CBSE Class 12 Accountancy Accounting For Share Capital MCQs Set B

Question: A company is

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

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) r 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

Question: Authorized share capital is also known as:

• a) Nominal Capital

• b) Called up capital

• c) Issued capital

• d) Reserve Capital

Answer: Nominal Capital

Question: When the entire face value of a share is called by the company and is also paid by the shareholder, It is known as

• a) Subscribed and fully paid up capital

• b) Subscribed but not fully paid up capital

• c) None of the options

Answer: Subscribed and fully paid up capital

Question: When a company makes an offer or invites the public in general to subscribe its shares, it is known as

• a) Initial Public Offer

• b) Issue of shares at par

• c) Issue of shares at Premium

• d) None of the options

Answer: Initial Public Offer

Question: Equity Shares are

• a) Not Convertible.

• b) Convertible

• c) Both

• d) None of the options

Answer: Not Convertible.

Question: As per the Companies Act, 2013, companies cannot issue

• a) Irredeemable Preference Shares

• b) Equity Shares

• c) Bonus Shares

• d) None of the options

Answer: Irredeemable Preference Shares

Question: Share Forfeiture account is a

• a) Nominal Account

• b) Fictitious Asset

• c) Personal Account

• d) Real Account

Answer: Nominal Account

Question: Which is not true about Preference Shares?

• a) No Dividend

• b) Can be Redeemed

• c) Can be converted

• d) Right to Dividend

Answer: No Dividend

Question: In case of a public company, it must have at least _____ Directors.

• a) 3

• b) 5

• c) 7

• d) 9

Answer: 3

Question: Which of the following is a free reserve

• a) Capital reserve collected in cash

• b) Investment allowance reserve

• c) Development rebate reserve

• d) Plant revaluation reserve

Answer: Capital reserve collected in cash

Question: Which of the following statement is false

• a) Bonus issue is made in lieu of dividend

• b) Bonus issue is not made unless the partly paid shares are made fully paid up

• c) Bonus issue must be implemented within six months from the date of approval

• d) Bonus is simply capitalisation of free reserves

Answer: Bonus issue is made in lieu of dividend 

Question: Which account is debited When shares are issued to the promoters:

• a) Incorporation Expenses A/c

• b) Premium A/c

• c) Discount A/c

• d) Capital A/c

Answer: Incorporation Expenses A/c

Question: Which Shares have the right to receive arrears of dividend before dividend is paid to the equity shareholders.

• a) Cumulative Preference Shares

• b) Redeemable Preference Shares

• c) Equity Shares

• d) All of the options

Answer: Cumulative Preference Shares

Question: If a shareholder does not pay calls money on time a notice of ___________ days should be given to the shareholder to pay the amount.

• a) 14 days

• b) 15 days

• c) 10 days

• d) None of the options

Answer: 14 days

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

• a) Sweat Equity Shares

• b) Preference Shares

• c) Equity Shares

• d) All of the options

Answer: Sweat Equity Shares

Question: Which of the following way is not used by the company to issue the shares?

• a) Without stock exchange

• b) By public subscription

• c) By private placement

• d) All of the options

Answer: Without stock exchange

Question: Return of partly paid shares by the shareholders to the company is known as

• a) Surrender of shares

• b) Forfeiture

• c) Both

• d) None of the options

Answer: Surrender of shares

Question: Those share who carry preferential right in respect of dividend at a fixed rate are called

• a) Preference share

• b) Equity share

• c) Both

• d) None of the options

Answer: Preference share

Question: Which of the following is not a type of Preference Shares

• a) Irredeemable Preference Shares

• b) Redeemable Preference shares

• c) Participating Preference shares

• d) Convertible Preference Shares

Answer: Irredeemable Preference Shares

Question: When an applicant gets less shares than the applied share, this situation is called

• a) Pro-rata

• b) Premium

• c) Discount

• d) None of the options

Answer: Pro-rata

Question: The amount of premium is decided by the board of Directors as per the guidelines issued by

• a) SEBI

• b) BSE

• c) NIFTY

• d) All of the options

Answer: SEBI

Question: Any profit on reissue of Forfeited shares represents capital profit & hence it should be transferred to

• a) Capital reserve

• b) Asset side of balance sheet

• c) Share capital

• d) None of the options

Answer: Capital reserve

Question: Share Application A/c and Share Allotment A/c is:

• a) Personal Account

• b) Nominal Account

• c) Real Account

• d) None of the options

Answer: Personal Account

Question: Dividend is paid to the

• a) Shareholders

• b) Debenture holders

• c) Both

• d) None of the options

Answer: Shareholders

Question: Sweat equity Shares can be issued only after

• a) One year of commencement of business

• b) Two years of commencement of business

• c) Three years of commencement of business

• d) None of the options

Answer: One year of commencement of business

Question: Which share issued for Employees hard work

• a) Sweat equity Shares

• b) Preference share

• c) Equity share

• d) None of the options

Answer: Sweat equity Shares

Question: Which Share to relatively small selected group of persons

• a) Private placement of shares

• b) Sweat equity Shares

• c) Preference share

• d) Equity share

Answer: Private placement of shares

Question: When the number of received is less than the number of shares offered to public it is under subscription, Called

• a) Under subscription

• b) Oversubscription

• c) Preferential Allotment

• d) None of the options

Answer: Under subscription

Question: When the number of received is more than the number of shares offered to public, In such cases

• a) All of the options

• b) Either reject the excess applications

• c) Make prorata allotment

• d) Partially refund amount on other prorata allotment is made

Answer: All of the options

Question: A certain number of shares are reserved for purchase and issue to key permanent employees at a price much lower than the market price called

• a) Employees stock option plan

• b) Preferential Allotment

• c) Private placement of shares

• d) None of the options

Answer: Employees stock option plan

Question: Cancellation or termination of membership of a share holder by taking away the shares and rights of membership by

• a) Forfeiture of shares

• b) Issue of shares

• c) Re-Issue of shares

• d) None of the options

Answer: Forfeiture of shares

Question: B Ltd. forfeited 300 shares of Rs. 100 each, Rs.70 called up, for non-payment of first call of Rs.20 per share. Out of these, 200 shares were reissued for Rs. 60 per share as Rs.70 paid up. What is the amount to be transferred to Capital Reserve Account?

a) Rs. 13,000

b) Rs. 8,000

c) Rs. 2,000

d) Rs. 7,000

Answer: B

Question: 2,000 shares of Rs.10, on which XI has been called and X5 has been paid, are forfeited. Out of these, 1,500 shares are re-issued for X9 as fully paid. What is the amount to be transferred to Capital Reserve Account?

a) Rs.6,000

b) Rs.7,500

c) Rs. 10,000

d) Rs. 8,500

Answer: A

Question: A-Ltd. forfeited 400 shares of Rs.20 each Rs. 15 called up on which application and allotment money of Rs.11 per share has been received. Of these, 100 shares were re-issued as fully paid-up for X24 per share. What is the amount to be transferred to Capital Reserve?

a) Rs. 1,500

b) Rs.4,400

c) Rs.1,100

d) Rs.3,500

Answer: C

Question: Z Ltd. forfeited 300 shares of Rs. 10 each issued at 20% premium (Rs.9 called up) on which Rs.4 of allotment (including premium) and first call of X2 has not been received. Out of these, 100 shares were re-issued as fully paid up for Rs.9 per share. What is to amount to be transferred to capital Reserve?

a) Rs.400

b) Rs.300

c) Rs.500

d) Rs.600

Answer: A

Question: MIG Ltd. forfeited 40 shares of Rs. 10 each issued at a premium of 40% to Raj who had applied for 48 shares. After having paid Rs. 6 (including Rs. 2 premium), he did not pay allotment money of Rs. 2 (including Rs. 1 premium) and on his subsequent failure to pay the first call of Rs. 3 (including Rs. 1 premium) his shares were forfeited. The amount to be credited to Forfeited Shares Account is

(a) Rs. 288.

(b) Rs. 200.

(c) Rs. 192.

(d) Rs. 160.

Answer: B

Question: Nominal Share Capital is ................

a) that part of authorised capital which is issued by the company

b) the amount of capital which is actually applied by the prospective shareholders

c) the amount of capital which is actually paid by the shareholders

d) the maximum amount of share capital which a company is authorised to issue

Answer: D

Question: The portion of the capital which can be called-up only on the winding up of the Company is called ................

a) Authorised Capital

b) Called up Capital

c) Uncalled Capital

d) Reserve Capital

Answer: D

Question: Reserve Capital is a part of:

a) Paid-up Capital

b) Forfeited Share Capital

c) Assets

d) Capital to be called up only on liquidation of company

Answer: D

Question: Which of the following statements is true?

a) Authorised Capital = Issued Capital

b) Authorised Capital > Issued Capital

c) Paid up Capital > Issued Capital

d) None of the above

Answer: B

Question: A company issued 4,000 equity shares of Rs. 10 each at par payable as under : On application Rs.3; on allotment Rs.2; on first call Rs.4 and on final call Rs.1 per share.

Applications were received for 13,000 shares. Applications for 3,000 shares were rejected and pro-rata allotment was made to the applicants for 10,000 shares. How much amount will be received in cash on first call? Excess application money is adjusted towards amount due on allotment and calls.

a) Rs.6,000

b) Nil

c) Rs. 16,000

d) Rs. 10,000

Answer: A

Question: A company issued 4,000 equity shares of Rs.10 each at par payable as under : On application Rs.3; on allotment Rs.2; on first call Rs.4 and on final call Rs.1 per share.

Applications were received for 10,000 shares. Allotment was made pro-rata. How much amount will be received in cash on allotment?

a) Rs.8,000

b) Rs. 12,000

c) Nil

d) None

Answer: C

Question: A company issued 5,000 equity shares of Rs. 100 each at par payable as to :

Rs.40 on application; Rs.50 on allotment and Rs.10 on call.

Applications were received for 8,000 shares. Allotment was made on pro-rata. How much amount will be received in cash on allotment?

a) Rs.2,50,000

b) Rs. 1,20,000

c) Rs. 1,30,000

d) Rs.50,000

Answer: C

Question: Issue of shares at a price lower than its face value is called :

a) Issue at a Loss

b) Issue at a Profit

c) Issue at a Discount

d) Issue at a Premium

Answer: C

Question: According to Companies Act, Minimum Subscription has been fixed at ................ of the issued amount.

a) 25%

b) 50%

c) 90%

d) 100%

Answer: C

Question: One of the conditions, in addition to others, for allotment of shares is :

a) Resolution in General Meeting

b) Receiving Minimum Subscription

c) Full Subscription by Public

d) Full Payment on Application

Answer: B

Question: Issue of shares at a price higher than its face value is called :

a) Issue at a Profit

b) Issue at a Premium

c) Issue at a Discount

d) Issue at a Loss

Answer: B

Question: On issue of shares Premium is :

a) Profit

b) Income

c) Revenue Receipt

d) Capital Profit

Answer: D

Question: Which of the following is not a capital profit?

a) Profit prior to incorporation of the company

b) Profit from the sale of fixed assets

c) Premium on issue of shares

d) Compensation received on the termination of a contract

Answer: D

Question: If 500 shares of Rs.10 issued at a premium of Rs.1 on which Rs.9 (including premium) have been called and Rs.7 including premium have been paid are forfeited, the forfeiture account should be credited by :

a) Rs.3,000

b) Rs.3,500

c) Rs.4,000

d) Rs.4,500

Answer: A

Question: A Company forfeited the following shares :

200 shares of Rs.10 each; called up Rs.9 per share, paid-up tl per share. Journal Entry for forfeiture will be) :

a) Share Capital A/c           Dr.           2,000

To Share Forfeiture A/c                                            200

To Calls in Arrears A/c                                            1,800

b) Share Capital A/c           Dr.              2,000

To Share Forfeiture A/c                                           1,800

To Calls in Arrears A/c                                               200

c) Share Capital A/c           Dr.             1,800

To Share Forfeiture A/c                                           1,400

To Calls in Arrears A/c                                              400

d) Share Capital A/c           Dr.              1,800

To Share Forfeiture A/c                                            400

To Calls in Arrears A/c                                            1,400

Answer: C

Question: A Ltd. forfeited 500 shares of Rs.10 each, Rs.7 called up, issued at a premium of Rs.2 per share to be paid at the time of allotment for non-payment of first call of Rs.2 per share. Entry on forfeiture will be :

a) Share Capital A/c                     Dr.           3,500

Securities Premium Reserve A/c   Dr.          1,000

To Share First Call A/c                                                  1,000

To Share Forfeiture A/c                                                 3,500

b) Share Capital A/c                      Dr.           4,500

Securities Premium Reserve A/c    Dr.           1,000

To Share First Call A/c                                                  1,000

To Share Forfeiture A/c                                                  4,500

c) Share Capital A/c                      Dr.            4,500

To Share First Call A/c                                                  1,000

To Share Forfeiture A/c                                                  3,500

d) Share Capital A/c                        Dr.          3,500

To Share First Call A/c                                                   1,000

To Share Forfeiture A/c                                                  2,500

Answer: D

Question: Amount of Calls in Advance is

a) Added to Share Capital

b) Deducted from Share Capital

c) Shown on the Assets side

d) Shown on the Equity & Liabilities side

Answer: D

Question: From which account, expenses on issue of shares will be written off first of all:

a) Statement of Profit and Loss

b) Miscellaneous Expenditure Account

c) Share Issue Expenses Account

d) Securities Premium Reserve Account

Answer: D

Question: Pro-rata allotment of shares is made when there is :

a) Under subscription

b) Oversubscription

c) Equal subscription

d) As and when desired by directors

Answer: B

Question: If applicants for 80,000 shares were allotted 60,000 shares on prorata basis, the shareholder who was allotted 1,200 shares must have applied for :

a) 900 Shares

b) 3,600 Shares

c) 1,600 Shares

d) 4,800 Shares

Answer: C

Question: A Company offered 50,000 shares of Rs. 10 each at par payable as to Rs.3 on applications, Rs.5 on allotment and the balance on final call. Applications were received for 60,000 shares and the allotment was made pro-rata. The excess application money was to be adjusted on allotment and call. How much amount will be transferred from Share Application A/c to Share Allotment A/c?

a) Rs. 1,80,000

b) Rs.30,000

c) Rs. 1,50,000

d) Rs.50,000

Answer: B

Question: Which one of the following items is not a part of subscribed capital?

a) Equity Shares

b) Preference Shares

c) Forfeited Shares

d) Bonus Shares

 Answer: C

Question: At the time of forfeiture of shares the share capital account is debited with

a) Face value

b) Called up value

c) Paid up value

d) Issued value

Answer: B

Question: 600 shares of Rs.10 each were forfeited for non-payment of Rs.2 per share on first call and Rs.5 per share on final call. Share Forfeiture Account will be credited with:

a) Rs. 1,200

b) Rs. 1,800

c) Rs.3,000

d) Rs.4,200

Answer: B

Question: On 300 equity shares of Rs.10 the company has called up Rs. 8 but Rs. 6 have been received by the company are forfeited, the forfeiture account should be credited by :

a) Rs.2,400

b) Rs. 1,200

c) Rs. 1,800

d) Rs. 600

 Answer: C

Question: If 400 shares of Rs. 10 issued at a premium of Rs.3 on which the full amount has been called and (including premium) have been received are forfeited, the forfeiture account should be credited with :

a) Rs.3,200

b) Rs.2,000

c) Rs. 1,200

d) Rs.2,800

Answer: B

Question: The amount of discount on reissue of forfeited shares cannot exceed :

a) 5% of the face value

b) 10% of the face value

c) The amount received on forfeited shares

d) The amount not received on forfeited shares

Answer: C

Question: T Ltd. forfeited 400 shares of Rs. 10 each, Rs.7 called up, for non-payment of first call of Rs.2 per share. Out of these, 300 shares were reissued for Rs.6 per share as Rs.7 paid up. What is the amount to be transferred to Capital Reserve Account?

a) Rs. 1,700

b) Rs. 1,200

c) Rs.2,100

d) Rs. 300

Answer: B

Question: 300 equity shares of Rs.10 each were issued at Rs.5 per share premium. Only Rs.4 per share on application has been paid on these shares. These shares were forfeited. Later on out of these, 200 shares were reissued at Rs.12 per share as fully paid. What will be amount of Capital Reserve?

a) Rs. 500

b) Rs. 1,200

c) Rs. 200

d) Rs. 800

Answer: D