CBSE Class 12 Accountancy Accounting For Share Capital MCQs Set 06

Answer: (a) Personal Account

Explanation:
1. Share Allotment Account shows the amount due from (and received from) the allottees, so it is treated as a personal account.

Teacher's Note:
1. Share Application, Allotment and Call Accounts are all treated as personal accounts of the shareholders.

Answer: (d) Paid up Capital

Explanation:
1. Dividend is paid on the amount actually paid up by the shareholders, i.e., on paid-up capital.

Teacher's Note:
1. Calls-in-arrears do not earn dividend, so dividend goes on paid-up, not called-up, capital.

Answer: (d) 20 years

Explanation:
1. Section 55 of the Companies Act, 2013 does not allow irredeemable preference shares; they must be redeemable within 20 years.

Teacher's Note:
1. Infrastructure companies may issue preference shares redeemable beyond 20 years (up to 30 years) under the Rules, but the general limit is 20 years.

Answer: (a) Prospectus

Explanation:
1. The prospectus invites the public to subscribe and states the terms of the issue: price, instalments, dates and so on.

Teacher's Note:
1. Memorandum = scope and capital clause; Articles = internal rules; Prospectus = invitation and terms of the issue.

Answer: (a) Preliminary expenses

Explanation:
1. Expenses incurred in promoting and forming a company are called preliminary expenses.

Teacher's Note:
1. Preliminary expenses are written off in the year they are incurred, first against Securities Premium if available.

Answer: (c) Promoters' A/c ... Dr.
To Share Capital A/c

Explanation:
1. The promoters are debited (they receive the shares) and Share Capital is credited.

Teacher's Note:
1. No cash is involved: shares to promoters are an issue for consideration other than cash.

Answer: (d) ₹2 per share

Explanation:
1. Maximum discount on reissue = amount forfeited = ₹8, so the minimum reissue price = ₹10 − ₹8 = ₹2.

Teacher's Note:
1. The discount on reissue can never exceed the amount already received on the forfeited share.

Answer: (d) Shown on the Equity and Liabilities side

Explanation:
1. Calls-in-advance is a liability of the company and is shown under Current Liabilities (Other Current Liabilities) on the Equity and Liabilities side.

Teacher's Note:
1. Calls-in-advance is never added to share capital, as the call has not yet been made.

Answer: (b) ₹600

Explanation:
1. Amount paid per share = ₹10 − ₹2 − ₹4 = ₹4; forfeited on 600 shares = 600 × 4 = ₹2,400.
2. Discount on reissue = 600 × 3 = ₹1,800; Capital Reserve = 2,400 − 1,800 = ₹600.

Teacher's Note:
1. Transfer to Capital Reserve only the forfeited amount of the shares actually reissued, net of the discount.

Answer: (b) Private Placement of Shares

Explanation:
1. Under Section 42 of the Companies Act, 2013, an offer of shares to a select group of persons (not the public) is a private placement.

Teacher's Note:
1. Private placement is different from preferential allotment, though both are made to selected persons.

Answer: (c) The amount received on forfeited shares

Explanation:
1. The discount on reissue is set off against the Share Forfeited balance, so it cannot exceed the amount forfeited (received) on those shares.

Teacher's Note:
1. If the discount exceeded the forfeited amount, the excess would amount to issuing shares at a discount, which is not allowed.

Answer: (c) ₹3,80,250

Explanation:
1. Allotment received = (95,000 − 500) × ₹4 = ₹3,78,000.
2. Add calls-in-advance from Gautam = 750 × ₹3 = ₹2,250. Total = ₹3,80,250.

Teacher's Note:
1. Calls-in-advance received with allotment is part of the bank receipt on allotment.

Answer: (c) ₹2,21,000

Explanation:
1. Call due = 45,000 × ₹5 = ₹2,25,000. Less advance already received from Pooja (500 × 5 = ₹2,500) and arrears of Kundan (300 × 5 = ₹1,500).
2. Amount received = 2,25,000 − 2,500 − 1,500 = ₹2,21,000.

Teacher's Note:
1. At the call, deduct both calls-in-advance already received and calls-in-arrears from the amount due.

Answer: (b) ₹10

Explanation:
1. On forfeiture, Share Capital is debited with the called-up value of the share (excluding premium), i.e., ₹10.

Teacher's Note:
1. Premium already received is never reversed on forfeiture; only premium not yet received is debited to Securities Premium.

Answer: (c) Called-up value of Shares

Explanation:
1. Forfeiture cancels the shares, so Share Capital is debited with the amount called up on them.

Teacher's Note:
1. Nominal value is debited only when the shares are fully called up.

Answer: (c) Subscribed but not fully paid-up

Explanation:
1. Only ₹9 of ₹12 has been called up, so the shares are 'subscribed but not fully paid-up'.

Teacher's Note:
1. In the Notes to Accounts, write the called-up amount per share alongside 'Subscribed but not fully paid-up'.

Answer: (d) ₹7

Explanation:
1. Of ₹8 received, ₹1 is premium (already credited to Securities Premium, not reversed). Share Forfeited A/c is credited with ₹8 − ₹1 = ₹7.

Teacher's Note:
1. Share Forfeited is credited with the amount received towards share capital only, not premium already received.

Answer: (b) Calls-in-Arrears Account

Explanation:
1. Amount called but not received is calls-in-arrears, debited to Calls-in-Arrears Account.

Teacher's Note:
1. Calls-in-arrears is deducted from called-up capital in the Notes to Accounts.

Answer: (a) 1,60,000 shares

Explanation:
1. Balance = 25,00,000 − 5,00,000 = ₹20,00,000; issue price = ₹10 + ₹2.50 = ₹12.50.
2. Shares = 20,00,000 ÷ 12.50 = 1,60,000 shares.

Teacher's Note:
1. Divide by the issue price (face value plus premium), not by the face value.

Answer: (c) In both payment of dividend and refund of capital

Explanation:
1. Preference shares carry a preferential right both to dividend and to return of capital on winding up.

Teacher's Note:
1. Shares never carry interest; dividend is an appropriation of profit.