a company has not called up the total nominal (face) value of the share, it is known as:
(a) Issued Capital
(b) Unissued Capital
(c) Subscribed and Fully paid up
(d) Subscribed but not fully paid up
Answer. D

Question. On Equity Shares dividend is proposed by the Board of Directors every year but rate of dividend is fixed on:
(a) Debentures
(b) Equity Shares
(c) Loan to outsiders
(d) Preference Shares
Answer. D

Question. Vinod Ltd. is registered with 50,000 shares @ Rs 10 each. It issued 40,000 shares to the public @ Rs 10 each. Applications were received on for 38,000 shares and allotment was made to all the applicants. The Authorised Capital of the company is:
(a) Rs 3,80,000
(b) Rs 4,00,000
(c) Rs 2,80,000
(d) Rs 5,00,000
Answer. D

Question. Maximum limit of premium on shares is:
(a) 5%
(b) 10%
(c) No limit
(d) Not more than 100%
Answer. C

Question. Voluntary return of shares for cancellation by the shareholders is called:
(a) Cancellation of shares
(b) Forfeiture
(c) Surrender of shares
(d) None of these
Answer. C

Question. A Ltd. forfeited 100 shares of Rs 100 each issued at a premium of 50% to be paid at time allotment on which first call of Rs 30 per equity share was not received, final call of, 20 are yet to be made. These shares were reissued at Rs 70 per share at Rs 80 paid up Calculate Gain on reissue:
(a) None of the below
(b) 3,000
(c) 4,000
(d) 2,000
Answer. A

Question. If a share of Rs 10 issued at a premium of Rs 3 on which the full amount has been called is forfeited the capital account should be debited with:
(a) Rs 5
(b) Rs 8
(c) Rs 10
(d) Rs 13
Answer. C

Question. When a company issue its share through IPO, it means shares are issued to:
(a) Promoters
(b) Creditors
(c) Vendors
(d) General Public
Answer. D

Question. Vinod Ltd. was formed with a Nominal Share Capital of Rs 40,00,000 divided into 4,00,000 shares of Rs 10 each. The Company offers 1,30,000 shares to the public payable Rs 3 per share on Application, Rs 3 per share on Allotment and the balance on First and Final Call. Applications were received for 1,20,000 shares. All money payable on Allotment was duly received, except on 200 shares held by Y. First and Final Call was not made by the Company. Call in arrears will be of:
(a) Rs 6,000
(b) Rs 4,000
(c) Rs 5,000
(d) Rs 7,000
Answer. A

Question. ABC Ltd. purchased Furniture of Rs 10,00,000 from KK Ltd. and paid 20% of the amount by accepting a bill of exchange in favour of KK Ltd. The remaining amount was paid by issuing Equity Shares of Rs 100 each at a premium of 25% to KK Ltd. No. of Equity Shares to be issued?
(a) 6,000
(b) 6,400
(c) 10,000
(d) 7,000
Answer. B

Question. Issue of shares at discount is not allowed under which section of the Companies Act, 2013?
(a) Section 52
(b) Section 53
(c) Section 54
(d) Section 55
Answer. B

Question. S.K Ltd. invited application for 10,000 Equity Shares of Rs 10 each. Applications were received for 15,000 shares and prorata allotment was made to all the applicants. If Mohan (one shareholder) was allotted 80 shares, find the shares applied by him.
(a) 80
(b) 100
(c) 150
(d) 120
Answer. D

Question. Company formed by special acts is called.
(a) Chartered company
(b) Statutory company
(c) Registered company
(d) None of these
Answer. B

Question. Own shares purchased by a company with a view to reduce its capital is called:
(a) Sale
(b) Purchase
(c) Buy-back
(d) Private placement
Answer. C

Question. Shares which have preferential rights are called?
(a) Equity share
(b) Preference share
(c) Debenture
(d) Bond
Answer. B

Question. Capital which is called only at the time of Winding-Up of the Company is called?
(a) Capital reserve
(b) Reserve capital
(c) Secure capital
(d) Authorised capital
Answer. B

Question. Which kind of Preference Share entitles its holders to receive arrear of dividends of previour years?
(a) Cumulative preference share
(b) Non-cumulative preference share
(c) Convertible preference share
(d) Non-convertible dividend share
Answer. A

Question. Which document is an invitation offer to public to subscribe for company’s share?
(a) Red herring prospectus
(b) Prospectus
(c) In lieu of prospectus
(d) None of these
Answer. B

Question. The balance of Share Forfeiture Account can be used to:
(a) provide for discount given at the time of re-issue
(b) write-off preliminary expenses
(c) write-off bad debts
(d) none of these
Answer. A

Question. Singh who was allotted 200 equity share of Rs 20 each by a company, failed to pay Rs 8 each on final call. Shares were re-issued to Kumar at Rs 20 each. What will be the journal entry on re-issue?
(a) Bank A/c Dr. 4,000
To Equity Share Capital A/c 4,000
(b) Equity Share Capital A/c Dr. 4,000
To Bank A/c 4,000
(c) Bank A/c Dr. 4,000
To Share Forfeiture A/c 4,000
(d) Share Forfeiture A/c Dr. 4,000
To Bank A/c 4,000
Answer. A

Question. A company issued 25,000 shares and received applications for 35,000 shares. Company wants to allot shares to everyone who hs applied. What will be the ratio for allotment?
(a) 6 : 7
(b) 7 : 5
(c) 5 : 7
(d) 7 : 6
Answer. B

Question. A company issued 10,000 shares of Rs 10 each. Amount is payable as Rs 2 on Application, Rs 5 on Allotment and Rs 3 on First and Final call. A shareholder who had 1,000 shares failed to pay allotment and first call amount on due date.After a month, he paid the due amount. What will be the amount received by company against issue of shares?
(a) Rs 92,000
(b) Rs 90,000
(c) Rs 1,00,000
(d) Rs 8,000
Answer. C

Question. Equity Shareholders are: 
(a) creditors
(b) owners
(c) customers of the company
(d) none of these
Answer. B

Question. Money received in advance from shareholders before it is actually called-up by the directors is: 
(a) debited to calls in advance account
(b) credited to calls in advance account
(c) debited to calls account
(d) None of these
Answer. B

Question. Shares can be forfeited: 
(a) for non-payment of call money
(b) for failure to attend meetings
(c) for failure to repay the loan to the bank
(d) for which shares are pledged
Answer. A

Question. The profit on re-issue of forfeited shares is transferred to: 
(a) general reserve
(b) capital redemption reserve
(c) capital reserve
(d) revenue reserve
Answer. C

Question. Balance of share forfeiture account is shown in the balance sheet under the item: 
(a) Current liabilities and provisions
(b) Reserves and surpluses
(c) Share Capital
(d) Unsecured loans
Answer. C

Question. Arrange the following in proper sequence as types of “Share Capital”:
(i) Paid up Capital
(ii) Issued Capital
(iii) Subscribed Capital
(iv) Called up Capital
Choose the correct option :
(a) (ii) - (iii) - (iv) - (i)
(b) (i) - (ii) - (iii) - (iv)
(c) (i) - (ii) - (iii) - (iv)
(d) (iv) - (i) - (ii) - (iii)
Answer. A

Question. When forfeited shares are re-issued the amount of discount allowed on these shares cannot exeed:
(a) 10% of called-up capital per share
(b) 6% of paid-up capital per share
(c) The amount received per share on forfeited shares
(d) The unpaid amount per share on forfeited shares
Answer. C

Question. Assertion : Issued capital is that part of Authorised Share Capital which is issued for subscription whether subscribe or not.
Reason : Issued capital is that part of Authorised Share Capital which is issued for subscription to the public which can be more than the subscription or equal to the subscription.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Issued capital can never be more than the Authorised capital.
Reason : When-ever the company wants it can issue shares to the public so it does not matter what the Authorised Capital is.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. C

Question. Assertion : Issued capital can never be more than the Authorised Capital.
Reason : Authorised Capital is the maximum amount of capital that the company can issue during its life time so issued capital can never exceed than the Authorised capital.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Shares can be issued to the Public at the discount.
Reason : Shares can be issued to the Public at a discount on reissue of the forfeited shares.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. B

Question. Assertion : Shares can’t be issued to the Public the discount.
Reason : Section 53 of the Companies Act, 2013 does not allow issue of shares at discount, However, section 54 allows issue of shares at a discount, when they are issued as Sweat Equity Shares.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Forfeited Shares can be re-issued at any amount of discount that the company is in favour to issue.
Reason : Forfeited shares can be re-issued at the discount up to the maximum of the amount already credited to the Share Forfeiture Account.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : The Application money received in excess of the allotment money is always transferred to Calls-inadvance account.
Reason : The Application money received in excess of the allotment money is to be adjusted depending on the terms that the company is giving Pro-rata allotment and wishes to adjust the money on call’s or not if the company is not willing to adjust the money it can be refunded.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. Assertion : Security Premium Reserve can be collected at any point of time, like on Application, Allotment or at any call.
Reason : Security premium reserve can be collected at any point of time but if it is not mentioned when to be collected it is presumed to be collected at the time of Allotment
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Cumulative Preference Shares mean that arrears of dividend is payable before dividend is paid on Equity Shares.
Reason : Cumulative Preference Shares carry the right to receive arrears of dividend before the dividend is paid to the Equity Shareholders.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. A

Question. Assertion : Pro-rata allotment is made in the event the shares are Undersubscribed.
Reason : Pro-rata allotment is made in the case of the over subscription as the subscription is received for the amount which is more than the issued capital.
(A) Both A and R true and R is the correct explanation of A.
(B) Both A and R are true but R is not the correct explanation of A
(C) A is true and R is false
(D) A is false and R is true
Answer. D

Question. X Ltd. is a reputed company invited applications for 20000 shares of Rs 10 each payable as under: Rs 3 per share on Application ; Rs 3 per on Allotment; Rs 2 per share on First Call; and balance on Final Call.
Prakriti an applicant of 100 shares failed to pay allotment money and first call money due from him.
Rest of money is duely received.

Question. What will be the amount received on share Allotment?
(a) Rs 59,700
(b) Rs 59,800
(c) Rs 59,600
(d) Rs 59,500
Answer. A

Question. What will be the total amount(including Allotment and First call) of Calls in arrear?
(a) 500
(b) 700
(c) 600
(d) 800
Answer. A

Question. What will be the amount due on Final Call ?
(a) Rs 39,700
(b) Rs 39,800
(c) Rs 39,900
(d) Rs 40,000
Answer. D

Question.  Pawan Ltd. issued Rs 10,00,000 new capital divided into Rs 100 shares at a premium of Rs 20 per share, payable as under:
On Application Rs 10
On Allotment Rs 40 (including premium of Rs 10 per share)
On First Call and Final Balance
Over – payments on application were to be applied towards sums due on allotment and first and final call. Where no allotment was made, money was to be refunded in full.
The issue was oversubscribed to the extent of 13000 shares. Applications for 12000 shares were allotted only 2000 shares and applications for 3000 were sent letters of regret and application money was returned to them, rest were alleted in full.
All the money due was duly received.

Question. What will the amount due on share Application.
(a) Rs 1,00,000
(b) Rs 1,30,000
(c) Rs 2,00,000
(d) Rs 1,80,000
Answer. A

Question. What amount of money will be credit to bank ( returned)?
(a) Rs 30,000
(b) Rs 50,000
(c) Rs 1,00,000
(d) Rs 1,10,000
Answer. A

Question. What will the amount received on share First and Final Call?
(a) Rs 6,20,000
(b) Rs 6,80,000
(c) Rs 6,60,000
(d) Rs 6,40,000
Answer. B

Question. A Ltd company was registered with an authorized capital of Rs 2,00,000 in Rs 10 in shares, of these 6000 shares were issued as fully paid to the vendors for the purchase of buildings. 8,000 shares were subscribed for by the public and during the first year Rs 6 per share were called up, payable Rs 3 on Application, Rs 1 on Allotment, Rs 1 on First
Call, and Rs 1 on Final Call. The amounts received in respect of these shares were as follows :
On 6000 shares the full amount called.
On 1200 shares Rs 5 per share
On 500 shares Rs 4 per share
On 300 shares Rs 3 per share
The directors forfeited 800 shares on which less than Rs 5 per share had been paid.

Question. What will the amount due on share application.
(a) Rs 24,000
(b) Rs 25,000
(c) Rs 80,000
(d) Rs 84,000
Answer. A

Question. What will be the total arrear amount (including first and final call) of the share forfeited?
(a) Rs 1,900
(b) Rs 2,900
(c) Rs 4,800
(d) Rs 2,200
Answer. A

Question. What will the amount of share forfeiture?
(a) Rs 1,900
(b) Rs 2,900
(c) Rs 4,800
(d) Rs 2,200
Answer. B

 

Question. A Ltd. makes an issue of 10000 equity shares of Rs. 100 each, payable as follows:
On Application and Allotment Rs 50
On First call Rs 25
On Final call Rs 25
Members holding 400 shares did not pay the second call and the shares are duly forfeited, 300 of which are reissued as fully paid at Rs 80 per share.

Question. What will be the amount due on share application and allotment?
(a) Rs 5,00,000
(b) Rs 2,50,000
(c) Rs 7,50,000
(d) Rs 4,50,000
Answer. A

Question. What will the amount transferred to Capital Reserve?
(a) Rs 16,500
(b) Rs 17,000
(c) Rs 30,000
(d) Rs 24,000
Answer. A

Question. What amount will be debited in Share Forfeiture Account.
(a) Rs 6,000
(b) Rs 24,000
(c) Rs 30,000
(d) Rs 10,000
Answer. A
 

 

Q.1 Jain Ltd has incurred a loss of Rs. 8,00,000 before payment of interest on debentures. The directors of the company are of the opinion that interest on debentures is payable only when company earn profit. Do you agree?

Q.2 As per latest guidelines governing the servicing of debentures a company is required to create on special account. Name that account.

Q.3 Name the method of redemption of debentures in which there is no requirement of creating Debenture Redemption Reserve.

Q.4 What is the nature of receipt of premium on issue of shares? 

Q.5 Can a company issue shares at a premium in the absence of any express authority in its articles?

Q.6 What is the maximum rate of interest which the board of directors of a company can normally pay on calls-in-advance if the articles are silent on the matter of such interest?

Q.7 State with reason whether a company can issue its shares at a discount in its Initial Public Offer (IPO).

Q.8 Why securities premium money can not be used for payment of cash dividend among  shareholders?

Q.9 Jamuna Ltd. with paid-up share capital of Rs. 60,00,000 has a balance of Rs. 15,00,000 in securities premium account. The company management does not want to carry over this balance. You are required to suggest the method for utilizing this premium money that would achieve the objectives of the management and maximize the return to shareholders.

Q.10 Distinguish between a share and a Debenture.

Q.11 Can share premium be utilised for the purchase of fixed assets?

Q.12 State in brief, the SEBI guidelines regarding Debenture Redemption Reserve(DRR).

Q.13 Which companies are exempted from the obligation of creating DRR by SEBI?

Q.14 What is the restriction on reissue of forfeited shares at discount?