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Accounting for share Capital Test - 12

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Accounting for share Capital Test - 12
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Which of the following statements is false?
    Solution
    Forfeiture of Shares Issued at Premium. However, at the time when the shares are forfeited if the entire, or part of the share premium is unpaid, certain adjustments must be made to Share Premium A/c. In such a case the Share Premium A/c will be debited by the amount of premium not received.
  • Question 2
    1 / -0
    When shares are issued to promoters for their services, the account that will be debited is ______________.
    Solution
    The company debits this amount to the Goodwill Account as it will derive the benefit of these services for a long period of time. Hence, it treats this expense as a capital expenditure. It thus needs to show the ‘shares issued for consideration other than cash’ separately under the heading ‘Share Capital’.
  • Question 3
    1 / -0
    The discount allowed on reissue of forfeited shares is debited to _________________.
    Solution
    Reissue of forfeited shares at a discount : When the shares forfeited arereissued at discount, Bank account is debited by the amount received and Share capital account is credited by the paid up amount. The amount of discount allowedis debited to Share Forfeited Account.
  • Question 4
    1 / -0
    The maximum amount beyond which a company is not allowed to raise funds, by issue of shares, is its _______________.
    Solution
    The maximum amount beyond which a company is not allowed to raise funds by issue of shares is authorized capital. Authorized capital, also known as nominal capital, represents the securities that are designated for shareholders.
  • Question 5
    1 / -0
    The part of share capital, which can be called up only on the winding up of a company, is called  __________________.
    Solution
    According to Section 2 (8) of the Companies Act, 2013, 'authorised capital' means such capital as is authorised by the memorandum of a company to be the maximum amount of share capital of a company. Answer: Part of capital of a company which is called-up only on winding up is called 'reserve capital'.
  • Question 6
    1 / -0
    The maximum rate of premium at which shares can be issued is ________________.
    Solution
    Companies Act, 2013 does not prescribe any maximum rate of premium for the issue of shares.
  • Question 7
    1 / -0
    Shares of a private company can be sold through __________________.
    Solution
    The easiest way to sell shares of privately held stock is to get the company that issued them to buy them back. The process of a buyback is relatively simple. However, the sticking point is that the company must authorize a buyback, and if other shareholders want to sell their shares as well, then the company might not be willing to accommodate every shareholder's request.
  • Question 8
    1 / -0
    The excess amount received over the called amount of shares is credited to ________________.
    Solution
    Excess Money received by the company which has been called up is known as calls in advance. If authorized by its Articles, A Company may accept call in advance from its shareholders. When a company receives such an amount, it needs to credit it to the calls-in-advance account.
  • Question 9
    1 / -0
    X, who holds $$100$$ shares of $$Rs. 10$$ each, fails to pay final call of $$Rs. 2$$ per share. The directors forfeited all the shares and subsequently reissued $$50$$ shares of $$Rs. 10$$ each as fully paid on payment of $$Rs. 4$$ per share. The amount to be transferred to Capital Reserve would be _______________.
  • Question 10
    1 / -0
    D Ltd. forfeited $$200$$ shares of $$Rs. 10$$ each, $$Rs. 7$$ called up on which Ram had paid only application money $$Rs. 3$$ per share. Of these, $$125$$ shares was reissued to Shyam for $$Rs. 9$$ per share fully paid. What will be balance in the Share Forfeited A/c after reissue of $$125$$ shares?
    Solution
    Share forfeited A/c contains only the forfeited amount of those shares which are not reissued yet. Forfeited amount of reissued shares are transferred to capital reserve.
    Balance in Share forfeited A/c after reissue= Shares not reissued x Call money received on such shares
                                                                            = 75 x 3
                                                                            = Rs. 225
    Therefore, A is the correct option.
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