CBSE Class 12 Accountancy Accounting For Share Capital MCQs Set C

Question. Formed by special act of the legislature or parliament Called
a) Chartered companies
b) Guarantee company
c) Statutory Company
d) None of the options

Answer : C

Question. The portion of the authorised capital which can be called-up only on the liquidation of the company is called
a) Reserve capital
b) Authorised capita
c) Issued capital
d) Called up capital

Answer : A

Question. The following statements apply to equity/preference shareholders. Which one of them applies only to preference sharehoders?
a) Shareholders risk the loss of investment
b) Shareholders bear the risk of no dividends in the event of losses
c) Shareholders usually have the right to vote
d) Dividends are usually given at a set amount in every financial year.

Answer : D

Question. Premium on the issue of shares should be shown :
a) On the Assets side of balance sheet
b) On the Equity & Liabilities side of balance sheet
c) In profit & loss Statement
d) None of the Above

Answer : B

Question. Section 591of Act states this type of company is incorporated outside India but has established business in India, Called
a) Private company
b) Government Company
c) Foreign Company
d) Limited company

Answer : C

Question. Maximum number of members in a Public Company
a) Any Number of members
b) 50
c) 60
d) None of the options

Answer : A

Question. Maximum Rate of discount
a) 10% of the nominal value of share
b) 5% of the nominal face value
c) 15% of the nominal face value
d) None of the options

Answer : A

Question. Incorporated under special charter by the king or sovereign
a) Chartered companies
b) Statutory Company
c) Guarantee company
d) None of the options

Answer : A

Question. Securities premium account is shown on the liabilities side of the balance sheet under the head:
a) Reserves and surplus
b) Share capital
c) Current liabilities
d) None of the options

Answer : A

Question. Which of the following is not a statistical book of a company?
a) Register of debenture holders
b) Share application and allotment book
c) Register of share warrants
d) Register of shares and debentures transferred

Answer : A

Question. ……………. is transferred to Capital Reserve.
a) Profit from sale of fixed assets
b) Premium on issue of shares
c) Profit on forfeiture of shares
d) All of the Above

Answer : D

Question. If a shareholder does not pay his dues on allotment, for the amount due, there will be a
a) Credit balance in the Shares Allotment Account.
b) Debit balance In the Shares Forfeiture Account.
c) Credit balance in the Shares Forfeiture Account.
d) Debit balance in the Shares Allotment Account,

Answer : D

Question. The capital of a company is divided into a number of equal parts, Each part is called
a) Share
b) Debenture
c) General Reserve
d) None of the options

Answer : A

Question. Preference shares, in case the holders of these have a right to convert their preference shares into equity shares at their option according to the terms of issue, such shares are called :
a) Cumulative Preference Share
b) Non-cumulative Preference Share
c) Convertible Preference Share
d) Non-convertible Preference Share

Answer : C

Question. A Company offered 50,000 shares of ?10 each at par payable as to ?3 on applications, ?5 on allotment and the balance on final call. Applications were received for 60,000 shares and the allotment was made pro-rata. The excess application money was to be adjusted on allotment and call. How much amount will be transferred from Share Application A/c to Share Allotment A/c?
a) ₹1,80,000
b) ₹30,000
c) ₹1,50,000
d) ₹50,000

Answer : B

Question. A new company set up by existing companies with five year track record can issue share at premium provided:
a) All of the options
b) Participation of existing companies are not less that 50%
c) Prospectus contains justification for issue price
d) The issue price is made applicable to all new investors uniformly.

Answer : A

Question. Shareholders receive from the company :
a) Interest
b) Commission
c) Profit
d) Dividend

Answer : D

Question. When Second instalment paid
a) On allotment
b) On Application
c) Both
d) None of the options

Answer : A

Question. If the loss on reissue on shares is less than the amount forfeited, the surplus is transferred to
a) Capital Reserve
b) Revenue Reserve
c) Current liabilities
d) None of the options

Answer : A

Question. What is the limit of Securities Premium on the issue of shares?
a) Unlimited
b) 0.1
c) 0.15
d) 0.2

Answer : A

Question. If a share of Rs. 10 issued at a premium of Rs.3 on which the full amount has been called and Rs.8 (including premium) paid is forfeited the capital account should be debited with :
a) Rs. 5
b) r 8
c) Rs.10
d) Rs.13

Answer : C

Question. ESOP offered by company will create / retain :
a) A sense of belongingness employees
b) High caliber
c) High Productivity
d) All of these

Answer : D

Question. Deepak Ltd. offered for subscription 5,50,000 equity shares of Rs. 10 each.The public applied for 5,00,000 shares.
The call ( Rs. 8 per share) was received except from Gopal, who holds 4,000 shares has not paid after application money of Rs. 2 per share and from Shyam who holds 1,000 shares has paid only Rs. 6 per share. Gopal’s shares were forfeited. The amount of subscribed capital to be disclosed in the Balance Sheet is
a) Rs.39,96,000.
b) Rs.39,74,000.
c) Rs.49,46,000.
d) Rs.49,74,000.

Answer : B

Question. Which of the following statement in false
a) No bonus issue shall be made within 12 months of any public or right issue.
b) Bonus issue is made out of free reserves or securities premium collected in cash only
c) Bonus shares can be issued out revaluation profit.
d) Company can issue bonus shares in any ratio

Answer : C

Question. If a share of Rs. 100 on which Rs.60 has been paid, is forfeited, it can be re-issued at the minimum price of:
a) Rs. 60
b) Rs.100
c) Rs. 40
d) Rs.140

Answer : C

Question. The following statements apply to equity/preference shareholders. Which one of them applies only to preference shareholders?
a) Shareholders risk the loss of investment
b) Shareholders bear the risk of no dividends in the event of losses
c) Shareholders usually have the right to vote
d) Dividends are usually given at a set amount in every financial year.

Answer : D

Question. Section 591of Act states this type of company is incorporated outside India but has established business in India, Called
a) Foreign Company
b) Government Company
c) Private company
d) Limited company

Answer : A

Question. It is that part of uncalled capital which the company reserve to be called only upon winding up of company
a) Reserve Capital
b) Share capital.
c) Called up Capital
d) Called up Capital

Answer : A

Question. Metacaf Ltd. issued 50,000 shares of Rs.100 each payable Rs.20 on application (on 1st May 2012); Rs.30 on allotment (on 1st January 2013); Rs.20 on first call (on 1st July 2013) and the balance on final call (on 1st February 2014). Shankar, a shareholder holding 5,000 shares did not pay the first call on the due date. The second call was made and Shankar paid the first call amount along with the second call. All sums due were received.
Total amount received on 1st February was :
a) Rs. 15,00,000
b) Rs. 16,00,000
c) Rs. 10,00,000
d) Rs. 11,00,000

Answer : B

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

Question. 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: (b) Calls-in-arrear

Question. 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: (c) Uncalled capital

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

Question. 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: (b) Issuing fully paid bonus shares

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

Question. 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: (d) Along with any of the above

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

Question. 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: (a) For paying dividend to members

Question. A joint stock company is :
(a) An artificial legal person
(b) Natural person
(c) A general person
(d) None of these
Answer: (a) An artificial legal person

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

Question. 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: (a) A part of subscribed uncalled capital

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

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

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

Question. 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: (d) None of these

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

Question. 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: (c) Called-up value of Shares

Question. 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: (a) Capital Reserve

Question. J. Ltd. re-issue \( 2,000 \) shares which where forfeited by crediting share forfeiture account by \( Rs 3,000 \). These shares were re-issued at \( Rs 9 \) per share. The amount transferred to capital reserve will be :
(a) \( Rs 3,000 \)
(b) \( Rs 2,000 \)
(c) \( Rs 1,000 \)
(d) Nil
Answer: (c) \( Rs 1,000 \)

Question. If a share of \( Rs 10 \) on which \( Rs 8 \) has been paid up is forfeited, it canbe 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: (d) 2 Rs. per share

Question. 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: (a) 700 Rs.

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

Question. 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: (b) Deducted from share capital

Question. 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: (b) Share Forfeiture A/c

Question. A company has…………
(a) Separate Legal Entity
(b) Perpetual Existence
(c) Limited Liability
(d) All the above
Answer: (d) All the above

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

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

Question. 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
Answer: (b) Capital Reserve Account

Question. 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: (c) Preference shares and equity shares

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

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

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

Question. 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: (b) For non-payment of call money

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

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

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

Question. 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: (b) Liabilities

Question. Share Allotment Account is :
(a) Personal A/c
(b) Real A/c
(c) Nominal A/c
(d) None of these
Answer: (a) Personal A/c

Question. 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: (d) Reserve Capital

Question. 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: (a) Issue of Bonus shares

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

Question. 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: (b) Reserve capital

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

Question. 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: (d) 20 years

Question. 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: (c) Authorised capital

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

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

Question. 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: (d) Goodwill A/c

Question. 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: (b) Writing Off Losses of the Company

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

Question. A Ltd. purchased a machinery for 1,80,000Rs. 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: (c) 1,500

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

Question. A company is registered with a share capital of \( Rs 1,00,000 \)Rs. divided into \( Rs 10,000 \) shares of \( Rs 10 \) 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: (b) Private Company

Question. 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: (b) Calls-in-arrear