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Accounting for share Capital Test - 19

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Accounting for share Capital Test - 19
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Weekly Quiz Competition
  • Question 1
    1 / -0
    Which of the following is not an alteration of capital?
    Solution

    Alteration of Share Capital:

    Under Section 94 of the Companies Act, a company limited by shares may in general meeting, if so authorized by its Articles of Association, alter the capital clause of its Memorandum of Association in any of the following ways:

    (i) It may increase its share capital by issuing new shares.

    (ii) It may consolidate and divide all or part of its share capital into shares of a large amount.

    (iii) It may convert all or any of its fully paid-up shares into stock or reconvert that stock into fully paid-up shares of any denomination.

    (iv) It may sub-divide its shares into shares of lower denomination.

    (v) It may cancel those shares which have not been taken by any person and reduce the amount of its share capital.

  • Question 2
    1 / -0
    Which of the following is not a case of combination?
    Solution
    Internal reconstruction refers to the method of corporate restructuring wherein existing company is not liquidated to form a new one. External reconstruction is one in which the company undergoing reconstruction is liquidated to take over the business of existing company. New company. No new company is formed.
  • Question 3
    1 / -0
    General insurance is a contract of ______.
    Solution
    When the purpose of insurance is to protect against loss of property due to an accident it is known as general insurance. Similarly if their is no loss of property their is no question of giving any compensation. For this reason general insurance is known as the contract of indemnity.
  • Question 4
    1 / -0
    The balance in capital reduction a/c after writing off all accumulated loss, fictitious assets and overvalued assets are transferred to _______.
    Solution

    After writing off other accumulated loss, fictitious assets, patents to be written off as far as possible.

    Capital Reserves to be continued in Balance Sheet and above are to be transferred in this A/c.

  • Question 5
    1 / -0
    Under which of the following circumstances can a company resort to internal reconstruction?
  • Question 6
    1 / -0
    Reinsurance is common in _________.
    Solution
    Reinsurance occurs when multiple insurance companies share risk by purchasing insurance policies from other insurers to limit their own total loss in case of disaster. By spreading risk, an insurance company takes on clients whose coverage would be too great of a burden for the single insurance company to handle alone.
  • Question 7
    1 / -0
    ________ represents that part of discount received during the year by a bank which relates to the next accounting year.
  • Question 8
    1 / -0
    Life insurance is a contract of ___________.
    Solution
    Life insurance is a contract between an insurer and a policyholder in which the insurer guarantees payment of a death benefit to named beneficiaries upon the death of the insured. The insurance company promises a death benefit in consideration of the payment of premium by the insured.
  • Question 9
    1 / -0
    An unregistered company can't have more than _________ members.
  • Question 10
    1 / -0
    The term capital structure denotes ____________________.
    Solution
    The capital structure is how a firm finances its overall operations and growth by using different sources of funds. The capital structure is defined as a mixture of debt & equity or any other long term sources of funds.
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