CBSE Class 12 Accountancy Accounting For Share Capital MCQs Set A

Question: Minimum number of members in a Private Company

a) 2

b) 5

c) 7

d) 1

Answer: 2

Question: Minimum number of members in a Public Company

a) 7

b) 2

c) 5

d) 3

Answer: 7

Question: Maximum number of members in a Private Company

a) 50

b) 60

c) 70

d) 100

Answer: 50

Question: Maximum number of members in a Public Company

a) Any Number of members

b) 50

c) 60

d) None of the options

Answer: A 

Question: Minimum Capital of a Private Company

a) 1 Lakh

b) 2 Lakh

c) 3 Lakhs

d) None of the options

Answer: A

Question: Interest on calls in advance

a) 6% P.A

b) 5% P.A

c) 9% P.A

d) No Interest

Answer: A

Question: Interest on calls in arrear

a) 5% P.A

b) 6% P.A

c) 9% P.A

d) No Interest

Answer: A

Question: Minimum subscription in case of public company

a) 90% of the entire issue

b) 75% of the entire issue

c) 50% of the entire issue

d) None of the options

Answer: A

Question: Minimum application money in case of public limited company

a) 5% of the nominal face value

b) 10% of the nominal face value

c) 15% of the nominal face value

d) None of the options

Answer: 5A

Question: Minimum Capital of a Public Company

a) 5 Lakh

b) 1 Lakh

c) 2 Lakh

d) None of the options

Answer: A

Question:  Maximum Rate of discount

a) 10% of the nominal value of share

b) 5% of the nominal face value

c) 15% of the nominal face value

d) None of the options

Answer: A

Question: Issue of share at a discount

a) Section 79

b) Section 78

c) Section 76

d) None of the options

Answer: A

Question: Issue of share at a premium

a) Section 78

b) Section 79

c) Section 76

d) None of the options

Answer: A

Question: Which of the following statement is false:

a) A shareholder is the agent of the company

b) A company is a legal entity quite distinct from its members.

c) A company can buy its own share

d) Same person can agent and creditor of the company

Answer: A 

Question: Which of the following are the characteristics of a company

a) Liability of the members is limited upto the face value of shares held by them

b) It is a voluntary association of persons.

c) A company is a separate body can sue and be sued in its own name

d) All of the above

Answer:A

Question: Formed by special act of the legislature or parliament Called

a) Statutory Company

b) Guarantee company

c) Chartered companies

d) None of the options

Answer: A

Question: Liability of the member is limited upto the amount he guaranteed to contribute in the event of winding up.

a) Guarantee company

b) Statutory Company

c) Chartered companies

d) None of the options

Answer: A

Question: Incorporated under special charter by the king or sovereign

a) Chartered companies

b) Statutory Company

c) Guarantee company

d) None of the options

Answer: A

Question: Minimum number of directors in Pvt. Ltd company

a) 2

b) 3

c) 4

d) No limit

Answer: 2

Question: Minimum number of directors in Ltd company

a) 3

b) 2

c) 4

d) No limit

Answer: 3

Question: Which of the following capital is not shown in companys balance sheet:

a) Reserve Capital

b) Authorised capital

c) Issued and Subscribed capital

d) Called and paid up capital

Answer: A

Question: Permission from central government to issue share capital is required if Nominal capital exceeds

a) 1 Crore

b) 2 Crore

c) 1 Lakh

d) 2 Lakh

Answer: A

Question: A company is said to be Deemed Public company if its Annual Turnover exceeds

a) 25 Crores.

b) 20 Crore

c) 30 Crore

d) None of the options

Answer: A

Question: Share application and allotment account is a:

a) Personal account

b) Real account

c) Nominal account

d) None of the options

Answer: A

Question: Securities premium account is shown on the liabilities side of the balance sheet under the head:

a) Reserves and surplus

b) Share capital

c) Current liabilities

d) None of the options

Answer: A

Question: Discount of issue of share shows debit balance and hence shown on the assets side of the balance sheet under the head

a) Miscellaneous expenditure.

b) Reserves and surplus

c) Share capital

d) Current liabilities

Answer: A

Question: As per section 78 of the companies act, amount collected as premium on securities cannot be utilised for:

a) Purchase of fixed assets

b) Writing off preliminary expenses

c) Buy back of its own shares

d) Premium payable on redemption of preference shares

Answer:A

Question: The portion of the authorised capital which can be called-up only on the liquidation of the company is called

a) Reserve capital

b) Authorised capita

c) Issued capital

d) Called up capital

Answer: A

Question: Penalty for delay in refunding application money

a) 0.15

b) 0.06

c) 0.05

d) 0.2

Answer: A

Question: Which of the following statement is false?

a) A company can raise funds beyond its Authorised capital.

b) Declared dividend should be classified in the balance sheet as a current liability.

c) Dividends are usually paid as a percentage of paid-up-capital.

d) As per the companies act, only preference shares which are redeemable within 20 years can be issued.

Answer: A  

Question: Which of the following statements are correct?

a) Paid-up-capital = called-up-capital - calls in arrear

b) Subscribed capital is that part of capital which is offered to the public for subscription.

c) Issued capital is that part of authorised capital which is applied by the public and allotted by company.

d) None of the options

Answer: A

Question: Which of the following is not a statistical book of a company?

a) Register of debenture holders

b) Share application and allotment book

c) Register of share warrants

d) Register of shares and debentures transferred

Answer: A

Question: Which of the following is not a statutory book of a company?

a) Agenda book

b) Annual returns

c) Minutes book

d) Register of fixed deposits

Answer: A

Question: Securities premium once received cannot be cancelled.

a) True

b) False

c) Both

d) None of the options

Answer: A

Question: Technique used for marketing a public offer of equity shares of a company is called book building process.

a) True

b) False

c) Both

d) None of the options

Answer: A

Question: As per SEBI guidelines, A new company without any track record can issue share at a premium.

a) False

b) True

c) Both

d) None of the options

Answer: A

Question: Share capital suspense account is opened when:

a) When application money is received but balance sheet is prepared before allotment of shares.

b) Balance sheet is not tallied

c) When dividend is declared but not paid

d) When shares are forfeited

Answer: A

Question: A new company set up by existing companies with five year track record can issue share at premium provided:

a) All of the options

b) Participation of existing companies are not less that 50%

c) Prospectus contains justification for issue price

d) The issue price is made applicable to all new investors uniformly.

Answer: A

Question: Issue of share at a discount must be authorised by a resolution passed by the company in general meeting and duly sanctioned by the

a) Central government.

b) State government.

c) Local government

d) None of the options

Answer: A

Question: A company can issue share at a discount if

a) All of the options

b) One year have been elapsed since the date at which the company was allowed to commence business

c) Shares issued at a discount must belong to a class of shares already issued

d) Issue must take place within two must after the date of sanction by the court or within extended time

Answer: A

Question: Maximum number of members in a private company is :

a) 7

b) 200

c) 20

d) No Limit

Answer: B

Question: Capital of a Company is divided in units which is called :

a) Debenture

b) Share

c) Stock

d) Bond

 Answer: B

Question: Shareholders receive from the company :

a) Interest

b) Commission

c) Profit

d) Dividend

Answer: D

Question: Voluntary return of shares for concellation by the shareholders is called

a) Cancellation of shares

b) Forfeiture

c) Surrender of shares

d) None of these

Answer: C

Question: If the Premium on the forfeited shares has already been received, then Securities Premium A/c should be :

a) Credited

b) Debited

c) No treatment

d) None of these

Answer: C

Question: Balance of share forfeiture account is shown in the balance sheet under the head

a) Share Capital Account

b) Reserve and Surplus

c) Current Liabilities and Provisions

d) Unsecured Loans

Answer: A

Question: 700 shares of Rs. 10 each were reissued as Rs. 9 paid up for Rs.7 per share. Entiy for reissue will be :

a) Bank A/c                Dr.    4,900

Share Discount A/c     Dr.    1,400

          To Share Capital A/c              6,300

b) Bank A/c               Dr.      4,900

          To Share Capital A/c              4,900

c) Bank A/c                    Dr.     4,900

Share Forfeiture A/c      Dr.    1,400

           To Share Capital A/c             6,300

d) Bank A/c                 Dr.     4,900

Share Forfeiture A/c    Dr.      2,100

            To Share Capital A/c             7,000

Answer: C

Question: A Ltd. forfeited 2,000 shares of Rs.10 each fully called up for non-payment of final call of Rs.2 per share. 1,200 of these shares were reissued at Rs.7 per share, fully paid up. What is the amount to be transferred to Capital Reserve Account?

a) Rs. 7,600

b) Rs. 1,200

c) Rs. 12,400

d) Rs. 6,000

Answer: D

Question: Using information given in above question, what is the net balance in Share Forfeiture Account:

a) Rs.9,600

b) Rs.6,400

c) Rs. 16,000

d) Rs.2,800

Answer: B

Question: Maximum limit of Premium on shares is:

a) 5%

b) 10%

c) No Limit

d) 100%

Answer: C

Question: When a company issues shares at a premium, the amount of premium should be received by the company :

a) Along with application money

b) Along with allotment money

c) Along with calls

d) Along with any of the above

Answer: D

Question: Amount of securities premium can be utilised for:

a) Writing off the preliminary expenses of the company

b) Issuing bonus shares to the shareholders of the company

c) Buy-back of its own shares

d) All of the above

Answer: D

Question: Which shareholders are returned their capital after some specified time :

a) Redeemable Preference Shares

b) Irredeemable Preference Shares

c) Cumulative Preference Shares

d) Participating Preference Shares

Answer: A

Question: The following statements apply to equity/preference shareholders. Which one of them applies only to preference sharehoders?

a) Shareholders risk the loss of investment

b) Shareholders bear the risk of no dividends in the event of losses

c) Shareholders usually have the right to vote

d) Dividends are usually given at a set amount in every financial year.

Answer: D

Question: Unless otherwise stated, a preference share is always deemed to be :

a) Cumulative, participating and non-convertible

b) Non-cumulative, non-participating and non-convertible

c) Cumulative, non-participating and non-convertible

d) Non-cumulative, participating and non-convertible

Answer: C

Question: A company has  _______

a) Separate Legal Entity

b) Perpetual Existence

c) Limited Liability

d) All of the Above

Answer: D

Question: Shareholders are :

a) Customers of the Company

b) Owners of the Company

c) Creditors of the Company

d) None of these

Answer: B

Question: Who are the real owners of a company?

a) Government

b) Board of Directors

c) Equity shareholders

d) Debentureholders

Answer: C

Question: Authorised capital of a Company is divided into 5,00,000 shares of Rs. 10 each. It issued 3,00,000 shares. Public applied for 3,60,000 shares. Amount of issued capital will be :

a) Rs.30,00,000

b) Rs.36,00,000

c) Rs.50,00,000

d) Rs.6,00,000

Answer: A

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 were allotted shares 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: E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The amount payable on application was Rs.2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from F will be :

a) 60 shares; Rs.120

b) 340 shares; Rs.160

c) 320 shares, Rs.200

d) 300 shares; U40

Answer: D

Question: Using information given in Q. 117, what is the net balance left in Share Forfeiture Account:

a) Rs. 1,400

b) Rs. 1,500

c) Rs.900

d) Rs. 1,000

Answer: D

Question: P Ltd. forfeited 150 shares of Rs.10 each, issued at a premium of Rs.2, for non-payment of the final call of Rs.3. Out of these, 100 shares were re-issued at Rs. 11 per share. How much amount would be transferred to capital reserve?

a) Rs.700

b) Rs.500

c) Rs. 1,200

d) Rs.300

Answer: A

Question: XY Limited issued 2,50,000 equity shares of Rs. 10 each at a premium of Rs.1 each payable as Rs.2.5 on application, Rs.4 on allotment and balance on the first and final call. Applications were received for 5,00,000 equity shares but the company allotted to them only 2,50,000 shares. Excess money was applied towards amount due on allotment. Last call on 500 shares was not received and shares were forfeited after due notice. This is a case of:

a) Over subscription

b) Pro-rata allotment

c) Forfeiture of Shares

d) All of the above

Answer: D

Question: 800 shares of Rs.10 each issued at 20% premium were forfeited for non-payment of allotment money of Rs.5 (including premium) and first & final of Rs.3 per share. Share Forfeiture Account will be credited with :

a) Rs. 1,600

b) Rs.2,400

c) Rs.3,200

d) Rs.4,800

Answer: C

Question: 800 shares of Rs.10 each issued at 30% premium (to be paid on allotment) were forfeited for non-payment of Rs.2 per share on first call and Rs.2 per share on final call. Share Forfeiture Account will be credited with :

a) Rs.2,400

b) Rs.4,800

c) Rs.3,200

d) Rs.7,200

Answer: B

Question: A Company forfeited 300 shares of Rs.10 each, Rs.8 per share called up, on which X had paid application and allotment money of Rs.6 per share. Share Forfeiture Account will be credited with :

a) Rs. 600

b) Rs. 1,800

c) Rs. 1,200

d) Rs.2,400

Answer: B

Question: For what purpose securities premium reserve account cannot be utilized?

a) Amortization of preliminary expenses

b) Distribution of dividend

c) Issue of fully paid bonus shares

d) Buy Back of own shares

Answer: B

Question: Premium on the issue of shares should be shown :

a) On the Assets side of balance sheet

b) On the Equity & Liabilities side of balance sheet

c) In profit & loss Statement

d) None of the Above

Answer: B

Question: A Company issued 50,000 shares of Rs.20 each at 5% premium. Rs.10 were payable on application and balance on allotment. What will be the allotment amount?

a) Rs.5,00,000

b) Rs.4,75,000

c) Rs.5,50,000

d) Rs.5,25,000

Answer: C

Question: Equity shares cannot be issued for the purpose of:

a) Cash Receipts

b) Purchase of assets

c) Redemption of debentures

d) Distribution of dividend

Answer: D

Question: A Company may issue

a) Equity Shares

b) Preference Shares

c) Equity and Preference both shares

d) None of the Above

Answer: C

Question: A company cannot issue :

a) Redeemable Equity Shares

b) Redeemable Preference Shares

c) Redeemable Debentures

d) Fully Convertible Debentures

Answer: A

Question: Authorised Capital of a Company is mentioned in :

a) Memorandum of Association

b) Articles of Association

c) Prospectus

d) Statement in lieu of Prospectus

Answer: A

Question: In case of private placement of shares, the lock in period is :

a) 1 Year

b) 2 Years

c) 3 Years

d) None of the above

Answer: C

• a) All of the options
• b) Has separate legal identity
• c) Has Perpetual existence
• d) Has Common seal

Answer: All of the options

Question: Restricts the right to transfer of shares for

• a) Private company
• b) Limited company
• c) Both
• d) None of the options

Answer: Private company

Question: Prohibits any invitation to public to subscribe for shares and Debentures for

• a) Private company
• b) Limited company
• c) Both
• d) None of the options

Answer: Private company

Question: Prohibits any invitation or acceptance of deposits from persons other than its members , directors or their relatives for

• a) Private company
• b) Limited company
• c) Both
• d) None of the options

Answer: Private company

Question: As per section 617 is a company in which more than 50% of paid up capital is held by Central or State Government or both, Called

• a) Government Company
• b) Private company
• c) Limited company
• d) Foreign Company

Answer: Government Company

Question: Section 591of Act states this type of company is incorporated outside India but has established business in India, Called

• a) Foreign Company
• b) Government Company
• c) Private company
• d) Limited company

Answer: Foreign Company

Question: Authorised Capital is also known as

• a) Nominal or registered Capital
• b) Share capital.
• c) Called up Capital
• d) None of the options

Answer: Nominal or registered Capital

Question: Which is the maximum amount of capital a company can issue

• a) Authorised Capital
• b) Share capital.
• c) Called up Capital
• d) None of the options

Answer: Authorised Capital

Question: Which is part of authorized capital

• a) Issued Capital
• b) Paid up capital
• c) Called up Capital
• d) None of the options

Answer: Issued Capital

Question: Capital raised by issue of shares is called

• a) Share capital.
• b) Authorised Capital
• c) Called up Capital
• d) None of the options

Answer: Share capital.

Question: It cannot exceed authorized capital .

• a) Issued Capital
• b) Paid up capital
• c) Share capital.
• d) None of the options

Answer: Issued Capital

Question: Subscribed Capital is part of

• a) Issued Capital
• b) Share capital.
• c) Paid up capital
• d) Called up Capital

Answer: Issued Capital

Question: It is that part of uncalled capital which the company reserve to be called only upon winding up of company

• a) Reserve Capital
• b) Share capital.
• c) Called up Capital
• d) Called up Capital

Answer: Reserve Capital

Question: Capital Reserve is

• a) Not available for distribution
• b) Available for distribution
• c) Both
• d) None of the options

Answer: Not available for distribution

Question: How many classes of shares

• a) 2
• b) 3
• c) 4
• d) 5

Answer: 2

Question: Classes of shares is

• a) Both
• b) Preference shares
• c) Equity shares
• d) None of the options

Answer: Both

Question: Preference shares : are shares which get preferential right in respect of

• a) Both
• b) Right of dividend
• c) Repayment of capital on winding up
• d) None of the options

Answer: Both

Question: Shares can be issued

• a) Both
• b) for cash
• c) for consideration other than cash
• d) None of the options

Answer: Both

Question: Terms of issue of share

• a) All of the options
• b) Issue of shares at Par
• c) Issue of shares at Premium
• d) Issue of shares at Discount

Answer: All of the options

Question: First instalment paid along with application is called

• a) Application money
• b) Allotment Money
• c) Both
• d) None of the options

Answer: Application money

Question: When Second instalment paid

• a) On allotment
• b) On Application
• c) Both
• d) None of the options

Answer: On allotment

Question: Issues Of Shares At Premium means Issue Of Share At

• a) More than face value
• b) Face Value
• c) Discount Value
• d) Premium value

Answer: More than face value

Question: Issue Of Shares For Cash At Par Means shares are issued

• a) Face Value
• b) Premium value
• c) Discount Value
• d) None of the options

Answer: Face Value

Question: Issue Of Shares At Discount, Rate of discount should not be more than

• a) 0.1
• b) 0.05
• c) 0.12
• d) None of the options

Answer: 0.1

Question: Issue Of Shares At Discount, Sanction from company Law board must be obtained and shares must be issued within

• a) 2 Months of permission
• b) 3 Months of permission
• c) 4 Months of permission
• d) None of the options

Answer: 2 Months of permission

Question: Premium received on issue of shares is shown on

• a) Equity and liabilities part of the balance sheet
• b) Asset part of the balance sheet
• c) Dr side in profit & loss A/c
• d) Cr side in profit & loss A/c

Answer: Equity and liabilities part of the balance sheet

Question: Premium on issue of shares can be used for

• a) Issue of fully paid bonus shares
• b) distribution of profit
• c) Transferred to general reserve
• d) None of the options

Answer: Issue of fully paid bonus shares

Question: Balance in forfeited share account is shown in the balance sheet under the head of

• a) Share capital.
• b) Reserves and surplus
• c) Current liabilities
• d) None of the options

Answer: Share capital.

Question: If a share of Rs. 10 issued at a premium of Rs. 2 on which the full amount has been called and Rs. 2 (including premium) paid is forfeited, the share capital account should be debited with

• a) Rs. 10
• b) Rs. 6
• c) Rs. 5
• d) None of the options

Answer: Rs. 10

Question: When share are forfeited, share capital account is debited with

• a) Called up value of shares
• b) Nominal Value of shares
• c) Paid up value of share
• d) None of the options

Answer: Called up value of shares

Question: If the loss on reissue on shares is less than the amount forfeited, the surplus is transferred to

• a) Capital Reserve
• b) Revenue Reserve
• c) Current liabilities
• d) None of the options

Answer: Capital Reserve

Question: If on share of nominal value of Rs. 10, Rs. 10 have been called up and also received, it will be shown as

• a) Subscribed and fully paid up
• b) Subscribed but not fully paid up
• c) Issued share capital
• d) None of the options

Answer: Subscribed and fully paid up

Question: If on share of nominal value of Rs. 10, Rs. 8 have been called up and also received, it will be shown as

• a) Subscribed but not fully paid up
• b) Subscribed and fully paid up
• c) Issued share capital
• d) None of the options

Answer: Subscribed but not fully paid up

Question: A company can re-issue its seized shares

• a) All of the options
• b) At par
• c) At premium
• d) At discount

Answer: All of the options

Question: The meeting of the board of directors should be at least

• a) Every Quarter
• b) Every Year
• c) Every month
• d) None of the options

Answer: Every Quarter

Question: Premium on issues of shares determined by

• a) Issuer Company
• b) Company Law board
• c) SEBI
• d) None of the options

Answer: Issuer Company

Question: A Company can issue share on discount

• a) After 1 Year of Company Starting
• b) After 1 Year of Company Starting
• c) After permission of Central Govt.
• d) None of the options

Answer: After 1 Year of Company Starting

Question: When does need valuation of shares

• a) Time of Merger
• b) Admission of new Partner
• c) Dissolution of Company
• d) None of the options

Answer: Time of Merger

Question: Which company has special rights under Companies Act 3 (i) section (iii)

• a) Private Company
• b) Limited company
• c) Illegal company
• d) None of the options

Answer: Private Company

Question: A company is formed according to the provisions of Indian Companies Act,

• a) 1956
• b) 1932
• c) 1952
• d) None of the options

Answer: 1956

Question: Capital included in the Total of Balance Sheet of a Company is called :

a) Issued Capital

b) Subscribed Capital

c) Called up Capital

d) Authorised Capital

Answer: B

Question: _____ is transferred to Capital Reserve.

a) Profit from sale of fixed assets

b) Premium on issue of shares

c) Profit on forfeiture of shares

d) All of the Above

Answer: D

Question: Reserve Capital is also known by :

a) Capital Reserve

b) Called up Capital

c) Subscribed Capital

d) None of the above

Answer: D

Question: Persons who start a company are called _____

a) Shareholders

b) Directors

c) Promoters

d) Auditors

Answer: C

Question: Minimum subscription amount of 90% is related to which share capital:

a) Authorised Capital

b) Issued Capital

c) Paid up Capital

d) Reserve Capital

Answer: B

Question: Share Application Account is in the nature of:

a) Real Account

b) Personal Account

c) Nominal Account

d) None of the above

Answer: B

Question: A Company purchased a building for Rs.3,60,000 and issued as payment equity shares at 20% premium. Journal Entry will be :

a) Building A/c                   Dr.            4,00,000

To Share Capital A/c                                             3,20,000

To Securities Premium Reserve A/c                       80,000

b) Share Capital A/c          Dr.             4,00,000

To Building A/c                                                     3,60,000

To Securities Premium Reserve A/c                      40,000

c) Building A/c                  Dr.              3,60,000

To Share Capital A/c                                              3,00,000

To Securities Premium Reserve A/c                       60,000

d) Building A/c                  Dr.              3,60,000

To Share Capital A/c                                               60,000

To Securities Premium Reserve A/c                       3,00,000

Answer: C

Question: A Company purchased a Building for Rs. 12,00,000 out of which Rs.2,00,000 were paid in cash. Balance amount was paid by issue of equity shares of Rs. 10 each at 25% premium. How many shares will be issued by the Company :

a) 1,00,000 Shares

b) 80,000 Shares

c) 1,20,000 Shares

d) 96,000 Shares

Answer: B

Question: If shares of Rs.4,00,000 are issued for purchase of assets of Rs.5,00,000, Rs. 1,00,000 will be treated as _______ :

a) Discount

b) Premium

c) Profit

d) Loss

Answer: B

Question: 400 shares of Rs.10, on which Rs.8 has been called and Rs.5 has been paid, are forfeited. Out of these, 300 shares are re-issued for Rs.9 as fully paid. What is the amount to be transferred to Capital Reserve Account?

a) Rs. 1,200

b) Rs. 1,600

c) Rs.2,000

d) Rs. 1,700

Answer: A

Question: R Ltd. forfeited 600 shares of Rs. 100 each Rs.70 called up on which Mahesh has paid application and allotment money of Rs.50 per share. Of these, 400 shares were re-issued to Naresh as fully paid-up for Rs.110 per share. What is the amount to be transferred to Capital Reserve?

a) Rs.30,000

b) Rs.36,000

c) Rs.24,000

d) Rs.20,000

Answer: D

Question: Madhu Ltd. forfeited 800 shares of Rs.10 each issued at 10% premium to Shyam (Rs.9 called up) on which he did not pay Rs.3 of allotment (including premium) and first call of Rs.2. Out of these, 600 shares were re-issued to Ram as fully paid up for Rs.9 per share. What is to amount to be transferred to capital Reserve?

a) Rs.2,400

b) Rs. 1,800

c) Rs.3,000

d) Rs.3,600

Answer: A

Question: A company has issued 10,000 Equity Shares of Rs. 10 each and it has called the total nominal (face) value. It has received the total amount, except the final call of Rs. 3 on 500 Equity Shares.These 500 Equity Shares will be shown as

a) Subscribed and fully paid-up.

b) Subscribed but not fully paid-up.

c) Issued share capital.

d) None of these.

Answer: B

Question: On an equity share of Rs. 20, the company called-up Rs. 16 but Rs. 14 has been received by the company, Equity Share Capital Account will be credited by

a) Rs. 20.

b) Rs. 16.

c) Rs. 14.

d) Rs.2.

Answer: B

Question: X Ltd. forfeited 2,000 shares of Rs. 10 each (which were issued at par) held by Naresh for non-payment of allotment money of Rs.4 per share.The called-up value per share was Rs. 9.On forfeiture, the amount debited to Share Capital Account will be

a) Rs. 10,000.

b) Rs. 8,000.

c) Rs. 2,000.

d) Rs. 18,000.

Answer: D

Question: Deepak Ltd. offered for subscription 5,50,000 equity shares of Rs. 10 each.The public applied for 5,00,000 shares.

The call ( Rs. 8 per share) was received except from Gopal, who holds 4,000 shares has not paid after application money of Rs. 2 per share and from Shyam who holds 1,000 shares has paid only Rs. 6 per share. Gopal's shares were forfeited. The amount of subscribed capital to be disclosed in the Balance Sheet is

a) Rs.39,96,000.

b) Rs.39,74,000.

c) Rs.49,46,000.

d) Rs.49,74,000.

Answer: B

Question: If a shareholder does not pay his dues on allotment, for the amount due, there will be a

a) Credit balance in the Shares Allotment Account.

b) Debit balance In the Shares Forfeiture Account.

c) Credit balance in the Shares Forfeiture Account.

d) Debit balance in the Shares Allotment Account,

Answer: D

Question: Sun & Moon Ltd. invited applications for 25,000 equity shares of Rs. 10 each and received 30,000 applications along with the application money of Rs. 4 per share. Which of the following alternatives can be followed?

(i) Refund the excess application money and full allotment to rest of the applicants,

(li) Not to allot any share to some applicants, full allotment to some of the applicants and pro rata allotment to the rest of the applicants,

(iii) Not to allot any share to some applicants and make pro rata allotment to other applicants.

(iv) Make pro rata allotment to all the applicants and adjust the excess money received towards call money.

a) only (I) above.

b) both (i) and (iii) above,

c) All of the above.

d) only (li) above.

Answer: C

Question: A Building was purchased for Rs. 9,00,000 and payment was made in Rs. 100 shares at 20% premium. Securities Premium Reserve A/c will be

a) Debited by Rs. 1,50,000

b) Credited by Rs. 1,50,000

c) Debited by Rs. 1,80,000

d) Credited by Rs. 1,80,000

Answer: B

Question: A company purchased machinery for Rs. 1,80,000 and in consideration issued shares at 20% premium. What will be the face value of shares issued :

a) Rs. 1,50,000

b) Rs. 1,44,000

c) Rs. 1,80,000

d) Rs.2,16,000

Answer: A

Question: Forfeiture of shares results in the reduction of:

a) Subscribed Capital

b) Authorised Capital

c) Reserve Capital

d) Fixed Assets

Answer: A

Question: Reserve Capital is :

a) Subscribed Capital

b) Capital Reserve

c) Uncalled Capital

d) Part of the uncalled capital which may be called only at the time of liquidation of the Company

Answer: D

Question: In the Balance Sheet of a company, under the heading share capital, at the last is shown :

a) Authorised Share Capital

b) Subscribed Share Capital

c) Issued Share Capital

d) Reserve Share Capital

Answer: B

Question: Which of the following is not shown under the heading ‘Share Capital’ in a Balance Sheet:

a) Subscribed Capital

b) Issued Capital

c) Reserve Capital

d) Authorised Capital

Answer: C

Question: A Company is created by :

a) Special act of the Parliament

b) Companies Act

c) Investors

d) Members

Answer: B

Question: An artificial person created by Law is called :

a) Sole Tradership

b) Partnership Firm

c) Company

d) All of the Above

Answer: C

Question: The liability of members in a Company is :

a) Limited

b) Unlimited

c) Stable

d) Fluctuating

Answer: A

Question: Following amounts were payable on issue of shares by a Company : Rs.3 on application, Rs.3 on allotment, Rs.2 on first call and Rs.2 on final call. X holding 500 shares paid only application and allotment money whereas Y holding 400 shares did not pay final call. Amount of calls in arrear will be :

a) Rs.3,800

b) Rs.2,800

c) Rs. 1,800

d) Rs.6,200

Answer: B

Question: Metacaf Ltd. issued 50,000 shares of Rs.100 each payable Rs.20 on application (on 1st May 2012); Rs.30 on allotment (on 1st January 2013); Rs.20 on first call (on 1st July 2013) and the balance on final call (on 1st February 2014). Shankar, a shareholder holding 5,000 shares did not pay the first call on the due date. The second call was made and Shankar paid the first call amount along with the second call. All sums due were received.

Total amount received on 1st February was :

a) Rs. 15,00,000

b) Rs. 16,00,000

c) Rs. 10,00,000

d) Rs. 11,00,000

Answer: B

Question: A shareholder holding 600 shares paid the amount of call @ Rs.5 per share on 1st November 2018 whereas the call was due on 1st March 2019. Interest on calls in advance as per Table F will be :

a) Rs.45

b) Rs.60

c) Rs.50

d) Rs.120

Answer: D

Question: Discount allowed on re-issue of forfeited shares is debited to :

a) Share Capital A/c

b) Share forfeiture A/c

c) Statement of Profit & Loss

d) General Reserve A/c

Answer: B

Question: The balance of the forfeited shares account after re-issue of forfeited shares is transferred to :

a) Statement of Profit & Loss

b) Share Capital A/c

c) Capital Reserve A/c

d) General Reserve A/c

Answer: C

Question: X Ltd. forfeited 500 shares of t) 0 each fully called up for non-payment of final call of Rs.3 per share 300 of these shares were reissued at Rs.9 per share, fully paid up. What is the amount to be transferred to Capital Reserve Account?

a) Rs.3,500

b) U,\00

c) Rs.3,200

d) Rs. 1,800

Answer: D

Question: Premium on issue of shares can be used for

a) issue of partly paid bonus shares.

b) writing off losses incurred during the year.

c) writing off discount/loss on Issue of debentures,

d) writing off past losses.

Answer: C

Question: When shares are forfeited. Share Capital Account is debited with

a) nominal (face) value of shares.

b) called-up share capital.

c) paid-up value of shares.

d) market value of shares.

Answer: B

• a) Artificial person
• b) Living person
• c) Non living Person
• d) None of the options

Answer: Artificial person

Question: The director of a company must be

• a) Shareholder
• b) Agent
• c) Employee
• d) None of the options

Answer: Shareholder

Question: Capital reserves are created from

• a) Capital Profit
• b) Average Profit
• c) Share Profit
• d) None of the options

Answer: Capital Profit

Question: Equity share holders are :

• a) Owners
• b) Creditors
• c) Customers of Company
• d) None of the options

Answer: Owners

Question: Nominal share capital is

• a) The amount actually paid by the shareholders
• b) That Part of the authorised capital which is issued by the company
• c) The maximum amount of share capital which a company is authorised to issue
• d) None of the options

Answer: The amount actually paid by the shareholders

Question: Money received in advance from shareholders before it is actually called-up by the directors is

• a) Credit to calls account
• b) Debit to calls account
• c) Capital A/C
• d) None of the options

Answer:  Credit to calls account

Question: The balance of share forfeited account after the reissue of forfeited shares is transferred to

• a) Capital reserve
• b) General reserve
• c) Revenue Reserve
• d) None of the options

Answer: Capital reserve

Question: Balance of share forfeiture account is shown in the balance sheet under the item

• a) Share capital account
• b) Reserves and surpluses
• c) Unsecured Loans
• d) None of the options

Answer: Share capital account

Question: Those companies whose shares are listed on a recognised stock exchange for public trading

• a) Listed Company
• b) Government Company
• c) Private Company
• d) Limited company

Answer: Listed Company

Question: When a company repurchase its own share from the market to reduce the number of share it is called

• a) Buy-back of shares
• b) Issue of shares
• c) Forfeited share
• d) None of the options

Answer: Buy-back of shares 

Question: Sources for Buy-back of Share is

• a) All of the options
• b) Free reserves.
• c) Securities premium account
• d) Proceeds of any shares

Answer: All of the options

Question: Company has

• a) Separate legal entity
• b) Perpetual Existence
• c) Limited Liability
• d) None of the options

Answer: Separate legal entity

Question: Share capital of a company can be divided into

• a) All of the options
• b) Authorised Capital
• c) Issued Capital
• d) Subscribed Capital

Answer: All of the options

Question: The capital of a company is divided into a number of equal parts, Each part is called

• a) Share
• b) Debenture
• c) General Reserve
• d) None of the options

Answer:  Share

Question: They have a right to receive dividend

• a) Preference Share
• b) Share
• c) Debenture
• d) None of the options

Answer: Preference Share

Question: Right shares are first offered to the

• a) Existing share holders
• b) Customers
• c) Companies
• d) None of the options

Answer: Existing share holders

Question: Right share are not offered to the existing equity shareholders if

• a) Both
• b) The company in general meeting has so decided by a special resolution
• c) Decided by an ordinary resolution and same has been approved by the central government
• d) None of the options

Answer: Both

Question: Which of the following statement in false

• a) Bonus shares can be issued out revaluation profit.
• b) Bonus issue is made out of free reserves or securities premium collected in cash only
• c) No bonus issue shall be made within 12 months of any public or right issue.
• d) Company can issue bonus shares in any ratio

Answer: Bonus shares can be issued out revaluation profit.

Question: Which of the following Reserves which are not available for issue of fully paid bonus shares

• a) Capital reserve arising due to revaluation
• b) Dividend equalisation reserve
• c) Profit and loss account
• d) Capital redemption reserve

Answer: Capital reserve arising due to revaluation

Question: Which of the following reserves which can be utilised to make partly paid shares into fully paid up

• a) Capital reserve from sale of fixed assets in cash
• b) Securities premium
• c) Capital redemption reserve
• d) Surplus arising from a change in the method of charging depreciation

Answer: Capital reserve from sale of fixed assets in cash

Question: Raj Limited forfeited 1,000 shares of 10 each for the non-payment of the final call of Rs.2 per share. These shares were reissued @ Rs.8 per share fully paid up. Find out the amount of capital reserve.

• a) 6000
• b) 10000
• c) 15000
• d) 8000

Answer: 6000

Question: Share Capital Account should be debited (at the time of forfeiture) with:

• a) Called up amount
• b) Paid up amount
• c) Premium Amount
• d) All of the options

Answer: Called up amount

Question: Securities premium reserve cannot be used

• a) Working capital
• b) Buy back of shares
• c) Writing off preliminary expenses
• d) None of the options

Answer: Working capital

Question: Which Shares are issued by a company to its employees or directors for their hard work and dedication towards the company.

• a) Sweat Equity Shares
• b) Bonus Shares
• c) Preference Shares
• d) None of the options

Answer: Sweat Equity Shares

Question: What is the limit of Securities Premium on the issue of shares?

• a) Unlimited
• b) 0.1
• c) 0.15
• d) 0.2

Answer: Unlimited

Question: Which capital is to be stated in the Memorandum of Association of a company?

• a) Authorised Capital
• b) Called up capital
• c) Subscribed capital
• d) Subscribed capital

Answer: Authorised Capital

Question: Share capital is shown in the balance sheet under the heading of_______

• a) Shareholders Funds
• b) Current Assets
• c) Current liabilities
• d) None of the options

Answer: Shareholders Funds

Question: have voting rights in all circumstances

• a) Equity Share
• b) Preference Share
• c) Bonus Share
• d) None of the options

Answer: Equity Share

Question: What type of shares can be issued at discount?

• a) Sweat Equity Shares
• b) Equity Shares
• c) Preference Shares
• d) None of the options

Answer: Sweat Equity Shares

Question: Shubham Limited invited applications for subscription of 10,000 Equity shares @ Rs.10 each. Applications were received for 20,000 shares. This situation is called

• a) Oversubscription of shares
• b) Under subscription of shares
• c) Full Allotment of shares
• d) Pro Rata Allotment of share

Answer: Oversubscription of shares

Question: In case of private placement of shares and company does not invite the general public for subscription of shares in that case, company instead of issuing prospectus :

a) Prepares the statement in lieu of prospectus

b) Prepares the Report

c) Prepares the Budget

d) Prepares the Asset side of Balance Sheet

Answer: A

Question: In case of private placement of shares, to raise the amount of capital a company :

a) invites the public through prospectus

b) does not invite the public

c) invites the public through advertisement

d) invites the public through memorandum of association

Answer: B

Question: Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are called :

a) Right Equity Shares

b) Private Equity Shares

c) Sweat Equity Shares

d) Bonus Equity Shares

(iv) Issue and Allotment of Shares

Answer: C

Question: Liability of a shareholder is limited to _____ of the shares allotted to him:

a) Paid up Value

b) Called up value

c) Face value

d) Reserve Price

Answer: C

Question: Preference shares, in case the holders of these have a right to convert their preference shares into equity shares at their option according to the terms of issue, such shares are called :

a) Cumulative Preference Share

b) Non-cumulative Preference Share

c) Convertible Preference Share

d) Non-convertible Preference Share

Answer: C

Question: A preference share which does not carry the right of sharing in surplus profits is called

a) Non-Cumulative Preference Share

b) Non-participating Preference Share

c) Irredeemable Preference Share

d) Non-convertible Preference Share

Answer: B

Question: Which shareholders have a right to receive the arrears of dividend from future profits :

a) Redeemable Preference Shares

b) Participating Preference Shares

c) Cumulative Preference Shares

d) Non-Cumulative Preference Shares

Answer: C

Question: If a share of Rs. 100 on which Rs.60 has been paid, is forfeited, it can be re-issued at the minimum price of:

a) Rs. 60

b) Rs.100

c) Rs. 40

d) Rs.140

Answer: C

Question: A Company forfeited 1,000 shares of Rs. 10 each fully called, on which Rs.6,000 has been paid. Out of these 800 shares were reissued upon payment of Rs.6,600. What is the amount to be transferred to Capital Reserve?

a) Rs.4,800

b) Rs.6,000

c) Rs.4,600

d) Rs.3,400

Answer: D

Question: A company forfeited 700 shares of Rs.10 each, on which only Rs.5 per share was paid. Of these, 200 shares were reissued at Rs.9 per share. Amount from Share Forfeiture Account to Capital Reserve Account will be transferred :

a) Rs.800

b) Rs.200

c) Rs.3,500

d) Rs.2,500

Answer: A

Question: On an equity share of Rs.10 the company has called up Rs.8 but Rs.6 have been received by the company is forfeited, the capital account should be debited by:

a) Rs.10

b) Rs. 8

c) Rs. 6

d) Rs. 2

Answer: B

Question: If a share of Rs. 10 issued at a premium of Rs.3 on which the full amount has been called and Rs.8 (including premium) paid is forfeited the capital account should be debited with :

a) Rs. 5

b) Rs. 8

c) Rs.10

d) Rs.13

Answer: C

Question: If a share of Rs.10 issued at a premium of Rs.1 on which Rs. 9 (including premium) have been called and Rs.7 including premium is paid is forfeited, the capital account should be debited by :

a) Rs.10

b) Rs. 7

c) Rs. 8

d) Rs. 9

Answer: C

Question: As per SEBI Guidelines, Application money should not be less than of the issue price of each share.

a) 10%

b) 15%

c) 25%

d) 50%

Answer: C

Question: 4,000 Equity Shares of Rs. 10 each were issued at 8% premium to the promoters of a company for their services. Which account will be debited?

a) Share Capital Account

b) Goodwill Account/Incorporation Cost Account

c) Securities Premium Reserve Account

d) Cash Account

Answer: B

Question: If vendors are issued fully paid shares of Rs. 1,25,000 in consideration of net assets of Rs. 1,50,000, the balance of Rs.25,000 will be credited to :

a) Statement of Profit & Loss

b) Goodwill Account

c) Security Premium Reserve Account

d) Capital Reserve Account

Answer: C

Question: On a share of Rs. 10 issued at a premium of Rs. 2, whole amount is called-up and Rs. 7 is received, Share Capital Account will be credited by

a) Rs. 10

b) Rs.12.

c) Rs.7.

d) Rs.2.

Answer: A

Question: On a share of Rs. 20 issued at a premium of Rs. 4 on which Rs. 16 (including premium) is called-up and Rs. 10 (including premium) paid is forfeited, the Share Capital Account will be debited by

a) Rs.20.

b) Rs.12.

c) Rs.10.

d) *16.

Answer: B

Question: At the time of reissue of all forfeited shares

a) General Reserve is debited with the credit balance left in the Forfeited Shares Account.

b) General Reserve is credited with the credit balance left in the Forfeited Shares Account.

c) Capital Reserve is debited with the credit balance left in the Forfeited Shares Account.

d) Capital Reserve is credited with the credit balance left in the Forfeited Shares Account.

Answer: D

Question: Green Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro rata basis. The amount payable on application is Rs. 2 per share. Mohan applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from Mohan are

a) 60shares, Rs. 120.

b) 320 shares, Rs. 200.

c) 340shares, Rs. 100.

d) 300shares, Rs.240.

 Answer: D

Question: Star Ltd. issued 10,000 equity shares of Rs. 100 each at a premium of 20%. Mamta, who has been allotted 2,000 shares did not pay first and final call of Rs. 5 per share. On forfeiture of Mamta's shares, amount debited to Securities Premium Reserve Account will be

a) Rs. 5,000.

b) Rs. 10,000.

c) Rs. 15,000.

d) NIL.

Answer: D

Question: To whom dividend is given at a fixed rate in a company?

a) To equity shareholders

b) To preference shareholders

c) To debentureholders

d) To promoters

Answer: B

Question: Preference shareholders have

a) Preferential right as to dividend only

b) Preferential right in the management

c) Preferential right as to repayment of capital at the time of liquidation of the company

d) Preferential right as to dividend and repayment of capital at the time of liquidation of the company

Answer: D

Question: The shares on which there is no any pre-fixed rate of dividend is decided, but the rate of dividend is fluctuating every year according to the availability of profits, such share are called :

a) Equity Share

b) Non-cumulative preference share

c) Non-convertible preference share

d) Non-guaranteed preference share

Answer: A

Question: Anthony Ltd. Issued 40,000 equity shares of Rs. 20 each payable as Rs. 5 on application; Rs. 7 on allotment and Rs. 8 on final call. Company received the due amount but one shareholder holding 250 shares did not pay the allotment money and another shareholder holding 150 shares failed to pay the amount due on final call. Total amount of Calls-in-Arrears is

a) Rs. 1,750.

b) Rs. 3,200.

c) Rs. 6,000.

d) Rs. 4,950.

Answer: D

Question: Gopal Ltd. purchased machine of Rs. 1,15,000 from Indian Traders, payment of Rs. 10,000 was made by issuing cheque and the remaining amount by issue of equity shares of the face value of Rs. 10 each fully paid at an issue price of Rs. 10.50 each. Amount of securities premium will be

a) Rs. 6,000.

b) Rs. 7,000.

c) Rs. 5,000.

d) Rs. 4,000.

Answer: C

Question: Mohar Ltd. forfeited 160 shares of Rs. 10 each on which the holder had paid only the application money of Rs. 2 per share. Out of these, 40 shares were reissued to Gaurav as fully paid for Rs. 9 per share.The gain on reissue Is

a) Rs. 320.

b) Rs. 160.

c) Rs. 40.

d) None of these.

Answer: C

Question: Interest on calls in arrears is charged according to Table F at:

a) 6% p.a.

b) 10% p.a.

c) 5% p.a.

d) 12% p.a.

Answer: B

Question: Amount of Calls in Arrears is shown in the Balance Sheet

a) as deduction from issued capital

b) as deduction from subscribed capital

c) as addition to subscribed capital

d) on the assets side

Answer: B

Question: As per Table F, the Company is required to pay ______ interest on the amount of calls in advance

a) 12% p.a.

b) 5% p.a.

c) 10% p.a.

d) 6% p.a.

Answer: A

Question: A Company may issue the shares :

a) By Private Placement of Shares

b) By Public Subscription of Shares

c) For Consideration other than cash

d) By All of the Above

Answer: D

Question: Public subscription of shares include :

a) To Issue Prospectus

b) To Receive Applications

c) To Make Allotment

d) All of the Above

Answer: D

Question: Which of the following will define, when appropriation of a certain number of shares is made to an applicant in response to his application?

a) Share allotment

b) Share forfeiture

c) Share trading

d) Share Purchase

Answer: A

Question: If a share of Rs. 10 issued at a premium of Rs. 2 on which the full amount has been called and Rs. 8 (including premium) paid is forfeited, the Share Capital Account will be debited with

a) Rs. 12.

b) Rs.10.

c) Rs. 8.

d) Rs. 6.

Answer: B

Question: If discount on reissue of shares is less than the amount forfeited, the surplus is transferred to

a) Capital Reserve.

b) General Reserve.

c) Securities Premium Reserve.

d) Statement of Profit and Loss.

Answer: A