VACHHANIS’ PROFESSIONAL ACADEMY- RATLAM

12th – Accounting for Share Capital- MCQs

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Accounting for Share Capital

Question 1.
Reserve share capital means :
(a) Part of authorised capital to be called at the beginning
(b) Portion of uncalled capital to be called only at liquidation
(c) Over subscribed capital
(d) Under subscribed capital

Answer
Answer: (b) Portion of uncalled capital to be called only at liquidation

Question 2.
When full amount is due on any call but it is not received, then the short fall is debited to :
(a) Calls-in-advance
(b) Calls-in-arrear
(c) Share Capital
(d) Suspense Account

Answer
Answer: (b) Calls-in-arrear

Question 3.
The difference between subscribed capital and called up capital is called :
(a) Calls-in-arear
(b) Calls-in-advance
(c) Uncalled capital
(d) None of these

Answer
Answer: (c) Uncalled capital

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Question 4.
Which statement is issued before the issue of shares ?
(a) Prospectus
(b) Articles of Association
(c) Memorandum of Association
(d) All of these

Answer
Answer: (d) All of these

Question 5.
Company can utilise securities premium for :
(a) Writing off loss incurred on revaluation of asset
(b) Issuing fully paid bonus shares
(c) Paying divided
(d) Writing off trading loss

Answer
Answer: (b) Issuing fully paid bonus shares

Question 6.
When a company issues fully paid shares to promoters
for their services, the journal entry will be:
(a) Bank A/c Dr.
To Share Capital A/c
(b) Good will A/c Dr.
To Share Capital A/c
(c) Promoters Personal A/c Dr.
To Share Capital A/c
(d) Promotion Expenses A/c Dr.
To Share Capital A/c

Answer
Answer: (b) Goodwill A/c Dr.
To Share Capital A/c

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Question 7.
When a company issues shares at a premium, amount of premium may be received by the
company :
(a) Along with application money
(b) Along with application money
(c) Along with calls
(d) Along with any of the above

Answer
Answer: (d) Along with any of the above

Question 8.
Share Application Account is :
(a) Personal Account
(b) Real Account
(c) Nominal/ Account
(d) None of these

Answer
Answer: (a) Personal Account

Question 9.
Secrities Premium can not be applied :
(a) For paying dividend to members
(b) For issuing bonus shares to members
(c) For writing off preliminary expenses of company
(d) For writing off discount on issue of debentures

Answer
Answer: (a) For paying dividend to members

Question 10.
A joint stock company is :
(a) An artificial legal person
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(b) Natural person

(c) A general person
(d) None of these

Answer
Answer: (a) An artificial legal person

Question 11.
Equity shareholders are :
(a) Customers
(b) Creditors
(c) Debtors
(d) Owners

Answer
Answer: (d) Owners

Question 12.
Reserve capital means :
(a) A part of subscribed uncalled capital
(b) Reserve Profit
(c) A part of Capital Reserve
(d) A part of Capital Redemption Reserve

Answer
Answer: (a) A part of subscribed uncalled capital

Question 13.
Securities Premium is shown under which head in the Balance Sheet ?
(a) Reserve and Surplus
(b) Miscellaneous Expenditure
(c) Current Liabilities
(d) Share Capital

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Answer
Answer: (a) Reserve and Surplus

Question 14.
Shares may be issued :
(a) At par value
(b) At FYemimum
(c) At Discount
(d) Both (a) & (b)

Answer
Answer: (d) Both (a) & (b)

Question 15.
Capital included in the liabilities of a company is called :
(a) Authorised Capital
(b) Issued Capital
(c) Subscribed Capital
(d) Paid-up Capital

Answer
Answer: (d) Paid-up Capital

Question 16.
An issue of shares which is not a public issue but offered to a selected group of persons is
called :
(a) Public offer
(b) Private placement of shares
(c) Initial public offer
(d) None of these

Answer
Answer: (d) None of these

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Question 17.
If a share of ₹ 10 on which ₹ 8 has been called and ₹ 6 is paid is forfeited, the Share Capital
Account should be debited with :
(a) ₹ 8
(b) ₹ 10
(c) ₹ 6
(d) ₹ 2

Answer
Answer: (a) ₹ 8

Question 18.
When shares are forfeited, the Share Capital Account is debited with:
(a) Nominal value of Shares
(b) Market value of Shares
(c) Called-up value of Shares
(d) Paid-up value of Shares

Answer
Answer: (c) Called-up value of Shares

Question 19.
If the loss on reissue of shares is less than the amount forfeited, the ‘surplus’ or profit is
transferred to :
(a) Capital Reserve
(b) Revenue Reserve
(c) Profit & Loss A/c
(d) None of these

Answer
Answer: (a) Capital Reserve

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Question 20.
J. Ltd. re-issue 2,000 shares which where forfeited by crediting share forfeiture account by ₹
3,000. These shares were re-issued at ₹ 9 per share. The amount transferred to capital
reserve will be :
(a) ₹ 3,000
(b) ₹ 2,000
(c) ₹ 1000
(d) Nil

Answer
Answer: (c) ₹ 1000

Question 21.
If a share of ₹ 10 on which ₹ 8 has been paid up is forfeited, it can be reissued at the minimum
price of…….
(a) 10 Rs. per share
(b) 8 Rs. per share
(c) 5 Rs. per share
(d) 2 Rs. per share

Answer
Answer: (d) 2 Rs. per share

Question 22.
Z & Co. forfeited 100 shares of 10 Rs. each for non-payment of final call of 2 Rs. per share. All
the forfeited shares were re-issued at 9 Rs. per share. What amount will be transferred to
Capital Reserve A/c ?
(a) 700 Rs.
(b) 800 Rs.
(c) 900 Rs.
(d) 1,000 Rs.

Answer
Answer: (a) 700 Rs.

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Question 23.
Forfeiture of shares results in the reduction of:
(a) Paid-up Capital
(b) Authorised Capital
(c) Fixed Assets
(d) Reserve Capital

Answer
Answer: (a) Paid-up Capital

Question 24.
Amount of calls in Arrear is :
(a) Added to capital
(b) Deducted from share capital
(c) Shown on the assets side
(d) Shown an the equity and liability side

Answer
Answer: (b) Deducted from share capital

Question 25.
Discount allowed on reissue of forfeited shares is debited to:
(a) Share Capital A/c
(b) Share Forfeiture A/c
(c) Profit & Loss A/c
(d) General Reserve A/c

Answer
Answer: (b) Share Forfeiture A/c

Question 26.
A company has…………
(a) Separate Legal Entity
(b) Perpetual Existence
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(c) Limited Liability

(d) All the above

Answer
Answer: (d) All the above

Question 27.
The liability of members in a company is :
(a) Limited
(b) Unlimited
(c) Stable
(d) Fluctuating

Answer
Answer: (a) Limited

Question 28.
Equity shareholders are :
(a) Creditors of the company
(b) Owners of the company
(c) Customers of the company
(d) None of these

Answer
Answer: (b) Owners of the company

Question 29.
Balance of Forfeited Shares Account after reissue of forfeited shares is transferred to :
(a) Profit & Loss A/c
(b) Capital Reserve Account
(c) General Reserve Account
(d) None of these

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Answer
Answer: (b) Capital Reserve Account

Question 30.
Under the provisions of Companies Act, company can issue:
(a) Only equity shares
(b) Only preference shares
(c) Preference shares and equity shares
(d) None of these

Answer
Answer: (c) Preference shares and equity shares

Question 31.
Reight shares are the shares, which :
(a) Are issued to the Direction of the company
(b) Are issued to existing shareholders of the company
(c) Are issued to promoters in consideration of their services
(d) Are issued to the vendors for purchasing assets

Answer
Answer: (b) Are issued to existing shareholders of the company

Question 32.
Total amount of liabilities side includes :
(a) Authorised Capital
(b) Issued Capital
(c) Subscribed Capital
(d) Paid-up Capital

Answer
Answer: (d) Paid-up Capital

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Question 33.
A company issues its shares at premium under which Section of Indian Companies Act, 2013
?
(a) 78
(b) 79
(c) 52
(d) 53

Answer
Answer: (c) 52

Question 34.
Shares can be forfeited :
(a) For failure to attend meetings
(b) For non-payment of call money
(c) For failure to repay the loan to the Bank
(d) For which shares are pledged as a security

Answer
Answer: (b) For non-payment of call money

Question 35.
Shareholders get:
(a) Interest
(b) Dividend
(c) Commission
(d) Profit

Answer
Answer: (b) Dividend

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Question 36.
According to Table E of the Companies Act, 2013 interest on calls in arrears charged should
not exceed :
(a) 5% p.a.
(b) 6% p.a.
(c) 8%p.a.
(d) 10%p.a.

Answer
Answer: (d) 10%p.a.

Question 37.
Premium on issue of shares is a :
(a) Capital Gain
(b) Capital Loss
(c) General Profit
(d) General Loss

Answer
Answer: (a) Capital Gain

Question 38.
Premium on issue of shares is shown on which side of the Balance sheet.
(a) Assets
(b) Liabilities
(c) Both
(d) None of these

Answer
Answer: (b) Liabilities

Question 39.
Share Allotment Account is :
(a) Personal A/c
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(b) Real A/c

(c) Nominal A/c
(d) None of these

Answer
Answer: (a) Personal A/c

Question 40.
The portion of the authorised capital which can be called-up only on the liquidation of the
company is called:
(a) Issued Capital
(b) Called-up Capital
(c) Uncalled Capital
(d) Reserve Capital

Answer
Answer: (d) Reserve Capital

Question 41.
Premium on issue of shares can be used for :
(a) Issue of Bonus shares
(b) Distribution of Profit
(c) Transferring to General Reserve
(d) All these

Answer
Answer: (a) Issue of Bonus shares

Question 42.
If equity share of ₹ 10 Rs. each is issued at ₹ 12 each, it is called:
(a) Issued at Par
(b) Issued at Premium
(c) Issued at Discount
(d) None of these
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Answer
Answer: (b) Issued at Premium

Question 43.
The maximum capital beyond which a company is not allowed to raise funds, by issue of
shares is called …………..
(a) Issued capital
(b) Reserve capital
(c) Authorised capital
(d) Subscribed capital

Answer
Answer: (b) Reserve capital

Question 44.
As per Table F the maximum rate of interest on calls in advance paid is:
(a) 8% p.a.
(b) 12% p.a.
(c) 5 % p.a.
(d) None of these

Answer
Answer: (b) 12% p.a.

Question 45.
As per the Companies Act, only preference shares, which are redeemable within ………….
can be issued.
(a) 24 years
(b) 22 years
(c) 30 years
(d) 20 years

Answer
Answer: (d) 20 years
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Question 46.
Which one of the following is the registered capital of the company ?
(a) Paid-up capital
(b) Uncalled capital
(c) Authorised capital
(d) Issued capital

Answer
Answer: (c) Authorised capital

Question 47.
Dividends are usually paid on :
(a) Authorised Capital
(b) Issued Capital
(c) Called-up Capital
(d) Paid-up Capital

Answer
Answer: (d) Paid-up Capital

Question 48.
If vendors are issued fully paid shares of ₹ 1,00,000 in consideration of net assets of ₹
1,20,000 the balance of ₹ 20,000 will be credited to :
(a) Goodwill Account
(b) Capital Reserve Account
(c) Vendor’s Account
(d) Profit & Loss Account

Answer
Answer: (b) Capital Reserve Account

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Question 49.
Which account should be debited when shows an issued to promoters:
(a) Share Capital A/c
(b) Assets A/c
(c) Promoter’s A/c
(d) Goodwill A/c

Answer
Answer: (d) Goodwill A/c

Question 50.
According to Section 52 of the Compaines Act, the amount in the Securities Premium Account
cannot be used for the purpose of:
(a) Issue of fully Paid Bonus Shares
(b) Writing Off Losses of the Company
(c) Writing off Preliminary Expenses
(d) Writing Off Commission or Discount on Issue of Shares

Answer
Answer: (b) Writing Off Losses of the Company

Question 51.
10,000 equity shares of 10 Rs. each were issued to public at a premium of ₹ 2 per share
payable on allotment.
Applications were received for ₹ 12,000 shares. Amount of securities premium account will be :
(a) ₹ 20,000
(b) ₹ 24,000
(c) ₹ 4,000
(d) ₹ 1,600

Answer
Answer: (a) ₹ 20,000

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Question 52.
A Ltd. purchased a machinery for 1,80,000 Rs. for which it is paying by issue of shares of 100
Rs. each at 20% premium. How many shares will be issued as consideration. ?
(a) 2,500
(b) 2,000
(c) 1,500
(d) 3,000

Answer
Answer: (c) 1,500

Question 53.
Right Shares are issued to :
(a) Promoters for the Services
(b) Holders of Convertible Debentures
(c) Existing Shareholders
(d) All of the above

Answer
Answer: (c) Existing Shareholders

Question 54.
A company is registered with a share capital of ₹ 1,00,000 Rs. divided into ₹ 10,000 shares of
₹ 10 each. Of these shares 9,990 shares are held by Rajeev and 10 Shares are held by
Sanjay. In the eye of law it is treated as:
(a) Partnership
(b) Private Company
(c) Public Compancy
(d) Government Company

Answer
Answer: (b) Private Company

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Question 55.
Which of the following should be deducted from the called-up capital to find out paid-up capital:
(a) Calls-in-advance
(b) Calls-in-arrear
(c) Share forfeiture
(d) Discount on issue of shares

Answer
Answer: (b) Calls-in-arrear

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