Company Accounts

Reviewed by Editorial Team
The ProProfs editorial team is comprised of experienced subject matter experts. They've collectively created over 10,000 quizzes and lessons, serving over 100 million users. Our team includes in-house content moderators and subject matter experts, as well as a global network of rigorously trained contributors. All adhere to our comprehensive editorial guidelines, ensuring the delivery of high-quality content.
Learn about Our Editorial Process
| By Sweetsalman123
S
Sweetsalman123
Community Contributor
Quizzes Created: 48 | Total Attempts: 92,137
| Attempts: 678
SettingsSettings
Please wait...
  • 1/203 Questions

    Koina Ltd. issued 15,00,000,12% debentures of Rs.50 each at premium of 10% payable as Rs.20 on application and balance on allotment. Debentures are redeemable at par after 6 years. All the money due on allotment was called up and received. The amount of premium will be  

    • Rs.3,00,00,000
    • Rs.2,25,00,000
    • Rs.75,00,000
    • Rs.5,25,00,000
Please wait...
Corporate Finance Quizzes & Trivia
About This Quiz

This quiz assesses knowledge on company accounts, focusing on specific accounting practices such as debenture issues, dividends, and share capital management. It is designed for learners to understand capital loss, expenditure treatment, and redemption processes in corporate finance.

Quiz Preview

  • 2. 

    Following balances are given in trial balance Debenture redemption fund 50,000 Debenture redemption fund investment 50,000 Interest on debenture redemption fund Investment 3,000 Increase in Debenture redemption fund by 10,000 Debenture redemption fund in Balance Sheet will be__________.  

    • Rs. 60,000

    • Rs. 63,000

    • Rs. 50,000

    • Rs. 65,000

    Correct Answer
    A. Rs. 63,000
    Explanation
    The Debenture redemption fund is a provision set aside by a company to redeem its debentures. In this case, the trial balance shows a Debenture redemption fund of Rs. 50,000. Additionally, there is an increase in the fund by Rs. 10,000 due to interest earned on the Debenture redemption fund investment. Therefore, the total Debenture redemption fund in the balance sheet will be Rs. 60,000 (Rs. 50,000 + Rs. 10,000).

    Rate this question:

  • 3. 

    A company can redeem its debentures by :  

    • Lump sum payment

    • Conversion

    • Draw of lots

    • All the three

    Correct Answer
    A. All the three
    Explanation
    A company can redeem its debentures through three methods: lump sum payment, conversion, or draw of lots. Lump sum payment refers to the company repaying the debenture holders in a single payment. Conversion allows the debenture holders to convert their debentures into shares of the company. Draw of lots refers to a random selection process where some debenture holders are chosen to be redeemed. Therefore, the correct answer is that a company can redeem its debentures through all three methods.

    Rate this question:

  • 4. 

    Green Ltd. Issued 5,000, 6% debentures of Rs.100 each at a discount of 5% repayable after 5 years at a premium of 5%. Total loss on issue of debentures will be         

    • Rs.40,000

    • Rs.50,000

    • Rs.60,000

    • Rs.70,000

    Correct Answer
    A. Rs.50,000
    Explanation
    The correct answer is Rs.50,000. The total loss on the issue of debentures can be calculated by finding the difference between the face value of the debentures and the amount received from the issue. In this case, the face value of the debentures is Rs.100 each, and the discount given is 5%. So, the amount received from the issue is (100 - 5% of 100) = Rs.95. The total loss on the issue is then calculated by subtracting the amount received from the face value of the debentures and multiplying it by the number of debentures issued. Therefore, the total loss is (100 - 95) x 5,000 = Rs.50,000.

    Rate this question:

  • 5. 

    Loss on issue of Debentures is generally written off in  

    • 10 years

    • 8 years

    • Over the period of redemption

    • 15 years

    Correct Answer
    A. Over the period of redemption
    Explanation
    The loss on issue of Debentures is generally written off over the period of redemption because debentures are long-term financial instruments that are issued by companies to raise capital. The loss incurred on the issue of debentures is spread over the period of redemption, which is the time it takes for the debentures to be repaid by the company. This allows the company to spread the impact of the loss over a longer period of time, reducing the immediate financial burden on the company.

    Rate this question:

  • 6. 

    Virender Ltd. Forfeited 20 shares of Rs. 100 each (Rs. 60 called up) issued at par to Ram on which he had paid Rs. 20 per share. All the forfeited shares were reissued to Syam as Rs. 60 paid up for Rs. 45 per share. Amount transferred to capital reserve will be.

    • Rs.150

    • Rs.100

    • Rs.75

    • Rs.60

    Correct Answer
    A. Rs.100
    Explanation
    When shares are forfeited, the company cancels the shares and reissues them to new shareholders. In this case, Virender Ltd. forfeited 20 shares that were issued to Ram at a face value of Rs. 100 each, with Rs. 60 called up (meaning Ram had paid Rs. 60 per share). Ram had paid only Rs. 20 per share, so the company forfeited the shares. These forfeited shares were then reissued to Syam at Rs. 45 per share, with Rs. 60 paid up (meaning Syam paid Rs. 60 per share). The amount transferred to capital reserve is the difference between the amount paid up and the face value of the shares forfeited, which is Rs. 100.

    Rate this question:

  • 7. 

    A Ltd. forfeited 400 shares of Anil of Rs. 10 each fully called up for non payment of final call of Rs. 2 per share and reissued to Sunil as fully paid for Rs. 10 per share. Amount transferred to Capital Reserve will be  

    • Rs.3200

    • Rs.3000

    • Rs.2800

    • None of the three

    Correct Answer
    A. Rs.3200
    Explanation
    When A Ltd. forfeited 400 shares of Anil for non-payment of the final call of Rs. 2 per share, the company would have received Rs. 800 (400 shares x Rs. 2). When these forfeited shares were reissued to Sunil as fully paid for Rs. 10 per share, the company would have received Rs. 4,000 (400 shares x Rs. 10). Therefore, the amount transferred to Capital Reserve would be the difference between the amount received from the reissue and the amount received from the forfeiture, which is Rs. 4,000 - Rs. 800 = Rs. 3,200. Hence, the correct answer is Rs. 3200.

    Rate this question:

  • 8. 

    According to table A of the companies Act, Interest on calls in arrears is charged     

    • @4 %

    • @5%

    • @6%

    • None of these

    Correct Answer
    A. @5%
    Explanation
    According to Table A of the Companies Act, interest on calls in arrears is charged at a rate of 5%.

    Rate this question:

  • 9. 

    A company can issue redeemable preference shares  

    • At par

    • At premium

    • At discount

    • All of the three

    Correct Answer
    A. All of the three
    Explanation
    A company can issue redeemable preference shares at par, at a premium, or at a discount. "At par" means that the shares are issued at their face value. "At premium" means that the shares are issued at a price higher than their face value, while "at discount" means that the shares are issued at a price lower than their face value. Therefore, a company has the option to issue redeemable preference shares at any of these three prices.

    Rate this question:

  • 10. 

    D Ltd. forfeited 800 shares of Rs. 10 each fully called up, on which the holder has paid only application money of Rs. 3 per share. Out of these 500 shares were reissued as Rs. 11 per share fully paid up. Capital Reserve will be credited by  

    • Rs. 1500

    • Rs. 1800

    • Rs. 2000

    • None of the three

    Correct Answer
    A. Rs. 1500
    Explanation
    When shares are forfeited, the company has the right to reissue them at a different price. In this case, 500 shares were reissued at Rs. 11 per share. The difference between the forfeited price (Rs. 10) and the reissue price (Rs. 11) is Rs. 1 per share. Therefore, the total amount credited to the Capital Reserve would be 500 shares multiplied by Rs. 1, which equals Rs. 500.

    Rate this question:

  • 11. 

    A company forfeited 1,000 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.8 .On forfeiture,the amount debited to share capital will be 

    • Rs.10,000

    • Rs.8,000

    • Rs.2,000

    • Rs.18,000

    Correct Answer
    A. Rs.8,000
    Explanation
    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.8 and the number of shares forfeited is 1,000. Therefore, the amount debited to share capital will be Rs.8,000 (Rs.8 x 1,000).

    Rate this question:

  • 12. 

    G Ltd. acquired assets worth Rs. 1,50,000 from AB Ltd. by issue of shares of Rs. 10 each at a premium of Rs. 5. The number of shares to be issued by G. Ltd. to settle the purchase consideration will be  

    • 10,000 shares

    • 12,000 shares

    • 9,000 shares

    • None of the three.

    Correct Answer
    A. 10,000 shares
    Explanation
    G Ltd. acquired assets worth Rs. 1,50,000 from AB Ltd. by issuing shares at a premium of Rs. 5. The total purchase consideration is calculated by multiplying the number of shares to be issued by the face value of each share, which is Rs. 10. To find the number of shares, we divide the total purchase consideration by the issue price per share (face value + premium). In this case, the total purchase consideration is Rs. 1,50,000 and the issue price per share is Rs. 15 (Rs. 10 + Rs. 5). Dividing Rs. 1,50,000 by Rs. 15 gives us 10,000 shares. Therefore, G Ltd. will issue 10,000 shares to settle the purchase consideration.

    Rate this question:

  • 13. 

    Gopal was holding 100 shares of 10 each of a company on which he had paid Rs. 3 on application and Rs. 2 allotment, but could not pay Rs. 2 on first calll Forfeited shares a/c Will be credited with  

    • Rs.500

    • Rs.400

    • Rs.600

    • None of the three

    Correct Answer
    A. Rs.500
    Explanation
    Gopal had 100 shares of Rs. 10 each. He paid Rs. 3 on application and Rs. 2 on allotment, totaling Rs. 5. However, he could not pay Rs. 2 on the first call. As a result, his shares were forfeited. The forfeited shares account will be credited with the amount Gopal paid, which is Rs. 5. Therefore, the correct answer is Rs. 500.

    Rate this question:

  • 14. 

    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:  

    • Rs. 50,000

    • Rs. 40,000

    • Rs. 30,000

    • None of the above

    Correct Answer
    A. Rs. 40,000
    Explanation
    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:

  • 15. 

    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:  

    • Rs. 4,000

    • Rs. 1,000

    • Rs. 5,000

    • Rs. 10,000

    Correct Answer
    A. Rs. 5,000
    Explanation
    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:

  • 16. 

    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 

    • Rs.40,000

    • Rs.10,000

    • Rs.20,000

    • Rs.8,000

    Correct Answer
    A. Rs.8,000
    Explanation
    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:

  • 17. 

    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  

    • Rs.2,60,000

    • Rs.2,50,000

    • Rs.2,40,000

    • Rs. 1,60,000

    Correct Answer
    A. Rs.2,50,000
    Explanation
    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:

  • 18. 

    G Ltd. purchased land and building from H 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 is credited with

    • Rs.2,60,000

    • Rs.2,50,000

    • Rs.2,40,000

    • Rs.1,60,000

    Correct Answer
    A. Rs.2,50,000
    Explanation
    The debentures account is credited with Rs.2,50,000 because the consideration for the purchase of land and building was paid by issuing 12% Debentures at a discount of 20%. The face value of the debentures is Rs.100 each, and the total consideration for the purchase is Rs.2,00,000. Since the debentures were issued at a discount of 20%, the actual amount received from the debenture holders is 80% of the face value. Therefore, the total amount of debentures issued is Rs.2,00,000 / 0.8 = Rs.2,50,000.

    Rate this question:

  • 19. 

    The Promising Co. Ltd. took over assets of Rs. 3,50,000 and liabilities of Rs.30,000 of X Ltd. for a purchase consideration of Rs. 3,30,000. The Promising Co. Ltd. paid the purchase consideration by issuing 12% debentures of Rs. 100 each at 10% premium. No. of Debentures issued will be  

    • 3000 Debentures

    • 3100 Debentures

    • 2800 Debentures

    • None of the three

    Correct Answer
    A. 3000 Debentures
    Explanation
    The purchase consideration for the assets and liabilities of X Ltd. is Rs. 3,30,000. The Promising Co. Ltd. paid this consideration by issuing 12% debentures at a premium of 10%. The face value of each debenture is Rs. 100, and with a premium of 10%, the total value of each debenture is Rs. 110. To calculate the number of debentures issued, we divide the purchase consideration by the value of each debenture: Rs. 3,30,000 / Rs. 110 = 3000 debentures. Therefore, the correct answer is 3000 Debentures.

    Rate this question:

  • 20. 

    Preference shares of Rs.3,00,000 are redeemed at par for which fresh equity shares of Rs.1,20,000 are issued at 20% premium. What amount should be transferred to capital redemption reserve account?  

    • Rs.60,000

    • Rs.24,000

    • Rs.36,000

    • Rs.1,80,000

    Correct Answer
    A. Rs.1,80,000
    Explanation
    When preference shares are redeemed at par, the company must transfer an amount equal to the nominal value of the shares being redeemed to the capital redemption reserve account. In this case, preference shares worth Rs.3,00,000 are being redeemed, so Rs.3,00,000 should be transferred to the capital redemption reserve account. The issuance of fresh equity shares at a premium does not affect the amount to be transferred to the reserve account. Therefore, the correct answer is Rs.1,80,000.

    Rate this question:

  • 21. 

    Narain Ltd invited application for 50,000 shares of Rs.100 each at a discount of 8%. Discount per share will be  

    • Rs.8.00

    • Rs.0.08 paise

    • 0.80 paise

    • Rs.80.00

    Correct Answer
    A. Rs.8.00
    Explanation
    The discount per share will be Rs.8.00. This can be calculated by multiplying the discount percentage (8%) by the face value of each share (Rs.100). 8% of Rs.100 is Rs.8.00. Therefore, the discount per share is Rs.8.00.

    Rate this question:

  • 22. 

    Jai Ltd.purchased machinery from Om Ltd. for Rs.8,00,000.The consideration was paid by issue of 15 % debentures by Rs.100 each at a discount of 20 %.Number of debentures issued by Jai Ltd will be

    • 8,000

    • 10,000

    • 12,000

    • 15,000

    Correct Answer
    A. 10,000
    Explanation
    Jai Ltd purchased machinery from Om Ltd for Rs.8,00,000. The consideration for the purchase was paid by issuing 15% debentures at a discount of 20%. To find the number of debentures issued, we need to calculate the total amount raised through debentures.

    The face value of each debenture is Rs.100, and since they are issued at a discount of 20%, the effective value of each debenture is Rs.80.

    To calculate the total amount raised, we divide the purchase price of the machinery (Rs.8,00,000) by the effective value of each debenture (Rs.80).

    Rs.8,00,000 ÷ Rs.80 = 10,000

    Therefore, the number of debentures issued by Jai Ltd is 10,000.

    Rate this question:

  • 23. 

    According to Section 78 of the Compaines Act,the amount in the securities premium A/c can be used for the purpose of

    • Issue of fully paid bonus shares

    • Writing off preliminary expenses

    • Both(a)&(b)

    • None of the above.

    Correct Answer
    A. Both(a)&(b)
    Explanation
    According to Section 78 of the Companies Act, the amount in the securities premium A/c can be used for the purpose of issuing fully paid bonus shares and writing off preliminary expenses.

    Rate this question:

  • 24. 

    10,000 equity shares of Rs. 10 each were issued to public at a premium of Rs.2 per share. Applications were received for 12,000 shares. Amount of securities premium account will be  

    • Rs.20,000

    • Rs.24,000

    • Rs.4,000

    • Rs.1600

    Correct Answer
    A. Rs.20,000
    Explanation
    When equity shares are issued at a premium, the excess amount received above the face value of the shares is credited to the securities premium account. In this case, 10,000 shares were issued at a premium of Rs.2 per share. Therefore, the total premium received would be 10,000 shares x Rs.2 = Rs.20,000. Hence, the amount credited to the securities premium account will be Rs.20,000.

    Rate this question:

  • 25. 

    Interest received on debenture redemption fund investment is  

    • General reserve account

    • Debenture Redemption in fund A/c

    • Capital reserve account

    • None of them.

    Correct Answer
    A. Debenture Redemption in fund A/c
    Explanation
    The correct answer is Debenture Redemption in fund A/c. When a company issues debentures, it sets up a Debenture Redemption Fund to accumulate funds for the repayment of the debentures at maturity. The interest received on the investments made with this fund is credited to the Debenture Redemption Fund Account. This interest income helps in building up the necessary funds for the redemption of the debentures. Therefore, the correct answer is Debenture Redemption in fund A/c.

    Rate this question:

  • 26. 

    Following information pertains to X Ltd.                                                                            Rs. Equity share capital called up               4,60,000 Calls in arrears                                              7,500 Calls in advance                                            5,000 Proposed dividend                                                5% The amount of dividend payable will be_______  

    • Rs. 22,625

    • Rs. 23,000

    • Rs. 20,000

    • None of the three

    Correct Answer
    A. Rs. 22,625
    Explanation
    The amount of dividend payable can be calculated by subtracting the calls in arrears and calls in advance from the equity share capital called up and then multiplying it by the proposed dividend percentage. In this case, the calculation would be as follows:

    Equity share capital called up: Rs. 4,60,000
    Calls in arrears: Rs. 7,500
    Calls in advance: Rs. 5,000
    Proposed dividend: 5%

    Amount of dividend payable = (Equity share capital called up - Calls in arrears - Calls in advance) * Proposed dividend percentage
    = (4,60,000 - 7,500 - 5,000) * 5%
    = (4,47,500) * 5%
    = Rs. 22,625

    Therefore, the correct answer is Rs. 22,625.

    Rate this question:

  • 27. 

    A Ltd, makes an issue of 10,000 equity shares of Rs. 100 each, payable as follows - On application and allotment             Rs. 50 On first call                                             Rs. 25 On second and final call                      Rs. 25 Members holding 400 shares did not pay the second call and the shares are duly forfeited, 300 of which are reissued as fully paid at Rs. 80 per share. Amount transferred to capital reserve will be

    • 16,500

    • 15,000

    • 15,000

    • None of the three

    Correct Answer
    A. 16,500
    Explanation
    The amount transferred to capital reserve will be 16,500. This can be calculated by multiplying the number of forfeited shares (300) by the reissue price per share (Rs. 80). Therefore, the amount transferred to capital reserve is 300 x Rs. 80 = Rs. 24,000. However, since the forfeited shares were originally issued at a discount of Rs. 20 per share (Rs. 100 - Rs. 80), the amount transferred to capital reserve will be reduced by the discount amount. Therefore, the final amount transferred to capital reserve is Rs. 24,000 - (300 x Rs. 20) = Rs. 16,500.

    Rate this question:

  • 28. 

    A company forfeited 2,000 shares of Rs.10 each held by Mr. Mohan for nonpayment of allotment money of Rs.3 per share. The called-up value per share was Rs.8. On forfeiture, the amount debited to share capital will be 

    • Rs.6000

    • Rs.20000

    • Rs.10000

    • Rs.16000

    Correct Answer
    A. Rs.16000
    Explanation
    When shares are forfeited, the amount debited to the share capital account is equal to the called-up value per share minus the amount already paid by the shareholder. In this case, the called-up value per share is Rs.8 and the allotment money already paid is Rs.3 per share. Therefore, the amount debited to the share capital will be (Rs.8 - Rs.3) * 2000 shares = Rs.10,000. Hence, the correct answer is Rs.10,000.

    Rate this question:

  • 29. 

    Interest 10,000 received on debentures redemption Fund investment will be  

    • Credited to Trading A/c

    • Credited to Profit & Loss A/c

    • Credited to P & L appropriation A/c

    • Credited to Debentures Redemption Fund A/c

    Correct Answer
    A. Credited to Debentures Redemption Fund A/c
    Explanation
    The interest received on debentures redemption fund investment is credited to the Debentures Redemption Fund A/c. This is because the purpose of the Debentures Redemption Fund is to accumulate funds for the redemption of debentures. The interest received on the investment contributes to this fund and is therefore credited to the Debentures Redemption Fund A/c.

    Rate this question:

  • 30. 

    Preliminary expenses in connection with flotation of a new company is  

    • Fixed asset

    • Current asset

    • Fictitious asset

    • None of the three

    Correct Answer
    A. Fictitious asset
    Explanation
    Preliminary expenses in connection with flotation of a new company are considered fictitious assets. Fictitious assets are intangible assets that do not have a physical existence but are recorded in the books of accounts. These expenses are incurred before the commencement of business operations and are not directly related to the production or sale of goods or services. Instead, they are incurred for activities like market research, feasibility studies, legal expenses, etc., which are necessary for setting up the company. Since these expenses do not have any realizable value and cannot be used in generating future economic benefits, they are classified as fictitious assets.

    Rate this question:

  • 31. 

    The maximum amount of capital that a company can raise is called  

    • Authorised capital

    • Subscribed capital

    • Issued capital

    • Called-up capital

    Correct Answer
    A. Authorised capital
    Explanation
    Authorised capital refers to the maximum amount of capital that a company is legally allowed to raise. This is the limit set by the company's articles of association and represents the total value of shares that can be issued by the company. It is important for companies to have authorised capital as it provides a framework for their financial operations and ensures that they do not exceed their legal limits in terms of raising capital.

    Rate this question:

  • 32. 

    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  

    • 6,000 shares

    • 7,500 shares

    • 9,375 shares

    • 5,000 shares

    Correct Answer
    A. 5,000 shares
    Explanation
    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:

  • 33. 

    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  

    • Rs.2,000

    • Rs.3,000

    • Nil

    • Rs.10,000

    Correct Answer
    A. Nil
    Explanation
    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:

  • 34. 

    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  

    • Goodwill accountby Rs. 1,00,000.

    • Legal services account by Rs.1,00,000.

    • Promoter's account by Rs.1,00,000.

    • 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:

  • 35. 

    Pavan Ltd. Invited application for 30,000 shares payable as under: Rs. 3 per share on application; Rs. 3 per share on allotment; Rs. 2 per share on First call; Rs. 2 per share on final call.Ashok, who had been allotted 500 shares failed to pay both the calls. His shares were forfeited and reissued at Rs. 9 per share to Hari, as fully paid up. Amount transferred to capital Reserve will be____________.  

    • Rs.2,000

    • Rs.2,500

    • Rs.2,800

    • Rs.1,500

    Correct Answer
    A. Rs.2,500
    Explanation
    When Ashok failed to pay both the calls, his shares were forfeited and reissued to Hari as fully paid up. The amount transferred to the capital reserve will be the difference between the reissue price and the total amount called up on the shares. In this case, the reissue price is Rs. 9 per share and the total amount called up on the shares is Rs. 8 per share (Rs. 3 + Rs. 3 + Rs. 2). Therefore, the amount transferred to the capital reserve will be Rs. 1 per share (Rs. 9 - Rs. 8) and since Hari received 500 shares, the total amount transferred to the capital reserve will be Rs. 500 (Rs. 1 x 500), which is equal to Rs. 2,500.

    Rate this question:

  • 36. 

    Z Ltd. Forfeited 600 shares of Rs. 10 each, on which first call of Rs. 3 per share was not received; the second and final call of Rs. 2 per share has not yet been called. Forfeited share A/c will be credited with  

    • Rs.3,000

    • Rs.2,000

    • Rs.1,500

    • Rs.1,000

    Correct Answer
    A. Rs.3,000
    Explanation
    When shares are forfeited, the amount already paid on those shares is transferred to the Forfeited Share Account. In this case, the first call of Rs. 3 per share was not received, so the total amount forfeited would be 600 shares multiplied by Rs. 3, which equals Rs. 1,800. Therefore, the Forfeited Share Account will be credited with Rs. 1,800. The correct answer is Rs. 3,000, which is not a valid explanation based on the information given.

    Rate this question:

  • 37. 

    Z Ltd. purchased plant and machinery for Rs. 2,00,000 payable as Rs.65,000 in cash and the balance by an issue of 6% debentures of Rs. 1000 each at a discount of 10%. Discount on issue of debentures will be  

    • Rs.15000

    • Rs.14000

    • Rs.10000

    • None of the three

    Correct Answer
    A. Rs.15000
    Explanation
    The discount on issue of debentures can be calculated by multiplying the face value of the debentures by the discount rate. In this case, the face value of each debenture is Rs. 1000 and the discount rate is 10%. Therefore, the discount on each debenture is Rs. 1000 * 10% = Rs. 100. As the company issued debentures worth Rs. 1,35,000 (Rs. 2,00,000 - Rs. 65,000), the total discount on the debentures is Rs. 100 * 1,35,000 = Rs. 13,50,000. However, the question states that the discount is at a rate of 6%. Therefore, the actual discount on the debentures is Rs. 13,50,000 * 6% = Rs. 81,000. Thus, the correct answer is Rs. 15,000.

    Rate this question:

  • 38. 

    Dividend paid before the end of the financial year is known as__________  

    • Interim dividend

    • Unclaimed dividend

    • Proposed dividend

    • None of the three

    Correct Answer
    A. Interim dividend
    Explanation
    Interim dividend is the correct answer because it refers to the dividend paid before the end of the financial year. This type of dividend is usually paid by companies in the middle of the year, before the final financial statements are prepared. It is a way for the company to distribute profits to shareholders before the end of the year, rather than waiting until the annual dividend is declared.

    Rate this question:

  • 39. 

    A company offers to the public 20000 shares for subscription. The company receives application for 24000 shares. If the shares are allotted on pro-rata basis the application for 24,000 shares are to be allotted as  

    • 5 Shares for every 6 shares applied

    • 4 Shares for every 5 shares applied

    • 6 Shares for every 7 shares applied

    • None of the above

    Correct Answer
    A. 5 Shares for every 6 shares applied
    Explanation
    The correct answer is "5 Shares for every 6 shares applied". This means that for every 6 shares applied, the company will allot 5 shares. In this case, since there are 24,000 shares applied, the company will allot 20,000 shares (5/6 * 24,000 = 20,000). This ensures a fair distribution of shares among the applicants.

    Rate this question:

  • 40. 

    Pankaj Ltd. Issued 500 equity shares of Rs.100 each as fully paid up in consideration of purchase of plant and machinery Rs.40000. What will be  the amount of discount an issue of shares.  

    • Rs. 15,000

    • Rs.10,000

    • Rs.5,000

    • Rs. 1,000

    Correct Answer
    A. Rs.10,000
    Explanation
    When a company issues shares as fully paid up in consideration of a purchase, it means that the shares are issued to the seller of the plant and machinery in exchange for the value of the purchase. In this case, Pankaj Ltd. issued 500 equity shares of Rs.100 each, which totals to Rs.50,000. However, the value of the purchase was only Rs.40,000. Therefore, the discount on the issue of shares would be the difference between the total value of the shares issued (Rs.50,000) and the value of the purchase (Rs.40,000), which is Rs.10,000.

    Rate this question:

  • 41. 

    Beta Ltd was formed as a public limited company with on authorised capital of Rs.2000000 divided into shares of Rs.10 each. Beta Ltd issued fully paid up share of Rs.10 each in consideration of acquiring asset worth Rs.380000 from M/s Rahim Bros. The shares are issued at a premium of 25%. To record this transaction share capital need to be credited by   

    • Rs.3,04,000

    • Rs.76,000

    • Rs.3,80,000

    • Rs.3,00,000

    Correct Answer
    A. Rs.3,04,000
  • 42. 

    X Ltd. Issued 5000 10% debentures of Rs.125 each at a discount of 5% payable at a premium of 5% at the end of 5 years. The loss on issue of debentures will be  

    • Rs.62,500

    • Rs.12,500

    • Rs.37,500

    • Rs.25,000

    Correct Answer
    A. Rs.62,500
    Explanation
    The loss on issue of debentures can be calculated by finding the difference between the face value of the debentures and the amount received from their issue. In this case, the face value of each debenture is Rs.125 and the amount received from their issue is 95% of the face value (due to the 5% discount). Therefore, the amount received from the issue of each debenture is Rs.118.75 (125 * 0.95). Since 5000 debentures were issued, the total amount received is Rs.593,750 (118.75 * 5000). The loss on issue of debentures is the difference between the face value of the debentures and the total amount received, which is Rs.62,500 (625,000 - 593,750).

    Rate this question:

  • 43. 

    As per table A of the companies Act 1956, a company can charge interest on call in arrears at the rate of  

    • 5%

    • 6%

    • 7%

    • 8%

    Correct Answer
    A. 5%
    Explanation
    According to Table A of the Companies Act 1956, a company is allowed to charge interest on call in arrears at a rate of 5%. This means that if a shareholder fails to pay their call on time, the company has the right to charge them an additional 5% interest on the amount owed.

    Rate this question:

  • 44. 

    1. 50,000 equity share of Rs.100 each fully called up 2. Calls in arrears Rs.50,000 3. Proposed dividend 20%  

    • Rs.10,00,000

    • Rs.9,84,000

    • Rs.9,90,000

    • Rs.9,80,000

    Correct Answer
    A. Rs.9,90,000
    Explanation
    The correct answer is Rs.9,90,000. This is because the total amount of equity shares fully called up is 50,000 shares multiplied by Rs.100 each, which equals Rs.50,00,000. The calls in arrears of Rs.50,000 and the proposed dividend of 20% need to be deducted from this amount. The calls in arrears reduce the total amount by Rs.50,000, and the proposed dividend reduces it further by 20% of Rs.50,00,000, which is Rs.10,00,000. Therefore, the final amount is Rs.50,00,000 - Rs.50,000 - Rs.10,00,000 = Rs.9,90,000.

    Rate this question:

  • 45. 

    The following information pertains to Suraj Ltd. Equtiy share capital called up           Rs.5,00,000 Calls in arrears                                    Rs.40,000 Calls in advance                                  Rs.25,000 Proposed dividend                                   15% Amount of dividend payable is 

    • Rs.69,000

    • Rs.75,000

    • Rs.70,000

    • None of the three

    Correct Answer
    A. Rs.69,000
    Explanation
    The amount of dividend payable can be calculated by subtracting the calls in arrears and calls in advance from the equity share capital. In this case, the calculation would be: Rs.5,00,000 - Rs.40,000 - Rs.25,000 = Rs.4,35,000. The proposed dividend is 15% of the equity share capital, which is Rs.75,000. However, since there are calls in arrears, the dividend payable will be reduced by the amount of calls in arrears. Therefore, the correct answer is Rs.69,000.

    Rate this question:

  • 46. 

    The following information pertains to Arjun Ltd. (1)  Equity share capital called up         Rs.1,00,000 (2)  Calls in arrear                                      Rs.10,000 (3)  Calls in advance                                 Rs.10,000 (4)  Proposed dividend                              15% The amount of proposed dividend payable is 

    • Rs.15,000

    • Rs.13,500

    • Rs.85,000

    • None of the above

    Correct Answer
    A. Rs.13,500
    Explanation
    Based on the given information, the equity share capital called up is Rs.1,00,000. Calls in arrear is Rs.10,000 and calls in advance is Rs.10,000. The proposed dividend is 15%. To calculate the amount of proposed dividend payable, we need to subtract the calls in arrear from the equity share capital. Therefore, the amount of proposed dividend payable is Rs.90,000 (Rs.1,00,000 - Rs.10,000). Then, we need to calculate 15% of the amount of proposed dividend payable which is Rs.13,500. Therefore, the correct answer is Rs.13,500.

    Rate this question:

  • 47. 

    Discount on issue of debentures is a____________  

    • Revenue loss to be charged in the year of issue

    • Capital loss to be written off from capital reserve

    • Capital loss to be written off over the tenure of the debentures

    • Capital loss to be shown as goodwill

    Correct Answer
    A. Capital loss to be written off over the tenure of the debentures
    Explanation
    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:

  • 48. 

    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  

    • Rs.500

    • Rs.400

    • Rs.600

    • Rs.1,000

    Correct Answer
    A. Rs.600
    Explanation
    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:

  • 49. 

    Chandra Ltd. issued 15,000 equity shares of 100 each at a discount of 5%.Payments were made as -on application Rs. 25; on allotment Rs. 35 and Rs.35 on first and final call. Applications for 14000 shares were received and all were accepted. All the money was duly received except the first and final call on 200 shares cash book Balance will be  

    • Rs. 13,23,000

    • Rs.13,00,000

    • Rs.12,00,000

    • None of the three

    Correct Answer
    A. Rs. 13,23,000
    Explanation
    The cash book balance will be Rs. 13,23,000. This can be calculated by multiplying the number of shares that were not paid for the first and final call (200 shares) by the amount of the first and final call (Rs. 35) and then subtracting the result from the total amount received (Rs. 13,25,000). Therefore, the cash book balance will be Rs. 13,25,000 - (200 shares x Rs. 35) = Rs. 13,23,000.

    Rate this question:

Quiz Review Timeline (Updated): Mar 21, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Sep 11, 2011
    Quiz Created by
    Sweetsalman123

Related Topics

Recent Quizzes

Financial Structure Quiz - Get Your Finances Right Financial Structure Quiz - Get Your Finances Right
A useful business quiz - Corporate Finance A useful business quiz - Corporate Finance
Chapter 5 & 6 Corporate Finance Chapter 5 & 6 Corporate Finance
Chapter 12: Long Term External Finance Chapter 12: Long Term External Finance
Chapter 10: Short Term Finance: Working Capital Chapter 10: Short Term Finance: Working Capital
Weighted average cost of capital (WACC) X1 Trivia Quiz Weighted average cost of capital (WACC) X1 Trivia Quiz
Corporate Finance Questions! Trivia Quiz Corporate Finance Questions! Trivia Quiz
Module 12 - Investment Management and Corporate Finance Module 12 - Investment Management and Corporate Finance
How much you know about Corporate Finance? Quiz How much you know about Corporate Finance? Quiz
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.