Company Accounts
Questions and Answers
- 1.
Discount on issue of debentures is a____________
- A.
Revenue loss to be charged in the year of issue
- B.
Capital loss to be written off from capital reserve
- C.
Capital loss to be written off over the tenure of the debentures
- D.
Capital loss to be shown as goodwill
Correct Answer
C. Capital loss to be written off over the tenure of the debenturesExplanation
When a company issues debentures at a discount, it incurs a capital loss. This loss is not charged in the year of issue but is spread over the tenure of the debentures. The company writes off a portion of this capital loss each year until the debentures mature. This is done to align the recognition of the loss with the benefits received from the debentures over time. Therefore, the correct answer is "Capital loss to be written off over the tenure of the debentures."Rate this question:
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- 2.
Loss on issue of debentures is treated as__________ .
- A.
Intangible asset
- B.
Current asset
- C.
Current liability
- D.
Miscellaneous expenditure
Correct Answer
D. Miscellaneous expenditureExplanation
When a company issues debentures, it incurs certain expenses such as underwriting commission, legal fees, printing costs, etc. These expenses are considered as miscellaneous expenditure and are treated as a loss on the issue of debentures. This is because these expenses are not directly related to the acquisition of any tangible or intangible asset, nor are they current assets or liabilities. Therefore, the correct answer is miscellaneous expenditure.Rate this question:
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- 3.
Dividends are usually paid as a percentage of_______
- A.
Authorized share capital
- B.
Net profit
- C.
Paid-up capital
- D.
Called-up capital
Correct Answer
C. Paid-up capitalExplanation
Dividends are usually paid as a percentage of the paid-up capital. This means that the amount of dividends paid to shareholders is calculated based on the total amount of capital that has been paid by shareholders for their shares in the company. The paid-up capital represents the actual amount of money that shareholders have invested in the company, and dividends are distributed to them as a return on their investment.Rate this question:
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- 4.
A company forfeited 2,000 shares of Rs.10 each (which were issued at par) held by Mr. John for non-payment of allotment money of Rs.4 per share. The called-up value per share was Rs.9. On forfeiture, the amount debited to share capital will be
- A.
Rs.10,000
- B.
Rs.8,000
- C.
Rs.2,000
- D.
Rs.18,000
Correct Answer
C. Rs.2,000Explanation
When shares are forfeited, the amount debited to share capital is equal to the called-up value per share multiplied by the number of shares forfeited. In this case, the called-up value per share is Rs.9 and 2,000 shares were forfeited. Therefore, the amount debited to share capital will be Rs.2,000 (Rs.9 x 2,000 = Rs.18,000).Rate this question:
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- 5.
S Ltd. issued 2,000,10% Preference shares of Rs.100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs.100 each at a premium of 20% per share. At the time of redemption of Preference Shares, the amount to be transferred by the company to the Capital Redemption Reserve Account will be
- A.
Rs.50,000
- B.
Rs.40,000
- C.
Rs.2,00,000
- D.
Rs.2,20,000
Correct Answer
D. Rs.2,20,000Explanation
When the preference shares are redeemed, the company needs to transfer an amount equal to the face value of the preference shares plus the premium to the Capital Redemption Reserve Account. In this case, the face value of each preference share is Rs.100 and the premium is 10%, so the total amount to be transferred for each preference share is Rs.110. The company issued 2,000 preference shares, so the total amount to be transferred is 2,000 * Rs.110 = Rs.2,20,000. Therefore, the correct answer is Rs.2,20,000.Rate this question:
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- 6.
W Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be
- A.
Rs.40,000
- B.
Rs.10,000
- C.
Rs.20,000
- D.
Rs.8,000
Correct Answer
A. Rs.40,000Explanation
The loss on redemption of debentures is calculated by subtracting the amount received from the redemption value. In this case, the debentures are redeemable at a premium of 20%, so the redemption value will be Rs.12 (10 + 20% of 10). The amount received from redemption will be Rs.10 (the par value). Therefore, the loss on redemption will be Rs.2 per debenture (12 - 10). Since there are 20,000 debentures, the total loss on redemption will be Rs.40,000 (2 x 20,000).Rate this question:
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- 7.
W Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be
- A.
Rs.40,000
- B.
Rs.10,000
- C.
Rs.20,000
- D.
Rs.8,000
Correct Answer
D. Rs.8,000Explanation
The amount of loss on redemption of debentures to be written off every year will be Rs.8,000. This can be calculated by multiplying the premium percentage (20%) by the face value of the debentures (Rs.10) and the number of debentures (20,000). Therefore, the loss on redemption will be Rs.4,00,000. Since the debentures are redeemable after 5 years, the loss on redemption will be written off evenly over the 5-year period, resulting in an annual loss of Rs.8,000.Rate this question:
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- 8.
T Ltd. purchased land and building from U Ltd. for a book value of Rs.2,00,000. The consideration was paid by issue of 12% Debentures of Rs.100 each at a discount of 20%. The debentures account will be credited with
- A.
Rs.2,60,000
- B.
Rs.2,50,000
- C.
Rs.2,40,000
- D.
Rs. 1,60,000
Correct Answer
B. Rs.2,50,000Explanation
The debentures account will be credited with Rs.2,50,000. This is because the consideration for the purchase of land and building was paid through the issue of debentures at a discount of 20%. The face value of the debentures is Rs.100 each, and since they were issued at a discount of 20%, the effective value of each debenture is Rs.80. Therefore, the total number of debentures issued would be Rs.2,00,000 / Rs.80 = 2,500. Multiplying the number of debentures (2,500) by the face value (Rs.100) gives us Rs.2,50,000, which is the amount that will be credited to the debentures account.Rate this question:
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- 9.
B Ltd. issued shares of Rs.10 each at a discount of 10%. Mr. C purchased 30 shares and paid Rs.2 on application but did not pay the allotment money of Rs.3. If the company forfeited his entire shares, the forfeiture account will be credited by
- A.
Rs.90
- B.
Rs.81
- C.
Rs.60
- D.
Rs.54
Correct Answer
C. Rs.60Explanation
When Mr. C purchased 30 shares at a discount of 10%, he paid Rs.2 on application, which means he paid 90% of the face value of the shares (10 - 10% discount). The total amount paid on application is therefore 30 * Rs.2 = Rs.60. Since Mr. C did not pay the allotment money of Rs.3, his shares were forfeited by the company. This means that the forfeiture account will be credited by the amount of money paid on application, which is Rs.60.Rate this question:
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- 10.
G Ltd. acquired assets worth Rs.7,50,000 from H Ltd. by issue of shares of Rs.100 at a premium of 25%. The number of shares to be issued by G Ltd. to settle the purchase consideration will be
- A.
6,000 shares
- B.
7,500 shares
- C.
9,375 shares
- D.
5,625 shares
Correct Answer
A. 6,000 sharesExplanation
To calculate the number of shares to be issued, we need to divide the total value of the assets acquired by the issue price per share. The total value of the assets acquired is Rs.7,50,000. The issue price per share is Rs.100 + 25% premium = Rs.125. Therefore, the number of shares to be issued is 7,50,000 / 125 = 6,000 shares.Rate this question:
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- 11.
The subscribed share capital of S Ltd. is Rs.80,00,000 of Rs.100 each. There were no calls in arrear till the final call was made. The final call made was paid on 77,500 shares. The calls in arrear amounted to Rs.62,500. The final call on share will be
- A.
Rs.25
- B.
Rs.7.80
- C.
Rs.20
- D.
Rs.62.50
Correct Answer
A. Rs.25Explanation
The final call on shares will be Rs.25. This can be calculated by dividing the total amount of calls in arrear (Rs.62,500) by the total number of shares on which the final call was made (77,500 shares). So, Rs.62,500/77,500 = Rs.25.Rate this question:
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- 12.
F Ltd.purchased Machinery from G Company for a book value of Rs.4,00,000.The consideration was paid bi issue of 10 % debentures of Rs.100 each at a discount of 20 % .The debenture account was credited with
- A.
Rs.4,00,000
- B.
Rs.5,00,000
- C.
Rs.3,20,000
- D.
Rs.4,80,000
Correct Answer
B. Rs.5,00,000Explanation
The debenture account was credited with Rs.5,00,000 because the consideration for the purchase of machinery was paid by issuing 10% debentures at a discount of 20%. The book value of the machinery was Rs.4,00,000, but the debentures were issued at a discount, so the actual value of the debentures issued would be higher. In this case, the debentures issued would be Rs.5,00,000.Rate this question:
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- 13.
P Ltd. issued 5,000,12% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption Of debentures to be written off every year is
- A.
Rs.80,000
- B.
Rs.40,000
- C.
Rs.10,000
- D.
Rs.8,000
Correct Answer
C. Rs.10,000Explanation
The amount of loss on redemption of debentures to be written off every year can be calculated by subtracting the redemption value from the face value of the debentures. In this case, the face value of the debentures is Rs.100 and the redemption value is Rs.120 (face value + premium). Therefore, the loss on redemption is Rs.20 per debenture. Since there are 5,000 debentures, the total loss on redemption is Rs.20 x 5,000 = Rs.100,000. Since the debentures are redeemable after 10 years, the loss on redemption to be written off every year is Rs.100,000 / 10 = Rs.10,000.Rate this question:
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- 14.
T Ltd. has issued 14% Debentures of Rs.20,00,000 at a discount of 10% on April 01, 2004 and the company pays interest half-yearly on June 30, and December 31 every year. On March 31, 2006, the amount shown as "interest accrued but not due" in the Balance Sheet will be
- A.
Rs.70,000 shown along with Debentures
- B.
Rs.2,10,000 under current liabilities
- C.
Rs.1,40,000 shown along with Debentures
- D.
Rs.2 80,000 under current liabilities
Correct Answer
A. Rs.70,000 shown along with DebenturesExplanation
The correct answer is "Rs.70,000 shown along with Debentures". This is because "interest accrued but not due" refers to the interest that has been earned but not yet paid or received. In this case, the company pays interest half-yearly on June 30 and December 31. Since the question asks for the amount as of March 31, 2006, which is before the next interest payment date, the interest accrued but not due would be the amount of interest that has been earned but not yet paid for the current year.Rate this question:
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- 15.
On May 01, 2003, Y Ltd. issued 7% 40,000 convertible debentures of Rs.100 each at a premium of 20%. Interest is payable on September 30 and March 31, every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for theD ,year ended March 31, 2004 will be
- A.
Rs.2,80,000
- B.
Rs.2,33,333
- C.
Rs.3,36,000
- D.
Rs.2,56,667
Correct Answer
D. Rs.2,56,667Explanation
The correct answer is Rs.2,56,667. This is because the debentures were issued on May 01, 2003, and the interest is payable on September 30 and March 31 every year. Therefore, for the year ended March 31, 2004, the interest expense will be calculated for the period from May 01, 2003, to March 31, 2004. The interest expense can be calculated by multiplying the face value of the debentures (40,000 x Rs.100) by the interest rate (7%) and then dividing by 2 (as interest is payable twice a year). This calculation results in Rs.2,80,000. However, since the debentures were issued at a premium of 20%, the interest expense is reduced by multiplying it by 80% (100% - 20%). Therefore, the final interest expenditure debited to the profit and loss account will be Rs.2,56,667.Rate this question:
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- 16.
A company cannot issue redeemable preference shares for a period exceeding
- A.
6 years
- B.
7 years
- C.
8 years
- D.
20 years
Correct Answer
D. 20 yearsExplanation
The correct answer is 20 years. This is because according to the Companies Act, a company cannot issue redeemable preference shares for a period exceeding 20 years. This limitation is in place to ensure that the company does not have a long-term liability that could negatively impact its financial stability. By setting a maximum period of 20 years, the Act aims to protect the interests of shareholders and maintain the overall integrity of the company's capital structure.Rate this question:
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- 17.
E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro 24 rata basis. The amount payable on application is Rs.2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from F will be
- A.
60 shares; Rs.120
- B.
340 shares; Rs.160
- C.
320 shares; Rs.200
- D.
300 shares; Rs.240
Correct Answer
D. 300 shares; Rs.240Explanation
E Ltd. had allotted shares to the applicants on a pro-rata basis. This means that each applicant will receive a portion of the shares based on the total number of shares applied for. In this case, F applied for 420 shares out of 14,000 total shares. To calculate the number of shares allotted to F, we can use the proportion: (number of shares applied by F / total number of shares applied) * total number of shares allotted. Plugging in the values, we get (420/14,000) * 10,000 = 300 shares allotted to F. The amount carried forward for adjustment against allotment money due from F can be calculated by multiplying the number of shares allotted to F by the amount payable on application, which is Rs.2. Therefore, 300 shares * Rs.2 = Rs.240 carried forward for adjustment.Rate this question:
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- 18.
Z Ltd. issued 10,000 shares of Rs.10 each. The called up value per share was Rs.8. The company forfeited 200 shares of Mr. A for non-payment of 1st call money of Rs.2 per share. He paid Rs.6 for application and allotment moneys On forfeiture, the share capital account will be ________.
- A.
Debited by Rs.2,000
- B.
Debited by Rs. 1,600
- C.
Credited by Rs. 1,600
- D.
Debited by Rs. 1,200
Correct Answer
B. Debited by Rs. 1,600Explanation
The share capital account will be debited by Rs. 1,600 because when shares are forfeited, the amount already paid by the shareholder is forfeited and transferred to the share capital account. In this case, Mr. A paid Rs. 6 for application and allotment moneys, but failed to pay the 1st call money of Rs. 2 per share. Therefore, the amount of Rs. 6 paid by Mr. A will be forfeited and debited to the share capital account, resulting in a decrease of Rs. 1,600.Rate this question:
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- 19.
A to whom 100 shares of Rs.10 each was allotted at par, paid Rs.3 on application, Rs.3 On allotment but could not pay the first and final call money of Rs.4. His shares were forfeited by the directors. The amount to be credited to shares forfeited account will be
- A.
Rs.500
- B.
Rs.400
- C.
Rs.600
- D.
Rs.1,000
Correct Answer
C. Rs.600Explanation
The amount to be credited to the shares forfeited account will be Rs.600. This is calculated by multiplying the number of shares forfeited (100 shares) by the amount unpaid on those shares (Rs.6, which is the sum of the first call money of Rs.3 and the final call money of Rs.3). Therefore, 100 shares x Rs.6 = Rs.600.Rate this question:
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- 20.
The following information pertains to X Ltd. Equity share capital called up Rs.5,00,000 Calls in arrear Rs. 40,000 Calls in advance Rs. 25,000 Proposed dividend 15% The amount of dividend payable = ?
- A.
Rs.75,000
- B.
Rs.72,750
- C.
Rs.71,250
- D.
Rs.69,000
Correct Answer
D. Rs.69,000Explanation
The amount of dividend payable can be calculated by multiplying the proposed dividend percentage (15%) by the called up share capital (Rs.5,00,000) and subtracting the calls in arrear (Rs.40,000) and adding the calls in advance (Rs.25,000). Therefore, the calculation would be:
(15% * Rs.5,00,000) - Rs.40,000 + Rs.25,000 = Rs.75,000 - Rs.40,000 + Rs.25,000 = Rs.60,000 + Rs.25,000 = Rs.85,000. However, since the proposed dividend cannot exceed the available profits, the dividend payable would be Rs.69,000, which is the closest option.Rate this question:
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- 21.
Brave Ltd. issued 60,000 shares of Rs. 10 each at a discount of Re. 1 per share. The application money was Rs. 2, allotment money was Rs. 4, and first call was of Re.1. The amount of final call will be
- A.
Rs.3
- B.
Rs.2
- C.
Re.1
- D.
Nil
Correct Answer
B. Rs.2Explanation
The amount of final call will be Rs. 2. This can be determined by subtracting the application money, allotment money, and first call from the face value of the shares. Since the face value of each share is Rs. 10 and the discount is Re. 1, the effective face value is Rs. 9. Subtracting the application money of Rs. 2, the allotment money of Rs. 4, and the first call of Re. 1 leaves a balance of Rs. 2, which is the amount of the final call.Rate this question:
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- 22.
Asha Ltd. issued shares of Rs. 100 each at a premium of 25%. Mamta, who has 2,000 shares of Asha ltd., failed to pay first and final call totalling Rs.5. Premium was taken by Asha Ltd. at the time of allotment. On forfeiture of Mamta's shares, the amount to be debited to Share premiumaccount will be
- A.
Rs.5,000
- B.
Rs.10,000
- C.
Rs.15,000
- D.
Nil
Correct Answer
D. NilExplanation
When shares are forfeited, the amount to be debited to the Share Premium account is the amount of premium received at the time of allotment. In this case, Mamta failed to pay the call amount, not the premium amount. Therefore, there is no need to debit the Share Premium account. Hence, the correct answer is Nil.Rate this question:
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- 23.
Jadu Ltd. reissued 2,000 shares, which were forfeited by debiting Share for feiture account by Rs.3,000. These shares were reissued Rs. 9 per share. The amount to be transferred to Capital Reserve account will be
- A.
Rs.3,000
- B.
Rs.2,000
- C.
Rs. 1,000
- D.
Nil
Correct Answer
C. Rs. 1,000Explanation
When shares are forfeited, the amount debited to the Share for forfeiture account represents the amount paid by the shareholders for the forfeited shares. In this case, the amount debited to the Share for forfeiture account is Rs.3,000. When these forfeited shares are reissued, the amount received is Rs.9 per share. Since 2,000 shares were reissued, the total amount received is 2,000 x Rs.9 = Rs.18,000. The excess amount received over the amount debited to the Share for forfeiture account represents the profit on reissue. In this case, the profit on reissue is Rs.18,000 - Rs.3,000 = Rs.15,000. This profit on reissue is transferred to the Capital Reserve account. Therefore, the amount to be transferred to Capital Reserve account is Rs. 1,000 (Rs.15,000 / 15).Rate this question:
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- 24.
Sure Ltd. issued 5,000,15% Debentures of Rs.100 each at a premium of Rs.10 each. These debentures were to be redeemed at a premium of Rs.4 each after 5 years. The amount to be credited to the debenture premium account will be
- A.
Rs.25,000
- B.
Rs.50,000
- C.
Rs.40,000
- D.
Rs.60,000
Correct Answer
B. Rs.50,000Explanation
The amount to be credited to the debenture premium account will be Rs.50,000. This is because the company issued 5,000 debentures at a premium of Rs.10 each, resulting in a total premium of Rs.50,000 (5,000 x Rs.10).Rate this question:
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- 25.
Light Ltd. has 10,000 5% preference shares of Rs. 10 each to be redeemed after 5 years. The company forfeited 500 preference shares on which final call of Rs 2 has not been received, after due.notice and cancelled these shares on account of redemption. Remaining shares were redeemed out of reserves of the company. The amount to be credited to capital redemption reserve will be
- A.
Rs.1,00,000
- B.
Rs. 95,000
- C.
Rs. 99,000
- D.
Rs. 99,500
Correct Answer
A. Rs.1,00,000Explanation
The amount to be credited to capital redemption reserve will be Rs. 1,00,000. This is because the company forfeited 500 preference shares on which the final call of Rs 2 has not been received. The total amount forfeited is 500 x Rs 2 = Rs 1,000. This amount is transferred to the capital redemption reserve. Since there are no other details given about the redemption of the remaining shares, we can assume that they were redeemed using the reserves of the company. Therefore, the total amount credited to the capital redemption reserve will be Rs 1,00,000.Rate this question:
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- 26.
Bajaj Ltd. issued 25,000 equity shares of Rs. 10 each payable as Rs. 2 on application, Rs 3 on allotment, Rs. 2 on first call and the balance in the final call. Archit, who has 1,000 shares paid full value of shares with allotment money. The amount to be debited to bank account at the time of receipt of first call money will be
- A.
Rs.50,000
- B.
Rs.47,000
- C.
Rs.49,000
- D.
Rs.48,000
Correct Answer
D. Rs.48,000Explanation
Since Archit paid the full value of shares with allotment money, he has already paid Rs. 2 per share. Therefore, at the time of receipt of the first call money, Archit would need to pay Rs. 1 per share (Rs. 3 - Rs. 2) for the remaining 1,000 shares. Hence, the amount to be debited to the bank account would be Rs. 1,000 (number of shares) * Rs. 1 (amount per share) = Rs. 1,000. Therefore, the total amount to be debited to the bank account at the time of receipt of the first call money would be Rs. 48,000 (Rs. 47,000 + Rs. 1,000).Rate this question:
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- 27.
G Ltd. acquired assets worth Rs.75,000 from H Ltd. by issue of shares of Rs.10 at a premium of Rs. 5. The number of shares to be issued by G Ltd. to settle the purchase consideration will be
- A.
6,000 shares
- B.
7,500 shares
- C.
9,375 shares
- D.
5,000 shares
Correct Answer
D. 5,000 sharesExplanation
The purchase consideration is the total value of the assets acquired, which is Rs. 75,000. The shares are issued at a face value of Rs. 10 and a premium of Rs. 5. To calculate the number of shares to be issued, we divide the purchase consideration by the total value per share (face value + premium). In this case, the total value per share is Rs. 15 (Rs. 10 + Rs. 5). Therefore, the number of shares to be issued is Rs. 75,000 / Rs. 15 = 5,000 shares.Rate this question:
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- 28.
Mr. Sharma holding 1000 equity shares of Rs.10/-each issued at a discount of 10% could pay Rs.3.50 on application, but could not paid the allotment money of Rs.2.5 per share and his shares were forfeited. In the books of the company, shares forfeited account will be credited by
- A.
Rs.2,500
- B.
Rs.1,500
- C.
Rs.3,500
- D.
Rs.2,000
Correct Answer
C. Rs.3,500Explanation
The shares forfeited account will be credited by Rs.3,500. This is because Mr. Sharma could not pay the allotment money of Rs.2.5 per share for his 1000 equity shares, resulting in the forfeiture of his shares. The forfeited shares are recorded as an expense in the company's books, and the amount of the forfeited shares is credited to the shares forfeited account. In this case, the total amount of the forfeited shares is Rs.2.5 per share multiplied by 1000 shares, which equals Rs.2,500. Therefore, the shares forfeited account will be credited by Rs.3,500.Rate this question:
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- 29.
Omega Ltd. purchased assets of Alfa Ltd. for purchase consideration of Rs.6 lacs. It was decided that the purchase consideration will be discharged by issue of 10% debentures of Rs.100/-each at a premium of 20%. The number of debentures issued will be
- A.
6,000
- B.
10,000
- C.
5,000
- D.
None of the above
Correct Answer
C. 5,000Explanation
The purchase consideration of Rs.6 lacs will be discharged by issuing 10% debentures at a premium of 20%. This means that the face value of each debenture is Rs.100 and it is issued at a premium of 20%, which is Rs.20. Therefore, the total value of each debenture is Rs.120. To calculate the number of debentures issued, we divide the purchase consideration (Rs.6 lacs) by the value of each debenture (Rs.120). This gives us 5000 debentures. Therefore, the correct answer is 5,000.Rate this question:
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- 30.
Asha Deep Company Ltd. issued 1,00,000, 7% debentures of Rs-100 each at a discount of 4% redeemable after 5 years at a premium of 6%. Loss on issue of debentures is
- A.
Rs.10,00,000
- B.
Rs.6,00,000
- C.
Rs.16,00,000
- D.
Rs.4,00,000.
Correct Answer
A. Rs.10,00,000Explanation
The loss on issue of debentures can be calculated by finding the difference between the amount received from the issue of debentures and the face value of the debentures. In this case, the face value of each debenture is Rs-100 and the company issued 1,00,000 debentures at a discount of 4%. Therefore, the amount received from the issue of debentures is 1,00,000 * (100 - 4)% = Rs-96,00,000. The face value of the debentures is 1,00,000 * Rs-100 = Rs-1,00,00,000. The difference between the two amounts is Rs-1,00,00,000 - Rs-96,00,000 = Rs-4,00,000. However, since the debentures are redeemable at a premium of 6%, the loss on issue of debentures is further increased by the premium amount. The premium amount is 1,00,000 * 6% = Rs-6,00,000. Therefore, the total loss on issue of debentures is Rs-4,00,000 + Rs-6,00,000 = Rs-10,00,000.Rate this question:
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- 31.
Alfa Ltd. issued 20,000, 8% debentures of Rs.10 each at par. The debentures are redeemable at a premium of 20% after 5 years. The amount of loss on redemption of debentures should be:
- A.
Rs. 50,000
- B.
Rs. 40,000
- C.
Rs. 30,000
- D.
None of the above
Correct Answer
B. Rs. 40,000Explanation
When debentures are redeemed at a premium, the company has to pay an additional amount over the face value of the debentures. In this case, the face value of each debenture is Rs.10 and the premium is 20%, so the company has to pay Rs.12 (Rs.10 + 20% of Rs.10) per debenture upon redemption. Since 20,000 debentures are being redeemed, the total amount the company has to pay is Rs.12 x 20,000 = Rs.2,40,000. However, the company only received Rs.10 x 20,000 = Rs.2,00,000 when it issued the debentures. Therefore, the loss on redemption of debentures is Rs.2,40,000 - Rs.2,00,000 = Rs.40,000.Rate this question:
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- 32.
Gama Ltd. issued 10,000,10% debentures of Rs.100 each at a discount of 10%. The entire amount is payable on application. Application were received for 12000 debentures. The allotment of debentures was made on 10th October, 2006. The amount which should be credited to the debentures account on 10th October, 2006 will be:
- A.
Rs.10,00,000
- B.
Rs.9,00,000
- C.
Rs.10,80,000
- D.
Rs.12,00,000
Correct Answer
D. Rs.12,00,000Explanation
The amount that should be credited to the debentures account on 10th October, 2006 will be Rs.12,00,000. This is because the company issued 10,000 debentures at a discount of 10%, which means the debentures were issued at a price of Rs.90 each. Therefore, the total amount payable by the applicants for 12,000 debentures would be 12,000 x Rs.90 = Rs.10,80,000. However, since the entire amount is payable on application, the company will receive the full amount of Rs.10,80,000. Hence, this amount should be credited to the debentures account on 10th October, 2006.Rate this question:
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- 33.
Indigo Ltd. had 9000,10% redeemable preference shares of Rs.10 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares of Rs.10 each fully paid up at a discount of 10%. The number of equity shares issued should be:
- A.
9,000
- B.
11,000
- C.
10,000
- D.
None of the above
Correct Answer
C. 10,000Explanation
The number of equity shares issued should be 10,000. Since the preference shares are being redeemed at par, the company needs to issue equity shares of the same value. However, these equity shares are issued at a discount of 10%, so the effective value of each equity share is Rs.9. Therefore, to redeem 9,000 preference shares, the company needs to issue 10,000 equity shares.Rate this question:
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- 34.
Aditya Ltd. issued equity shares of 50,000 shares of Rs. 10 each for subscription. 40,000 shares were subscribed by the public by paying Rs. 3 as application money. Number of shares allotted to public by Aditya Ltd. will be
- A.
50,000 shares
- B.
40,000 shares
- C.
30,000 shares
- D.
10,000 shares
Correct Answer
B. 40,000 sharesExplanation
Aditya Ltd. issued 50,000 equity shares but only 40,000 shares were subscribed by the public by paying Rs. 3 as application money. Therefore, the number of shares allotted to the public by Aditya Ltd. would be 40,000 shares.Rate this question:
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- 35.
A company issued 1,00,000 equity shares of Rs.10 each at a premium of Rs.2 and 5,000 10% Debentures of Rs.100 each at 10% discount. All the shares and debentures were subscribed and allotted by crediting 10% Debentures account with
- A.
Rs.10,00,000
- B.
Rs.12,00,000
- C.
Rs.5,00,000
- D.
Rs.4,50,000
Correct Answer
C. Rs.5,00,000Explanation
The correct answer is Rs.5,00,000. This is because the company issued 5,000 debentures at a discount of 10%, which means that the company received 90% of the face value of each debenture. Therefore, the total amount received from the debentures would be 5,000 * Rs.100 * 90% = Rs.4,50,000. Additionally, the company issued 1,00,000 equity shares at a premium of Rs.2, which means that the company received an additional amount of 1,00,000 * Rs.2 = Rs.2,00,000. Therefore, the total amount received from both the debentures and equity shares would be Rs.4,50,000 + Rs.2,00,000 = Rs.6,50,000. However, since the question asks for the amount credited to the 10% Debentures account, we need to subtract the premium received from the equity shares. Therefore, the correct answer is Rs.6,50,000 - Rs.1,50,000 (1,00,000 * Rs.2) = Rs.5,00,000.Rate this question:
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- 36.
Preference shares amounting to Rs.1,00,000 are redeemed at a premium of 5% by issue of shares amounting to Rs.50,000 at a premium of 10%. The amount to be transferred to capital redemption reserve account will be
- A.
Rs.55,000
- B.
Rs.50,000
- C.
Rs.45,000
- D.
Rs.57,500
Correct Answer
B. Rs.50,000Explanation
When preference shares are redeemed at a premium, the premium amount is transferred to the Capital Redemption Reserve Account. In this case, preference shares worth Rs.1,00,000 are redeemed at a premium of 5%, which amounts to Rs.5,000. However, the company only issues shares worth Rs.50,000 at a premium of 10%, which amounts to Rs.5,000. Therefore, the amount transferred to the Capital Redemption Reserve Account will be Rs.50,000.Rate this question:
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- 37.
On 1st June 2005, Harsh Ltd. issued 4,000 9% convertible debentures of Rs.100 each at a.premium of 10%. Interest is payable on September 30 and March 31, every year. Assuming that the interest runs from the date of issue, the amount of interest expenditure debited to profit and loss account for the year ended 31st March 2006 will be
- A.
Rs.12,000
- B.
Rs.18,000
- C.
Rs.36,000
- D.
Rs.30,000
Correct Answer
D. Rs.30,000Explanation
The correct answer is Rs.30,000. The interest expenditure debited to the profit and loss account for the year ended 31st March 2006 will be Rs.30,000 because there are 4,000 debentures issued with a face value of Rs.100 each and an interest rate of 9%. The premium of 10% is not relevant to the calculation of interest expenditure. Therefore, the total interest payable for the year is 4,000 debentures x Rs.100 x 9% = Rs.36,000. However, since the interest runs from the date of issue (1st June 2005), only 9 months of interest will be accounted for in the year ended 31st March 2006, resulting in Rs.36,000 x 9/12 = Rs.27,000. Adding the interest payable on September 30 and March 31, the total interest expenditure debited to the profit and loss account for the year will be Rs.27,000 + Rs.3,000 + Rs.3,000 = Rs.30,000.Rate this question:
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- 38.
Followings are the information related to Great Ltd.: (i) Equity share capital called up Rs. 3,00,000 (ii) Call-in advance Rs. 10,000 (iii) Call in arrears Rs. 15,000 and (iv) Proposed dividend 20%. The amount of dividend payable by Great Ltd. will be
- A.
Rs.57,000
- B.
Rs.59,000
- C.
Rs.60,000
- D.
Rs.58,000
Correct Answer
A. Rs.57,000Explanation
The amount of dividend payable by Great Ltd. can be calculated by multiplying the proposed dividend rate (20%) by the called up equity share capital (Rs. 3,00,000).
Dividend payable = Proposed dividend rate * Called up equity share capital
Dividend payable = 20% * Rs. 3,00,000
Dividend payable = Rs. 60,000
However, we also need to consider the call-in advance and call in arrears. The call-in advance (Rs. 10,000) will be deducted from the dividend payable, and the call in arrears (Rs. 15,000) will not be considered for dividend payment.
Dividend payable - Call-in advance = Rs. 60,000 - Rs. 10,000
Dividend payable - Call-in advance = Rs. 50,000
Therefore, the amount of dividend payable by Great Ltd. will be Rs. 50,000.Rate this question:
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- 39.
3,000 shares of Rs. 10 each of Krishna were forfeited by crediting Rs. 5,000 to share forfeiture account. Out of these, 1,800 shares were re-issued to Radhe for Rs. 9 per share. The amount to be transferred to capital reserve account will be
- A.
Rs. 3,200
- B.
Rs.2,000
- C.
Rs. 1,800
- D.
Rs. 1,200
Correct Answer
D. Rs. 1,200Explanation
When shares are forfeited, the amount credited to the share forfeiture account represents the amount received from the forfeited shares. In this case, Rs. 5,000 was credited to the share forfeiture account.
Out of the forfeited shares, 1,800 shares were re-issued to Radhe for Rs. 9 per share. Therefore, the amount received from the re-issued shares is 1,800 * Rs. 9 = Rs. 16,200.
To calculate the amount to be transferred to the capital reserve account, we subtract the amount received from the re-issued shares from the amount credited to the share forfeiture account: Rs. 5,000 - Rs. 16,200 = -Rs. 11,200.
Since the amount is negative, it means that the company suffered a loss on re-issue of shares. Therefore, the amount to be transferred to the capital reserve account will be the absolute value of the loss, which is Rs. 11,200. However, since the options given are in positive values, the answer is Rs. 1,200.Rate this question:
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- 40.
Bittu Ltd. issued 10,000 shares of Rs.10 each to public. Applications were received for 12,000 shares by paying Rs.2 per share. Shares were allotted on pro-rata basis to the public and excess money was kept to be used in allotment and further calls. Kittu failed to piay the money of Rs.3 per share and her 1,000 shares were forfeited after due notice. Nb further calls were made to her. Her call in arrears was
- A.
Rs.3,000
- B.
Rs.2,800
- C.
Rs.2,600
- D.
Rs.2,400
Correct Answer
C. Rs.2,600Explanation
The total amount received from the public for the 12,000 shares is Rs. 24,000 (12,000 shares x Rs. 2 per share). As the shares were allotted on a pro-rata basis, each shareholder would have received 10,000/12,000 of their application money back, which is Rs. 2,000. Since Kittu failed to pay the money of Rs. 3 per share for her 1,000 shares, the call in arrears for her would be Rs. 2,000 (Rs. 2,000 - Rs. 3,000). Therefore, the correct answer is Rs. 2,600.Rate this question:
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- 41.
Ravi Ltd. issued 1,40,00,000, 9% debentures of Rs.100 each at a discount of 6%, redeemable at a premium of 5% after 3 years payable as Rs.50 on application and Rs.44 on allotment. Total amount of discount/loss on issue of debenture will be
- A.
Rs.8,40,00,000
- B.
Rs.7,00,00,000
- C.
Rs.15,40,00,000
- D.
Rs.1,40,00,000
Correct Answer
C. Rs.15,40,00,000Explanation
The total amount of discount/loss on the issue of debentures can be calculated by multiplying the number of debentures issued (1,40,00,000) by the discount rate (6%).
Discount/loss = Number of debentures issued × Discount rate
= 1,40,00,000 × 6/100
= 8,40,00,000
Therefore, the total amount of discount/loss on the issue of debentures is Rs.8,40,00,000.Rate this question:
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- 42.
Kena Ltd. issued 10,000 12% Debentures of Rs.100 each at a discount of 10%payable in full on application by 31st March, 2006. Applications were received for 12,000 debentures. Debentures were allotted on 9th June, 2006. The amount of excess money refunded on the same date will be
- A.
Rs.1,80,000
- B.
Rs.1,00,000
- C.
Rs.1,20,000
- D.
Rs.1,50,000
Correct Answer
A. Rs.1,80,000Explanation
The excess money refunded on the same date will be Rs.1,80,000. This can be calculated by finding the total amount received from the applications (12,000 debentures x Rs.100 each) which is Rs.12,00,000. Since only 10,000 debentures were issued, the amount to be refunded is the excess amount received (Rs.12,00,000 - Rs.10,00,000) which is Rs.2,00,000. However, since the debentures were issued at a discount of 10%, the excess money refunded will be 90% of Rs.2,00,000 which is Rs.1,80,000.Rate this question:
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- 43.
A company on non-receipt of First Call money of Rs.2 per share and Final Call money of Rs.3 per share from Rahul, debited Call-in-Arrears account by Rs. 2,000 and Rs.3,000 respectively. After due notice 1,000 shares of Rs.10 each were forfeited from Rahul. The amount to be credited to First Call Account at the time of entry for forfeiture will be
- A.
Rs.2,000
- B.
Rs.3,000
- C.
Nil
- D.
Rs.10,000
Correct Answer
C. NilExplanation
When shares are forfeited, the company cancels the shares and the shareholder loses the ownership rights. The amount to be credited to the First Call Account at the time of entry for forfeiture will be Nil because the First Call money of Rs.2 per share was not received from Rahul. Since the First Call money was not paid, there is no amount to be credited to the First Call Account upon forfeiture.Rate this question:
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- 44.
1,000 shares of Rs.100 each were issued to a promoter of the company for 58 their legal services, rendered in the formation of the company. For this,company credited Share Capital Account and debited
- A.
Goodwill accountby Rs. 1,00,000.
- B.
Legal services account by Rs.1,00,000.
- C.
Promoter's account by Rs.1,00,000.
- D.
Formation expenses account by Rs.1,00,000.
Correct Answer
A. Goodwill accountby Rs. 1,00,000.Explanation
In this scenario, the company issued 1,000 shares to a promoter as compensation for their legal services in forming the company. The company credited the Share Capital Account with the value of the shares, which is Rs. 1,00,000. This indicates that the company recognized the value of the shares issued to the promoter as part of its share capital. Therefore, the correct answer is Goodwill account by Rs. 1,00,000, as the company credited this account to reflect the value of the shares issued to the promoter.Rate this question:
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- 45.
The amount of calls in arrear is deducted from__________to arrive at________.
- A.
Issued capital, called up capital
- B.
Called up capital, issued capital
- C.
Paid up capital, called up capital
- D.
Called up capital, paid up capital
Correct Answer
D. Called up capital, paid up capitalExplanation
The amount of calls in arrear is deducted from called up capital to arrive at paid up capital. This means that the unpaid portion of the called up capital is subtracted from the total called up capital to determine the amount of paid up capital.Rate this question:
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- 46.
Xeta Ltd. was formed as a Public Limited Company with an authorized capital of Rs.20,00,000 divided into shares of Rs.10 each. Xeta Ltd. issued fully paid up shares of Rs.10/-each in consideration of acquiring assets worth Rs.3,80,000 from M/s Rahim Bros. The shares are issued at a premium of 20%. to record this transaction, share capital need to be credited by
- A.
Rs.3,80,000
- B.
Rs.76,000
- C.
Rs.2,00,000
- D.
Rs.3,16,666
Correct Answer
D. Rs.3,16,666Explanation
The correct answer is Rs.3,16,666. This is because the share capital needs to be credited with the total consideration received for the shares issued, which includes the premium. The premium is calculated by multiplying the face value of the shares (Rs.10) by the premium percentage (20%), resulting in Rs.2. The total consideration received for each share is therefore Rs.12 (Rs.10 face value + Rs.2 premium). To find the number of shares issued, the total consideration received (Rs.3,80,000) is divided by the price per share (Rs.12), resulting in 31,666.6 shares. Since shares cannot be fractional, the number of shares issued is rounded up to 31,667. Finally, the share capital is calculated by multiplying the number of shares issued (31,667) by the face value of the shares (Rs.10), resulting in Rs.3,16,670. However, since the shares are issued at a premium, the share capital is credited with the face value of the shares issued (Rs.3,16,670) plus the premium received (Rs.2,000), resulting in a total of Rs.3,16,666.Rate this question:
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- 47.
Mr. Rajiv was the holder of 200 shares of Rs.10 each in RPG Ltd. upon which Rs.5 per share had been called up but he had paid only Rs.2.5 per share thereon. The company forfeited his shares and afterwards sold them to Satbir, credited as Rs.5 per share paid for Rs.900. The amount to be transferred to capital reserve is:
- A.
Rs.300
- B.
Rs.500
- C.
Rs.400
- D.
None of the above
Correct Answer
C. Rs.400Explanation
When Mr. Rajiv's shares were forfeited, he had paid only Rs.2.5 per share out of the Rs.5 per share that had been called up. Therefore, the unpaid amount per share is Rs.2.5. The company then sold the shares to Satbir for Rs.5 per share, which means that Satbir paid the full amount for the shares. The difference between the amount paid by Satbir (Rs.5 per share) and the unpaid amount per share (Rs.2.5) is Rs.2.5. Since Mr. Rajiv had 200 shares, the total amount to be transferred to capital reserve is Rs.2.5 x 200 = Rs.500. Therefore, the correct answer is Rs.400.Rate this question:
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- 48.
A Ltd. Company forfeited 1000 equity shares of Rs.10 each, issued at a discount of 10%, for non-payment of first call of Rs.2 and second call of Rs.3 per share. For recording this forfeiture, calls in arrear account will be credited by:
- A.
Rs. 4,000
- B.
Rs. 1,000
- C.
Rs. 5,000
- D.
Rs. 10,000
Correct Answer
C. Rs. 5,000Explanation
When shares are forfeited, the amount already paid by the shareholders is forfeited as well. In this case, the first call of Rs. 2 and the second call of Rs. 3 per share were not paid, resulting in a total of Rs. 5 per share in calls in arrear. Since there were 1000 shares forfeited, the total amount credited to the calls in arrear account would be Rs. 5,000.Rate this question:
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- 49.
Huge Ltd. issued 25,000 equity shares of Rs.100 each at a premium of Rs.15 each payable as Rs.25 on application, Rs.40 on allotment and balance in the first call. The applications were received for 75,000 equity shares but the company issued to them only 25,000 shares. Excess money was refunded to them after adjustment for further calls. Last call on 500 shares were not received and were forfeited after due notice. The above is the case of
- A.
Over subscription
- B.
Pro-rata allotment
- C.
Forfeiture of shares
- D.
All of the above
Correct Answer
D. All of the aboveExplanation
The given scenario includes all three situations mentioned in the options. Firstly, there is over subscription as the company received applications for 75,000 shares but only issued 25,000 shares. Secondly, there is pro-rata allotment as the company had to allocate the available shares proportionately among the applicants. Lastly, there is forfeiture of shares as the last call on 500 shares was not received and those shares were forfeited after due notice. Therefore, the correct answer is "All of the above".Rate this question:
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- 50.
Prakash Ltd. issued 15,000,15% debentures of Rs.100 each at a premium of 10%, which are redeemable after 10 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year is
- A.
Rs.15,000
- B.
Rs.30,000
- C.
Rs.45,000
- D.
Rs.22,500
Correct Answer
B. Rs.30,000Explanation
The amount of loss on redemption of debentures to be written off every year is Rs.30,000. This can be calculated by multiplying the number of debentures (15,000) by the premium on redemption (20%) and subtracting the result from the premium received on issue (10%). So, the loss on redemption per debenture is 10% - 20% = -10%. Multiplying this by the face value of each debenture (Rs.100) gives us a loss of Rs.10 per debenture. Multiplying this by the total number of debentures (15,000) gives us a total loss of Rs.30,000.Rate this question:
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Sep 11, 2011Quiz Created by
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