Accounting for share Capital Test

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Accounting for share Capital Test - 10

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Weekly Quiz Competition

Question 1
1 / -0

When an applicant gets less shares than the applied share, this situation is called__

A
Pro-rata

B
Premium

C
Rejection

D
Discount

Solution

When a company gets excess applications than the shares offered for subscription, it is known as oversubscription. In this situation a company may allot shares on pro-rata basis i.e. an applicant gets less shares than the shares applied by him.
Question 2
1 / -0

The amount of premium is decided by the board of Directors as per the guidelines issued by

A
BSE

B
NIFTY

C
Company

D
SEBI

Solution

It is mandatory for every company to follow the rules and regulations or guidelines issued by SEBI. Thus, a company follows the rules regarding premium issued by SEBI.
Question 3
1 / -0

If he Forfeited shares were issued at a premium and the premium money is already received on those Forfeited shares, security premium A/c will

A
not be cancelled or debited

B
Add to Share Capital

C
Should be added to new premium

D
Debited

Solution

When a company reissue its forfeited shares which were originally issued at premium and on which premium was received, should not be cancelled or debit the same at the time of reissue of shares.
Question 4
1 / -0

Any profit on reissue of Forfeited shares represents capital profit & hence it should be transferred to

A
Asset side of balance sheet

B
Share capital

C
Authorized capital

D
Capital reserve

Solution

Any capital gain earned by the company will be transferred to the capital reserve. Gain on forfeiture of shares which are reissued, should be transferred to the capital reserve at the time of reissue of shares.
Question 5
1 / -0

A forfeited share can:

A
be reissued at a maximum discount of 10% only.

B
Be issued at premium only

C
not be reissued at discount.

D
be re-issued at a maximum discount equal to the amount forfeited on the share.

Solution

Forfeited shares can be reissued at par, premium or discount. Directors of the company have authority to reissue forfeited shares at par, premium or discount.
Question 6
1 / -0

Share Application A/c and Share Allotment A/c is:

A
Nominal Account

B
Personal Account

C
Fictitious Account

D
Real Account

Solution

Share Application Account and Share Allotment Account is personal account. Share application account is personal account of applicants who have applied for shares and share allotment account is a personal account of allottees to whom the shares have been alloted.
Question 7
1 / -0

Securities premium account can be utilized for:

A
To pay the dividend to the equity shareholders

B
To Distribute it among the promoters

C
To create the General Reserve

D
To write off the preliminary expenses

Solution

As per the section 52 of the Companies Act, 2013 restricts the use of securities premium received, it can be used for the following purposes:
(i) To write off the preliminary expenses
(ii) To issue fully paid bonus shares to promoters
(iii) To purchase own shares
(iv) To write off the expenses
Question 8
1 / -0

What is paid to the Shareholders?

A
Salary

B
Interest

C
Debentures

D
Dividend

Solution

Dividend is paid to the shareholders.
Interest is paid to the Debenture holders
Question 9
1 / -0

When a company makes an offer or invites the public in general to subscribe its shares, it is known as _______

A
Initial Public Offer (IPO)

B
Issue of shares at par

C
Private Placement of shares

D
Issue of shares at premium

Solution

An initial public offering, or IPO, is the very first sale of stock issued by a company to the public. Prior to an IPO the company is considered private. with a relatively small number of shareholders made up primarily of early investors (such as the founders, their families and friends) and professional investors (such as venture capitalists or angel investors.
Question 10
1 / -0

Which of the following statement is false

A
A company can buy its own share

B
A company is legal entity distinct from its owner

C
Company is managed by all the members

D
Company is not affected by the death of its m

Solution

The Statement given as ‘Company is managed by all the members’ is not correct because it is not mandatory for all the members to run the company.

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 10

Result

Accounting for share Capital Test - 10

Score

-

Rank

-

SHARING IS CARING

Question 1

Pro-rata

Premium

Rejection

Discount

Solution

Question 2

BSE

NIFTY

Company

SEBI

Solution

Question 3

not be cancelled or debited

Add to Share Capital

Should be added to new premium

Debited

Solution

Question 4

Asset side of balance sheet

Share capital

Authorized capital

Capital reserve

Solution

Question 5

be reissued at a maximum discount of 10% only.

Be issued at premium only

not be reissued at discount.

be re-issued at a maximum discount equal to the amount forfeited on the share.

Solution

Question 6

Nominal Account

Personal Account

Fictitious Account

Real Account

Solution

Question 7

To pay the dividend to the equity shareholders

To Distribute it among the promoters

To create the General Reserve

To write off the preliminary expenses

Solution

Question 8

Salary

Interest

Debentures

Dividend

Solution

Question 9

Initial Public Offer (IPO)

Issue of shares at par

Private Placement of shares

Issue of shares at premium

Solution

Question 10

A company can buy its own share

A company is legal entity distinct from its owner

Company is managed by all the members

Company is not affected by the death of its m

Solution

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