B.

com 301 (corporate accounting )

Q.1 What is share capital ?what are classes of shares ?

Ans : Share capital is the money a company raises by issuing
common or preferred stock. The amount of share capital or equity
financing a company has can change over time with additional public
offerings.

The term share capital can mean slightly different things depending on the
context. Accountants have a much narrower definition and their definition
rules on the balance sheets of public companies. It means the total
amount raised by the company in sales of shares.

A class of shares is a type of listed company stock that is differentiated by

the level of voting rights shareholders receive. For example, a listed
company might have two share classes, or classes of stock, designated as
Class A and Class B. Owners of companies that have been privately
owned and go public often create class A and B share structures with
different voting rights in order to maintain control and/or to make the
company a more difficult target for a takeover. Two of the primary types of
stock are common shares, representing the majority of shares available
across the market, and preferred stock, which typically guarantee a fixed
dividend but do not have voting rights

Q.2 WhAT IS difference between reserve and provisions .?

Ans :

It is a charge against It is an appropriation of profits,

profits, which means that which means that they are only
they are created even if created when the company is
Nature there is no profit. profitable.

Reserves may or may not be

Provisions are always made for a defined purpose.
made for a defined liability Example- Debenture Redemption
Objective or expense. reserve/General reserve.
 Provisions are created to
meet a specific
liability and fulfill Reserves are made to
the requirement of the give strength to the financial
Purpose law. position of the company.

It is created by It is created by debiting Profit

Mode of debiting Profit and Loss and Loss Appropriation
Creation Account. Account.

It is not mandatory to create

It is mandatory to create reserves. They are only created
provisions as per various when the company has surplus
Necessity laws. profits.

Q 3 Define amalgamation what are types of amalgamation?

Ans : An amalgamation is a combination of two or more companies into a
new entity. Amalgamation is distinct from a merger because neither
company involved survives as a legal entity. Instead, a completely new
entity is formed to house the combined assets and liabilities of both
companies.

The term amalgamation has generally fallen out of popular use in the
United States, being replaced with the terms merger or consolidation even
when a new entity is formed. But it is still commonly used in countries such
as India

i. Amalgamation in the nature of merger:

In this type of amalgamation, not only is the pooling of

assets and liabilities is done but also of the shareholders’
interests and the businesses of these companies. In other
words, all assets and liabilities of the transferor company
become that of the transfer company. In this case, the
business of the transfer or company is intended to be
carried on after the amalgamation. There are no
adjustments intended to be made to the book values. The
other conditions that need to be fulfilled include that the
 shareholders of the vendor company holding atleast 90%
face value of equity shares become the shareholders’ of
the vendee company.

ii. Amalgamation in the nature of purchase:

This method is considered when the conditions for the

amalgamation in the nature of merger are not satisfied.
Through this method, one company is acquired by
another, and thereby the shareholders’ of the company
which is acquired normally do not continue to have
proportionate share in the equity of the combined
company or the business of the company which is
acquired is generally not intended to be continued.

Q.4 What are the advantages of slip system.?

Ans : (1) The bank saves a lot of clerical labour as most of the slips
are filled in by its customers.

(2) Subsidiary books are avoided as posting is done from slips.

(3) Entries can be recorded with minimum delay as slips can easily
pass from hand to hand among clerks concerned.

Q.5 What is the process of determination of profit in life insurance

business?

Ans The insurance company makes money in primarily two ways: from the
profit it makes on premium payments and from investing those premiums.

To figure out what premiums should be, insurance companies employ

thousands of actuaries who specialize in advanced statistics and
probability. They perform calculations to determine the financial costs of the
risks insurance companies face, such as whether an insured person
smokes, is obese, or has one or more serious health conditions like cancer
or heart disease. They use this information to create and modify the
mortality tables that underwriters use to determine the premiums charged
to a specific insured person with their specific health conditions.

In this way, the company knows how much it needs to charge its customers
in premiums to cover its liabilities and, ideally, make a profit that year.