ACCOUNTING FOR SHARE CAPITAL-XII

(COMPANY ACCOUNTS)-2021-22
MCQ’s
SECTION- A – Simple and Complex Questions
Q1. The nature of share application account is:
a) Real A/c b) Personal A/c c) Nominal A/c d) Both (a) and (c)
Q2. Out of the following which capital is not shown in the company’s balance
sheet:
a) Authorized capital b) Issued Capital c) Reserve Capital d) Subscribed
capital
Q3. Amount of one call should not be more than------- of the nominal value of
the shares.
a)20% b) 15% c) 10% d) 25%
Q4. X Ltd. issued 25,000 Equity shares @ Rs.10 each 10% premium. All the
money to be received on application only. The company received 40,000
applications. The subscription is known as:
a) Undersubscription b) Oversubscription c) Both (a) and (b) d) Full
subscription
Q5. What interest rate will be charged as per Table F if any shareholder does
not pay the call money on the due date?
a)7% b) 5% c) 8% d) 10%
Q6. Which of the following is not a purpose for which the Securities Premium
amount can be used?
a) Issuing fully paid bonus share to shareholders
b) Issuing partly paid-up bonus shares to shareholders
c) Writing off preliminary expenses of the company
d) In purchasing its own shares (buy-back)
Q7. When shares are forfeited, share capital account is debited by:
a) Forfeited amount b) Called up amount on shares
c) Paid-up amount on shares d) Amount of capital reserve
Q8. 250 shares of Rs.20 each on which first and final call of Rs.6 per share is
not paid is forfeited. Out of these, 200 shares are reissued for Rs.14 per share
fully paid. The amount transferred to capital reserve will be:
a) Rs.1,800 b) Rs1,200 c) Rs2,800 d) Rs1,600
Q9. If vendors are issued fully paid shares of Rs.8,00,000 in consideration of
net assets Rs.6,00,000. Then the balance of Rs.2,00,000 will be:
a) Dr. to Statement of Profit & loss
b) Dr. to Goodwill Account
c) Cr. to Capital Reserve A/c
d) Credited to Securities Premium A/c
Q10. 500 shares of Rs.10 each issued at 40% premium were forfeited for non-
payment of allotment money of Rs.7(including premium) and first and final call
of Rs.3 per share. Share forfeiture account will be credited with:
a) Rs.4,000 b) Rs.3,000 c) Rs.2,000 d) Rs1.500
Q11. Y Ltd. forfeited 500 shares of Rs.100 each (Rs.75 called-up) issued at
premium of 5% on which Rs.45 per share has been paid. Out of these 200
shares were reissued to Z as Rs.75 paid-up for Rs.60 per share. What is the
amount to be transferred to Capital Reserve A/c?
a) Rs.19,500 b) Rs.7,000 c) Rs.6,000 d) Rs.22,000
Q12. The subscribed capital of a company is Rs.50,00,000 and the nominal
value of the share is Rs.100. There were no calls in arrear till the final call was
made. The final call made was paid on Rs.47,500 shares only. The balance in
the calls in arrear amounted to Rs.62,500. Calculate the final call on share:
a) Rs.20 b) Rs.7 c) Rs.25 d) Rs22
Q13. A company issued 20,000 equity shares of Rs.10 each at par payable as
follows:
On application-Rs.3, On allotment- Rs.4, On first call-Rs.2 and final Call-Rs.1
Applications were received for 50,000 shares. Allotment was made on pro-rata.
How much amount will be received in cash on allotment?
a) Rs.10,000 b) Rs.80,000 c) NIL d) Rs.90,000
Q14. Z Ltd. forfeited 500 shares of Rs.10 each fully called up for non-payment
of final call of Rs.3 per share. 300 shares were reissued as fully paid-up and
after reissue the amount transferred to Capital Reserve was Rs.1,800. What is
the reissue price?
a) Rs.6 per share b) Rs.8 pers share c) Rs.7 pers share d) Rs.9 per share
Q15. When the shares are issued to the selected group of people instead of
offering to the general public, it is known as --------.
a) Right Issue b) Private Placement c) ESOP d) e-IPO’s.

SECTION-B- Assertion and Reason Based Questions

Q1. Assertion (A)- Nominal Capital is stated in the Memorandum of
Association and is the maximum amount that a company can issue for
subscription as share capital.
Reason (R) – Nominal Capital is also known as Authorized Capital or
Registered Capital.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q2. Assertion (A)- Reserve Capital is a part of share capital that a company
resolves not to call except in the event of it being wound up.
Reason (R) – It is not mandatory to have reserve capital and special
resolution is required for reserve capital.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q3. Assertion (A)- Initial Public Offer (IPO) means making an offer or inviting
the public in general for the first time to subscribe shares.
Reason (R) – IPO’s are raised by the several companies recently from the
capital market.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q4. Assertion (A)- Sec. 53 of the Companies Act, 2013 does not allow issue of
shares at discount.
 Reason (R)- However, Sec. 54 allows issue of shares at a discount, when
they are issued as Sweat Equity Shares.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q5. Assertion (A)- On forfeiture of shares share capital amount is debited with
the amount called up to the date of forfeiture on shares forfeited.
Reason (R)- Since on forfeiture of shares the shares are cancelled and to
that extent Share Capital is reduced.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q6. Assertion (A)- Calls-in-advance is the amount due but not received by the
company from the shareholder on the due date.
Reason (R)- Calls-in-advance is actually the amount paid by the
shareholder before the due date to the company.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q7. Assertion (A)- Premium amount received by the company is utilized to
write off capital losses.
Reason (R)- Because premium amount is the capital receipt for the
company and must be utilized to write off capital losses.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
Q8. Assertion (A)- One Person Company means a company which has only
one person as member.
Reason (R)- One person can form only one “One Person Company” or
become nominee of only such company.
(a) Both (A) and (R) are true and (R) is the correct explanation of (A).
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A).
(c) (A) is true, but (R) is false
(d) (A) is false, but (R) is true.
SECTION – C- Matching Based Questions:
Q1. Match the following statement:
Statement I
1.Right Issue
2. Minimum Subscription
3. Floated Capital
4. Reserve capital
A) 1-c, 2-a, 3-b, 4-d
C) 1-b, 2-d, 3-c, 4-a
Q2. Match the following statement:
Statement I
1.Securities Premium Reserve
2. Forfeited Shares A/c
3. Calls-in-arrears
4. Private Placements
A) 1-c, 2-d, 3- a, 4-b
C) 1-a, 2-b, 3-c, 4-d
Statement II
a) Nominal Capital
b) Capital called up on wound up
c) 90% of the shares issued amount
d) Shares offered to the existing shareholders
B) 1-a, 2-b, 3-c, 4-d
D) 1-d, 2-c, 3-a, 4-b.
Statement II
a) Deducted from subscribed but not paid
b) Shares offered to selected group of
people
c) Reserve & Surplus
d) Amount already paid by the shareholder.
B) 1-d, 2-a, 3-b, 4-c
D) 1-b, 2-c, 3-a, 4-d.