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chapter in
Financial Accounting

5 of 76 sets

401. When forfeited shares (which were originally issued at a discount ) are reused
at a premium, the amount of such premium will be credited to
A. Shares forfeiture account
B. security premium account
C. capital reserve account
D. none of these.
Answer:B

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402. When an existing company offers its sharescfor sale to the existing
shareholders, it is known as te
A. Private placement a
B. bonus shares
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C. right issue c
D. offer for sale M
Answer:C

403. Dividends are usually paid on

A. Authorized capital
B. issued capital
C. called up capital
D. paid up capital
Answer:D

404. Which of the following should be deducted from the shares capital to find out
paid up capital
A. Calls in advance
B. calls in arrears
C. shares forfeited account
 D. discount on issue of shares.
Answer:B

405. Interest on debenture is

A. Adjustment of profit
B. appropriation of profit
C. charge on profit
D. none of these
Answer:C

406. In the balance sheet of a company, debentures are shown under which
heading
A. Secured loan
B. unsecured loan
C. provisions
D. reserves and surplus
Answer:A

407. In the balance sheet of a company , the discount on issue of debentures is

shown under which heading
A. Fixed asset
B. current asset
C. investment
D. miscellaneous expenditure
Answer:D

408. Advance payment of tax is in the nature of

A. Capital expenditure
B. prepaid expenses
C. outstanding expenses
D. revenue expenditure
Answer:B

409. Debentures are shown in the balance sheet under head

A. Current asset loans and advances
B. investments

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 C. secured loan
D. unsecured loan
Answer:C

410. Preliminary expense Is an example of

A. Fixed asset
B. current asset
C. investment
D. fictitious asset
Answer:D

411. Divisible profit do not include

A. Insurance fund
B. reserve fund
C. profit and loss account balance
D. revaluation
Answer:D

412. The transfer of profit to reserve should not exceed

A. 5% of profit
B. 10% of profit
C. 15% of profit
D. 20% of profit
Answer:B

413. Loose tools are shown in the balance sheet under

A. Fixed asset
B. investment
C. current asset
D. miscellaneous expenditure
Answer:C

414. Discount on shares and debentures are shown in

A. P/L Appropriation a/c
B. asset side of the b/s

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 C. liability side of the b/s
D. none of these.
Answer:B

415. Calls in arrear Is

A. Shown as current asset
B. deducted from share capital
C. shown as current liability
D. shown under miscellaneous expenditure
Answer:B

416. The amount set aside to meet the loss of bad debt is
A. Provision
B. liability
C. reserve
D. contingent liability
Answer:A

417. When the proposed dividend exceeds 20% of the paid up capital, percentage
of profit to be transferred to reserve is
A. 10%
B. 7.5%
C. 2.5%
D. 5%
Answer:A

418. In the case of joint stock company, goodwill is sown on the asset side under the
head
A. Fixed asset
B. investment
C. current asset
D. miscellaneous expenditure
Answer:A

419. Advance payment of tax should be shown on the

A. Debit side of P/L a/c

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 B. debit side of P/L appropriation a/c
C. asset side of the B/S
D. liability side of the B/S
Answer:C

420. Which of the following items will be taken in the P/L a/c below the line
A. Provision for taxation
B. transfer to sinking fund
C. contribution to PF
D. preliminary expenses written off
Answer:C

421. Scrip dividend means

A. Unclaimed dividend
B. arrears of dividend
C. dividend paid other than cash
D. cash dividend
Answer:C

422. Which of the following would not appear in a limited company’s

appropriation a/c
A. Transfer to revaluation reserve
B. proposed taxation
C. interim dividend
D. transfer to general reserve.
Answer:B

423. As per the rules framed under the companies Act, 1956, if the dividend
proposed by a company is 12% of the paid up capital, the amount to be transferred
to reserve must not be less than
A. 5% of current year profit
B. 7.5% of the current year profit
C. 10% of the current year profit
D. 2.5% of the current year profit.
Answer:D

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424. Banks show the provision for income tax under the head
A. Contingent assets
B. contingent liabilities
C. other liabilities and provisions
D. borrowings.
Answer:C

425. Rebate on bills discounted is

A. An item of income
B. a liability
C. income received in advance
D. accrued income.
Answer:C

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