Accounting for share Capital Test

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Accounting for share Capital Test - 31

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Question 1
1 / -0

A company cannot issue shares at a discount more than ________ % of its face value.

A
$$5$$

B
$$10$$

C
$$15$$

D
$$20$$

Solution

When Shares are issued at a price lower than their face value, they are said to have been issued at a discount.
Shares can be issued at discount subject to the following conditions:
(a) The shares must belong to a class already issued.
(b) Discount rate should not be more than 10% of its face value.
Question 2
1 / -0

If minimum subscription is not received, then the company is required to refund the amount so received from the applicants within ________ days of issue of prospectus.

A
$$90$$

B
$$120$$

C
$$60$$

D
$$15$$

Solution

The issuer company allows its securities in 60 days from the date of receiving the application money for such securities, and if the company is not able to allot securities within the given time, it has to refund the application money to the subscribers within 15 days after the completion of sixty days.
Question 3
1 / -0

X Ltd. purchased an automatic bottling machine from a vendor for $$Rs. 165,000$$. The company allotted him equity shares at a premium of $$10$$% instead of paying him in cash. How many equity shares will be allotted to the vendor if the company allotted the shares at $$10$$% discount?

A
$$18,333$$

B
$$17,655.76$$

C
$$17,650$$

D
$$18,180$$

Solution

Value of asset purchased=Rs1,65,000
The shares are to be issued at discount of 10%
therefore , issue price of a share=Rs10-10%
=Rs9/share.
No of shares to be issued =Rs1,65,000/Rs9
=18,333 shares.
Question 4
1 / -0

When a company receives application for subscriptions to the shares of the company much more than the issued capital, the issue is called __________.

A
Oversubscribed

B
Under subscribed

C
Overwhelmed issue

D
Flopped show

Solution

Oversubscribed is the term for when the demand for a company's IPO shares is greater than the number of shares issued. That is, a situation in which investors have expressed an interest in buying more shares of a new company than will be available.
Question 5
1 / -0

Calls in advances attracts interest at _________.

A
$$5$$%

B
$$6$$%

C
$$8$$%

D
$$9$$%

Solution

If the Articles of the Company are silent about the rate of interest on calls-in-advance, then rate of interest is 6% p.a. Such an interest is a charge on profits and has to be paid to the concerned shareholder even if there is no profit.
Question 6
1 / -0

If a shareholder does not pay his dues on allotment, for the amount due, there will be a ________________.

A
Credit balance in the share allotment Account

B
Debit balance in the share forfeiture Account

C
Credit balance in the share forfeiture Account

D
Debit balance in the share allotment Account

Solution

Share Allotment A/c represents collectively the amount due from all the shareholders on account of Allotment money.
Just like when you sell goods on credit, you don't receive money but credit sales, similarly though allotment money is not received but Share Capital A/c is credited.
Question 7
1 / -0

ABC Ltd. invited applications for public issue of $$20,000$$ equity shares of $$Rs. 10$$ each at premium of $$Rs. 2$$, payable as under $$Rs. 2$$ on application, $$Rs. 3$$ on allotment, $$Rs. 5$$ on first call (including premium) and balance on second and final call. Applications were received for $$30,000$$ shares, pro rata allotment was made for $$24,000$$ applications and the remaining applications were rejected, Gopal who applied for $$4800$$ shares failed to pay second call consequently his shares were forfeited and reissued at $$Rs. 6$$. Find the number of shares allotted to Gopal on pro rata basis.

A
$$4000$$

B
$$4800$$

C
$$3000$$

D
$$4400$$

Solution

Total applications received for shares = 30,000
Pro-rata allotment made to applications = 24,000
Total shares issued = 20,000
Gopal applied for shares = 4800
Shares issued to Gopal = 20,000/24,000 x 4800
= 4000 shares.
Question 8
1 / -0

XYZ Ltd. invited application for issue of $$100,000$$ shares of $$Rs. 10$$ each at a premium of $$Rs. 2, Rs. 5$$ called at the time of application, $$Rs. 5$$ (including premium) at the time of allotment and balance $$Rs. 2$$ at the time of $$1st$$ call. Applications were received for $$1,30,000$$ shares. Application money was returned to the extent to $$10,000$$ shares and pro rate allotment was made to the remaining applicants of $$120,000$$. PQR to whom $$500$$ shares were allotted failed to pay allotment and call money. These shares were subsequently re-issued at $$Rs. 8$$ full paid. Based on the above facts, $$PQR$$ must have applied for _________.

A
$$550$$ shares

B
$$650$$ shares

C
$$600$$ shares

D
$$500$$ shares
Solution
- PQR shares 500 & Rs.8 fully paid 500 x 8 =4000
- Returned to extent shares 10,000 -4000 =6000
- Rs 6000 shares Rs.10 each = 6000/10 = 600 shares.
Question 9
1 / -0

Select the false statement.

A
Premium on issue of shares is available for distribution as dividend

B
Shares of any type can be issued to vendors of some assets

C
Shares cannot be issued at a discount more than $$10$$%

D
Notice of forfeiture is must before forfeiting the shares
Question 10
1 / -0

Limit on managerial remuneration under the Companies Act, $$2013$$ is ______________.

A
$$12,5$$% of taxable profit

B
$$11$$% of net profits

C
$$10$$% of MAT

D
no such limit

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 31

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Accounting for share Capital Test - 31

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SHARING IS CARING

Question 1

$$5$$

$$10$$

$$15$$

$$20$$

Solution

Question 2

$$90$$

$$120$$

$$60$$

$$15$$

Solution

Question 3

$$18,333$$

$$17,655.76$$

$$17,650$$

$$18,180$$

Solution

Question 4

Oversubscribed

Under subscribed

Overwhelmed issue

Flopped show

Solution

Question 5

$$5$$%

$$6$$%

$$8$$%

$$9$$%

Solution

Question 6

Credit balance in the share allotment Account

Debit balance in the share forfeiture Account

Credit balance in the share forfeiture Account

Debit balance in the share allotment Account

Solution

Question 7

$$4000$$

$$4800$$

$$3000$$

$$4400$$

Solution

Question 8

$$550$$ shares

$$650$$ shares

$$600$$ shares

$$500$$ shares

Solution

Question 9

Premium on issue of shares is available for distribution as dividend

Shares of any type can be issued to vendors of some assets

Shares cannot be issued at a discount more than $$10$$%

Notice of forfeiture is must before forfeiting the shares

Question 10

$$12,5$$% of taxable profit

$$11$$% of net profits

$$10$$% of MAT

no such limit

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