CUET Accountancy MCQs Unit V Accounting for Share and Debenture Capital

CUET Accountancy Accounting For Share Capital MCQs

Question: Minimum number of members in a Private Company

a) 2

b) 5

c) 7

d) 1

Answer: 2

Question: A company is

a) Artificial person

b) Living person

c) Non living Person

d) None of the options

Answer: Artificial person

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: 90% of the entire issue

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: 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 shareholder is the agent of the company

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: 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: 1 Crore

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: Penalty for delay in refunding application money

a) 0.15

b) 0.06

c) 0.05

d) 0.2

Answer: 0.15

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: 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: True

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: Face value

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

a) Debenture

b) Share

c) Stock

d) Bond

Answer: Share

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: Rs. 8

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: Rs.6,400

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: Security Premium Reserve Account

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: Cumulative, non-participating and non-convertible

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: To preference shareholders

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: 300 shares; U40

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: 10% p.a.

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: Distribution of dividend

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: 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: A company cannot issue :

a) Redeemable Equity Shares

b) Redeemable Preference Shares

c) Redeemable Debentures

d) Fully Convertible Debentures

Answer: Redeemable 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: A Company is

a) All of the options

b) Has separate legal identity

c) Has Perpetual existence

d) Has Common seal

Answer: All of the options

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: 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: 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: 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: 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: Rs.1,100

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: 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: Capital to be called up only on liquidation of company

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

a) 25%

b) 50%

c) 90%

d) 100%

Answer: 90%

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: 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: 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: Shown on the Equity & Liabilities side

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: Issued Capital

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: Rs.30,000

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: Rs.20,000

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: The amount received on forfeited shares

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: Credited by Rs. 1,50,000

Question:  Maximum limit of premium on shares is :

a) 32%

b) 20%

c) No limit

d) 100%

Answer: No limit

Question: A Company is created by :

a) Special act of the Parliament

b) Companies Act

c) Investors

d) Members

Answer: Companies Act

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

a) Equity shares issued to vendor

b) Preference shares of convertible type

c) Forfeited shares

d) Bonus shares

Answer: Forfeited shares

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: Rs.120

Question:   The subscribed share capital of Mukand Ltd is Rs.1,00,00,000 of Rs.100 each. There were no calls in arrear till the final call was made. The final call made was paid on 97,500 shares. The calls in arrear amounted to Rs.87,500.The final call on share :

a) Rs.20

b) Rs.35

c) Rs.25

d) Rs.45

Answer: Rs.35

Question: The director of a company must be

a) Shareholder

b) Agent

c) Employee

d) None of the options

Answer: Shareholder

Question:  Faltu Limited invited application for 2,00,000 shares of Rs.10 each. These shares were issued at premium of Rs.11 each which was allowed at the time of allotment. All money was called and duly received except on 10,000 shares on which only application money of Rs.3 per share was received.

The company forfeited all the shares. 7000 of forfeited share where re-issued at Rs.13per share. State the amount of securities premium to be shown under the head -Reserve and surplus.

a) Rs.20,00,000

b) Rs.11,11,000

c) Rs.8,11,000

d) Rs.21,11,000

Answer: Rs.21,11,000

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: The director of a company must be

a) Shareholder

b) Agent

c) Employee

d) None of the options

Answer: Shareholder

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: 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: 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: 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: Non-participating Preference Share

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: 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: Rs.10

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: 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: Rs.12.

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: 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: Rs. 4,950.

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: Convertible Preference Share

Question: Public subscription of shares include :

a) To Issue Prospectus

b) To Receive Applications

c) To Make Allotment

d) All of the Above

Answer: All of the Above

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: Rs.10

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: Capital Reserve.

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: NIL.

Question: Maximum number of members in a Private Company

a) 50

b) 60

c) 70

d) 100

Answer: 50

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: Rs. 5,000.
 

CUET Accountancy Redemption Of Debentures MCQs

Question: Types of debentures on the basis of priority

a) Both

b) First debentures

c) Second debenture

d) None of the options

Answer: Both

Question: Profit on sale of debenture redemption fund investments in the first instance is credited to :

a) Debenture redemption fund account

b) Profit and loss appropriation account,

c) General reserve account

d) None of the options

Answer: Debenture redemption fund account

Question: Which of the following is not true about Debenture redemption reserve(DRR)

a) DRR is required in case of Fully convertible debenture.

b) DDR created @ 50% of the amount of debentures issued before commencement of redemption

c) Withdrawal from DRR can be made only after 10% of debenture liability has been redeemed.

d) None of the options

Answer: DRR is required in case of Fully convertible debenture.

Question: Creation of DRR is compulsory in case of

a) Non-Convertible Debentures

b) Convertible Debentures

c) Banking Companies

d) None of the options

Answer: Non-Convertible Debentures

Question: Which is a reserve representing retentions out of profit made for the purpose of redemption of debentures

a) Debenture Redemption Reserve

b) Capital reserve

c) General reserve

d) None of the options

Answer: Debenture Redemption Reserve

Question: Debentures can be issued at par at premium or discount but redemption only

a) Both

b) Redeemable at par

c) Redeemable at premium

d) None of the options

Answer: Both

Question: Premium on redemption of debentures account is

a) A nominal account - expenditure

b) A real account

c) A personal account

d) A nominal account - income

Answer: A nominal account - expenditure

Question: A Debenture of a company represents

a) Debt

b) Capital

c) Shareholders Fund

d) Assets

Answer: Debt

Question: Sources of Redemption of debentures

a) All of the options

b) Proceeds from fresh issue of share capital or debenture holders.

c) From accumulated profits

d) Proceeds from sale of fixed assets.

Answer: All of the options

Question: In case debentures of Rs. 10000 are issued at par but redeemable at a premium of 10% the premium payable is debited to

a) Loss on issue of debentures A/c

b) Debentures Suspense Account

c) Both

d) None of the options

Answer: Loss on issue of debentures A/c

Question: Which debentures are issued with a specific rate of interest

a) Coupon rate debentures

b) First debentures

c) Second debenture

d) None of the options

Answer: Coupon rate debentures

Question: Why does a company purchase its own debentures from the open market?

a) For Cancellation OR Investment

b) For Raising Finance

c) For Investment only

d) None of the options

Answer: For Cancellation OR Investment

Question: Premium payable on redemption of debentures is in nature of

a) Personal Account

b) Real Account

c) Current Account

d) None of the options

Answer: Personal Account
 

CUET Accountancy Issue Of Debentures MCQs

Question: Which of the following statements is true?

a) A debenture issued at a discount can be redeemed at a premium

b) A debenture holder is an owner of the company

c) A debenture holder can get his money back only on the liquidation of the company

d) A debenture holder receives interest only in the event of profits

Answer: A debenture issued at a discount can be redeemed at a premium

Question: Which of the following is not true about debenture stock:

a) Debenture stock are identified by their distinct number

b) It must be fully paid.

c) Debenture Stock can be transferred in fraction.

d) None of the options

Answer: Debenture stock are identified by their distinct number

Question: When debentures are issued as collateral security, the final entry for recording the transaction in the books is

a) Debit debenture suspense a/c. and credit debentures a/c.

b) Credit debentures a/c. and debit cash a/c.

c) Debit debenture suspense a/c. and credit cash a/c.

d) None of the options

Answer: Debit debenture suspense a/c. and credit debentures a/c.

Question: Debentures are shown in the balance sheet of a company under the head of

a) Non current Liabilities

b) Current Liabilities

c) Share Capital

d) None of the options

Answer: Non current Liabilities

Question: Debenture is a

a) Long term Loan

b) Short term loan

c) Dividend

d) None of the options

Answer: Long term Loan

Question: On liquidation of company, principal amount of debentures is returned :

a) First of All

b) Last of All

c) Before Equity Capital

d) After Equity Capital

Answer: Before Equity Capital

Question: Issued 5,000, 12% debentures of Rs. 100 each at a discount of 2%, redeemable at a premium of 5%. In such case :

a) Loss on Issue will be Credited by Rs. 10,000.

b) Loss on Issue will be debited by Rs.35,000.

c) Premium on Redemption will be debited by Rs.25,000.

d) Premium on Redemption will be credited by Rs.35,000.

Answer: Loss on Issue will be debited by Rs.35,000.

Question: Which of the following statements is false?

a) At maturity, debenture holders get back their money.

b) Debentures can be forfeited for non-payment of call money.

c) In company’s balance sheet, debentures are shown under the head Long term Borrowings.

d) Interest on debentures is a charge against profits.

Answer: Debentures can be forfeited for non-payment of call money.

Question: The amount of debenture is returned to the holders at the end of

a) Predetermined maturity period

b) Company

c) Current Year

d) None of the options

Answer: Predetermined maturity period

Question: Person holding debenture is known as

a) Debenture Holder

b) Share Holder

c) Both

d) None of the options

Answer: Debenture Holder

Question: When debentures are issued at par and are redeemable at a premium, the loss on such an issue debited to

a) Loss on issue of debentures account

b) Profit and loss account

c) Profit and loss account

d) None of the options

Answer: Loss on issue of debentures account

Question: Profit on sale of debenture redemption fund investments in the first instance is credited to

a) Debenture redemption fund account

b) Profit and loss appropriation account

c) General reserve account

d) None of the options

Answer: Debenture redemption fund account

Question: Issue of Debenture at more than face value, Called

a) Issue of debenture at premium

b) Issue of debenture at par

c) Both

d) None of the options

Answer: Issue of debenture at premium

Question: Insert on Debentures is calculated

a) At a fixed rate on its face value

b) At a fixed rate on its Par value

c) At a average rate on its Par value

d) None of the options

Answer: At a fixed rate on its face value

Question: Premium on Redemption of Debentures Account is

a) Personal Account

b) Real Account

c) Capital A/c

d) None of the options

Answer: Personal Account

Question: Debenture holders are :

a) Owners of the Company

b) Debtors of the Company

c) Creditors of the Company

d) Promoters of the Company

Answer: Creditors of the Company

Question: The debentures whose principal amount is not repayable by the company during its life time, but the payment is made only at the time of Liquidation of the company, such debentures are called :

a) Bearer Debentures

b) Redeemable Debentures

c) Irredeemable Debentures

d) Non-Convertible Debentures

Answer: Irredeemable Debentures

Question: Debentures are shown in the Balance Sheet of a company under the head of

a) Non-current Liabilities.

b) Current Liabilities.

c) Share Capital.

d) None of these.

Answer: Non-current Liabilities.

Question: Which of the following is Correct with respect to debentures?

a) They can be issued on credit.

b) They can be issued for consideration other than cash.

c) They cannot be issued as collateral security.

d) They can be issued partly on credit and partly in cash.

Answer: They can be issued for consideration other than cash.

Question: Debenture is acknowledgment of debt and a contract for the repayment of principal amount with

a) Interest

b) Premium

c) Dividend

d) None of the options

Answer: Interest