Corporate Accounting
Chapter 01 : Issue of Shares
- Which documents is prepared at the time of incorporation of companies.
(a) Memorandum of Association
(b) Prospectus
(c) Articles of Association
(d) Promoters’ statement - The amount of capital with which the company is registered with the Registrar of the Companies is called as
(a) Authorized capital
(b) Share premium
(c) Issued capital
(d) Fixed capital - Reserve share capital means:
(a) Part of authorized capital to be called at beginning
(b) Portion of uncalled capital to be called only at liquidation
(c) Oversubscribed capital
(d) Under subscribed capital - Capital Reserve is created out of :
(a) Capital Profit
(b) Revenue profit
(c) Capital Receipt
(d) Revenue Receipt - The difference between subscribed capital and called –up capital is called:
(a) Calls in arrears
(b) Calls in advance
(c) Uncalled capital
(d) None of the above - Which of the following should be deducted from the share capital to find out paid up capital of a company ?
(a) Calls-in-advance
(b) Calls-in-arrears
(c) Shares forfeited
(d) Discount on issue of share - The part of share capital which can be called up only on the winding up of a company is called:
(a) Authorized capital
(b) Called up capital
(c) Capital Reserve
(d) Reserve Capital - The amount of capital that is mentioned in capital clause is known as:
(a) Authorized capital
(b) Registered capital
(c) Nominal capital
(d) All of these - Which of the following statement is false?
(a) Issued capital can never be more than the authorized capital
(b) In the case of under subscription issued capital is less than subscribed capital
(c) Uncalled capital may be converted into reserve capital
(d) Paid up capital is equal to called up capital less calls in arrears - Which statement is issued before the issue of shares?
(a) Prospects
(b) Memorandum of association
(c) Articles of association
(d) All of these - Select the incorrect statement –
(a) Dividends rate for ordinary shareholders is not fixed
(b) The payment of dividends to shareholders is a legal obligation
(c) Ordinary shareholders are generally called owners of residue
(d) Preference shareholders receive dividend at fixed rate - Dividend are usually paid on :
(a) Authorized capital
(b) Issued capital
(c) Called – up – capital
(d) Paid – up – capital - The following information pertains to X Ltd:
(i) Equity share capital called up = Rs. 5,00,000
(ii) Calls in arrears = Rs. 40,000
(iii) Calls in advance = Rs. 40,000
(iv) Proposed dividend 15%.
The amount of dividend payable is:
(a) Rs. 75,000
(b) Rs. 72,750
(c) Rs. 71,250
(d) Rs. 69,000 - Following are the information related to G Ltd
(i) Equity shares capital = Rs. 2,85,000
(ii) Call in advance = Rs. 10,000
(iii) Calls in arrears = Rs. 15,000
(iv) Proposed dividend = 20%.
The amount of dividend payable:
(a) Rs. 57,000
(b) Rs. 54,000
(c) Rs. 56,000
(d) Rs. 60,000 - A company has issued, 5,000 ordinary shares of Rs. 10 each and 10,000, 6% preference shares of Re. 10 each. If the profit available for dividends are Rs.10,000 and the firm wishes to give out all available profits as dividends then the amount given out per ordinary share would be
(a) Rs. 0.80
(b) Rs. 1.00
(c) Rs. 2.00
(d) Rs. 0.40 - Shares of a company can be reissued at –––––––––?
(a) Premium
(b) Discount
(c) Par
(d) Any of these - The excess price receive over the par value of shares, would be credited to:
(a) Call –in- advance account
(b) Share capital account
(c) Capital reserve account
(d) Security premium account - In Case of issue of shares, amount received above par value is credited to which account?
(a) Security premium A/c
(b) Discount A/c
(c) Share forfeited A/c
(d) None of these - The amount received over and above the par value is credited to which account?
(a) Share Capital Account
(b) Calls –in- advance Account
(c) Securities Premium Account
(d) Share forfeited Account - Securities premium is shown under which head in the balance sheet.
(a) Current liabilities
(b) Miscellaneous expenditure
(c) Reserve and surplus
(d) None of these - A company issued 20,000 preference share at the rate of Rs. 100 each at 5% premium and 2,00,000 equity shares at the rate Rs. 10 each at 10% premium. What is the net amount of securities premium ?
(a) Rs. 1,00,000
(b) Rs. 2,00,000
(c) Rs. 2,40,000
(d) Rs. 3,00,000 - According to section 52 (2) of the companies Act, the amount in the Securities premium A/c cannot be used for the purpose of:
(a) Issue of fully paid bonus shares
(b) Written off losses of the company
(c) Writing off preliminary expenses
(d) Written off commission or discount on issue of shares - Security premium can be used by the company.
(a) To adjust loss on Revaluation of assets.
(b) To issue of fully paid Bonus shares
(c) To pay dividend
(d) To adjust trading loss - The sweat equity shares are allotted to …………………… .
(a) Investors
(b) Employees
(c) Vendors
(d) Promoters - Shares allotment account is a :
(a) Real account
(b) Nominal account
(c) Personal account
(d) Company account - As per the Companies Act, a company cannot proceeds to allot share unless –––––– is received by the company.
(a) Minimum money
(b) Allotment money
(c) Application money
(d) Call money - If the issue size is up to Rs. 500 crores, the issued shares should be made fully paid up within –––– of the date of allotment:
(a) 6 months
(b) 10 months
(c) 12 months
(d) 18 months - The minimum subscription as prescribed by SEBI against the entire issue is:
(a) 95%
(b) 90%
(c) 5%
(d) None - If minimum subscription is not received application money should be refunded with in how many days?
(a) 15
(b) 90
(c) 10
(d) 30 - If a company is not able to refund the excess amount of shares within the reasonable time. The company will give them interest @:
(a) 15 % p.a.
(b) 5 % p.a.
(c) 7 % p.a.
(d) 10 % p.a. - When full amount is due on any call but it is not received, then the shortfall is debited to-
(a) Calls in advance
(b) Calls in arrears
(c) Share capital
(d) Suspense account - The rate of interest paid on calls in advance as per table F is:
(a) 5% p.a.
(b) 12% p.a.
(c) 10% p.a.
(d) 4% p.a. - According to Companies Act, 2013, interest on calls in arrears and calls in advance can be charged and provided, the maximum rates for which are:
(a) 4% p.a. and 5% p.a.
(b) 5% p.a. and 4% p.a.
(c) 6% p.a. and 7% p.a.
(d) 10% p.a. and 12% p.a. - Innovative Ltd. offers to the public 20,000 shares for subscription. The company receives application for 35,000 shares. If 30,000 shares are allotted on pro-rata basis, then applicants for 35,000 shares are to be allotted as:
(a) 4 shares for every 6 shares applied.
(b) 4 shares for every 3 shares applied.
(c) 5 shares for every 6 shares applied.
(d) 3 shares for every 4 shares applied. - E Ltd has allotted 10,000 shares to the applicants of 14,000 shares on Pro-rata basis. The amount payable on application is Rs. 2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment due from F
(a) 60 shares ; Rs. 120
(b) 340 shares Rs. 160
(c) 320 shares Rs. 200
(d) 300 shares Rs. 240 - Supreme Ltd. has allotted 5,000 shares to the application of 7,500 shares on pro-rata basis. The amount of application is Rs. 3 per shares. M applied for 600 shares. The number of shares allotted to M will be –––––––––- and the amount against allotment money from M will be ––––––––
(a) 200 shares ; Rs. 200
(b) 300 shares ; Rs. 300
(c) 400 shares ; Rs. 600
(d) 150 shares ; Rs. 450 - A company invited application for subscription of 5,000 shares. The application were received for 8,000 shares. Out of which 6,000 shares were allotted on Pro-rata basis. If Shyam applied for 180 shares, how many shares would be allotted to him.
(a) 180
(b) 200
(c) 150
(d) 175 - G Ltd acquired assets worth Rs. 75,000 from H Ltd by issue of shares of Rs. 10 at a premium of Rs. 5. The number of shares to be issued by G Ltd. to settle the purchase consideration:
(a) 6,000 shares
(b) 7,500 shares
(c) 9,375 shares
(d) 5,000 shares - If vendors are issued fully paid shares of Rs. 1,00,000 in consideration of net assets of Rs. 1,20,000, the balance of Rs. 20,000 will be credited to:
(a) Goodwill
(b) Capital Account
(c) Vendors Account
(d) Profit and Loss Account - When shares are issued to promoters which account should be debited:
(a) Shares capital A/c
(b) Assets A/c
(c) Promoters A/c
(d) Goodwill A/c - Which of the following account is affected, when share are issued to promoters ?
(a) Preliminary expenses account
(b) Share premium account
(c) Goodwill account
(d) Promoters personal account - A Ltd. acquired assets worth Rs. 15,00,000 from H Ltd. but issued of shares of Rs. 100 @ premium of 25%. The number of share issued to settle the purchase consideration will be:
(a) 12,000 shares
(b) 15,000 shares
(c) 18,750 shares
(d) 11 250 shares - A Ltd acquired assets worth Rs. 11,25,000 form B Ltd by issue of equity shares of Rs. 100 at premium of 25%. The number of shares to be issued by A Ltd for the purchase consideration:
(a) 9,000 Shares
(b) 11,250 Shares
(c) 14,063 Shares
(d) 7500 Shares - X Ltd allotted 10,000 shares to the applicant of 14,000 shares on prorate basis. O Applied for 840 shares. What is the number of shares allotted to him. If application money is Rs. 2 then what will be his amount transferred to further calls ––––––––––
(a) 600 shares Rs. 480
(b) 840 shares, Nil
(c) 600 Shares , Nil
(d) 840 Shares, Rs. 1200 - When shares are issued for purchase of assets, –––––––– should be credited
(A) Vendor’s A/c
(B) Sundry Assets A/c
(C) Share capital A/c
(D) Bank A/c - If Vendor’s are issued 1,00,000 fully paid share of Rs. 10 each in consideration of net assets of Rs. 12,00,000. The balance of Rs. 2,00,000 will be credited to:
(a) Capital Reserve A/c
(b) Goodwill A/c
(c) Vendor’s A/c
(d) Profit and Loss A/c - X purchased the running business of A for Rs. 60,000. In place of cash he discharged the purchase consideration by issue of equity shares of Rs. 10 each at 20% premium. Find the number of shares to be issued?
(a) 6,000
(b) 7,500
(c) 5,000
(d) 8,000 - Voluntary return of shares for cancellation by the shareholders is called.
(a) Surrender of shares
(b) Forfeited of shares
(c) Cancellation of shares
(d) Distribution of shares - . Compulsory cancellation of shares by the company due to non‐payment of allotment or call money or calls in arrears is exist called …………….
(a) Surrender of Shares
(b) Buy back of shares
(c) Forfeiture of shares
(d) All of these - The shares of a company only can be forfeited after giving a ………days notice
(a) 21
(b) 14
(c) 7
(d) 30 - The power of forfeiture of shares is exercise by –
(a) Promoters of the company
(b) Directors as per rules and regulations provided in the Articles of Association
(c) The shareholder at annual general meeting
(d) The government - Discount on reissue of forfeited shares should not exceed ………….
(a) Amount forfeited
(b) Face value
(c) Issued price
(d) Market price - Discount on re-issue of shares forfeited cannot exceed the –––––––:
(a) 50% of face value
(b) Face value
(c) 50% of amount forfeited
(d) Amount forfeited - X was issued 100 shares of Rs. 10 each at a premium of Rs.1 he paid application money and allotment money which is total amounted to Rs. 5 (excluding premium) and failed to pay the balance call money of Rs. 5. Find the maximum discount that can be given at the time reissue of shares:
(a) Rs. 4 per shares
(b) Rs. 5 per shares
(c) Rs. 2 per shares
(d) Rs. 6 per shares - Innovative Ltd. Forfeited 100 shares of Rs.10 each and on which Rs.6 per share were paid. If the forfeited shares are reissued as Rs. 8 per share paid up, what is the minimum price the company must charge?
(a) Rs. 4 per share
(b) Rs. 8 per share
(c) Rs. 10 per share
(d) Rs. 2 per share - If a share of Rs. 10 on which Rs. 8 has been paid up is forfeited, it can be re-issued at the minimum price of:
(a) Rs. 10 per Shares
(b) Rs. 8 per Shares
(c) Rs. 5 per Shares
(d) Rs. 2 per Shares - Mr. X a holder of 10,000 shares for Rs. 10 each has paid Rs. 3 on application and Rs. 3 on allotment. He did not pay Rs. 2 on first call. His shares are forfeited subsequently after first call. Share capital will be debited by –––––––
(a) Rs. 85,000
(b) Rs. 1,00,000
(c) Rs. 80,000
(d) Rs. 60,000 - Innovative Ltd. forfeited 2,000 shares of Rs. 10 each (which were issued at premium of 30 %) held by Anil for non payments of First Call Money of Rs. 4 per share. The company received Rs.9 per share from shareholder. On forfeited, the amount debited to shares capital is:
(a) Rs. 10,000
(b) Rs. 18,000
(c) Rs. 12,000
(d) Rs. 14,000 - The profit remaining after issue of forfeited shares, in share forfeited account will be transferred to –––––––
(a) Profit and Loss A/c
(b) Share capital A/c
(c) General Reserve A/c
(d) Capital Reserve A/c - The directors of a company forfeited 1000 share of Rs. 10 each, Rs. 7.50 paid up, for none payment of final call money Rs. 2.50 per share. 700 of these share are re-issued @ Rs. 7 /- per shares. The amount of transferred to capital reserve A/c would be:
(a) Rs. 2,500
(b) Rs. 3,150
(c) Rs. 3,500
(d) Rs. 5,400 - ABC Ltd forfeited 20 shares of Rs. 10 each. Rs. 8 called, on which X paid application and allotment money of Rs. 2 and Rs. 3 respectively. These share were re-issued to Y at Rs. 6 fully paid. What was the balance in share forfeited account before share were re- issued?
(a) Rs. 40
(b) Rs. 60
(c) Rs. 100
(d) Rs. 160 - ABC Ltd forfeited 20 shares of Rs. 10 each. Rs. 8 called, on which X paid application and allotment money of Rs. 2 and Rs. 3 respectively. Out of these 15 share were re-issued to Y at Rs. 6 fully paid. What was the balance in share forfeited account after share were re- issued?
(a) Rs. 25
(b) Rs. 60
(c) Rs. 100
(d) Rs. 160 - J Ltd reissued 2,000 shares which were forfeited by crediting shares forfeited account by Rs. 3,000. These shares were reissued at Rs. 9 Per shares. The amount transferred to capital Reserve will be:
(a) Rs. 3,000
(b) Rs. 2,000
(c) Rs. 1,000
(d) Nil - A to whom 100 share of Rs. 10 each were allotted at par, paid Rs. 3 on allotment and Rs. 3 on application but could not pay the first and final call forfeited by directors. The amount to be credited to share forfeited account will be:
(a) Rs. 500
(b) Rs. 400
(c) Rs. 600
(d) Rs. 1,000 - A company forfeited 100 equity share of Rs. 100 each issued at premium of 50% ( to be paid at the time of allotment) on which the first call money of Rs. 30 per share was not received, final call of Rs. 20 is yet to be made. These shares were subsequently reissued @ Rs. 70 per shares at Rs. 80 paid up. The amount credited to capital reserve is:
(a) 4,000
(b) 2,000
(c) 3,000
(d) None - 10,000 equity shares of Rs. 10 each were issued to public at a premium of Rs. 2 per shares. Application was received for 12,000 shares. Amount of securities premium account will be:
(a) Rs. 20,000
(b) Rs. 24,000
(c) Rs. 4,000
(d) Rs. 1,600 - Asha Ltd issued shares of Rs. 100 each at a premium of 25%. Mamta who has Rs. 2,000 shares of Asha Ltd. failed to pay first and final call totaling Rs. 5. Premium was taken at the time of allotment by the company. On forfeited of Mamta’s shares, the amount to be debited to share premium account will be:
(a) Rs. 5,000
(b) Rs. 10,000
(c) Rs. 15,000
(d) Nil - A company makes an issue of 10,000 equity shares of Rs. 100 each, payable as follows:
On application and allotment Rs. 50
On first call Rs. 25
On second and final call Rs. 25
Members holding 400 shares did not pay the second call and the shares were duly forfeited 300 of which are reissued as fully paid at Rs. 80 per share. Amount transferred to capital reserve will be:
(a) 16,500
(b) 15,000
(c) 10,000
(d) None - When shares are issued at a premium and the amount is already received by company. Later on when such share are forfeited:
(a) Premium A/c should be debited
(b) Premium A/c should be credited
(c) Premium A/c is not affected
(d) None of these. - Innovative Ltd. forfeited 2,000 shares of Rs. 10 each (which were issued at 30 % premium ) held by Anil for non payments of First Call Money of Rs. 4 per share. The company called Rs.9 per share from shareholder. On forfeited, the amount debited to shares capital is:
(a) Rs. 10,000
(b) Rs. 18,000
(c) Rs. 2,000
(d) Rs. 12,000