Accounting for share Capital Test

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Accounting for share Capital Test - 35

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Question 1
1 / -0

Rematerialization of shares means __________.

A
Getting the share certificates in bank account

B
Converting them into money by selling the shares

C
Getting the share certificate in the physical form

D
None of the above

Solution

Rematerialization of shares means getting the share certificate in physical form. It also refers to the process of converting the shares in physical form which are held into electronic form.
Hence, option (C) is the correct answer.
Question 2
1 / -0

The means of obtaining financial resources that involves the sale of part of the ownership of the business is called ______.

A
bankruptcy

B
equity financing

C
commercial loans

D
debt financing

Solution

Equity financing is the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.

Question 3

1 / -0

If separate set of books is maintained and suppliers grant discount at the time of making the payment for purchase of goods, such discount received will be treated as ___________________.

Income of Joint Venture, hence credited to Joint Venture A/c

Will be credited to Joint Bank A/c

Will be credited to Co-venturers Capital A/c

Will be ignored from the books

Solution

If separate set of books is maintained and suppliers grant discount at the time of making the payment for purchase of goods, such discount received will be treated as : income of joint venture, hence credited to joint venture a/c,because he get the discount so it will be the income of joint venture.

Question 4
1 / -0

Full form of ESOP is __________.

A
Employee sale option plan

B
Employee stock option plan

C
Employee stock option procedure

D
None of the above

Solution

Many companies use employee stock options plans to compensate, retain, and attract employees. These plans are contracts between a company and its employees that give employees the right to buy a specific number of the company's shares at a fixed price within a certain period of time.

An Employee stock option plan is a kind of employee benefit plan, similar in some ways to a profit-sharing plan. In an Employee stock option plan, a company sets up a trust fund, into which it contributes new shares of its own stock or cash to buy existing shares.
Question 5
1 / -0

The balance appearing in the books of a company at the end of the year were: CRR A/c Rs. 50,000; Sccurity Premium Rs. 5,000; Revaluation Reserve Rs. 20,000; P & L A/c (Dr) Rs. 10,000. Maximum amount available for distribution as Bonus Shares will be __________.

A
Rs. 50,000

B
Rs. 55,000

C
Rs. 45,000

D
Rs. 57,000

Solution

CRR A/C 50,000
Add- Rev. Res. 20,000
70,000
Less- security pre. (5,000)
P & L A/C (Dr) (10,000)
Bonus shares 55,000.
'
Question 6
1 / -0

A and B enter into a joint venture sharing profits and losses equally. A purchased 5000 Kg of rice @ Rs. 25/kg. B purchased 1000 kg of wheat @ Rs. 30/kg. A sold 1000 kg of wheat @ Rs. 35/kg and B sold 5000 kg of rice @ Rs. 30/kg. What will be the final remittance ?

A
B will remit Rs. 1,05,000 to A

B
A will remit Rs.1,05,000 to B

C
A will remit Rs. 1,00,000 to B

D
B will remit Rs. 90,000 to A
Question 7
1 / -0

The adjustment to be made for interest on capital is _________________.

A
Debit profit and loss account and deduct interest from capital

B
Credit profit and loss account and deduct interest from capital

C
Debit profit and loss account and add interest to capital

D
Credit profit and loss account and add interest from capital

Solution

By passing the above entry the company has transferred the interest on capital to the profit and loss account which results in a decrease in the profits of the company and another effect of this adjustment will be on the balance sheet as in the balance sheet the capital account of the owner will increase due to addition of interest on capital amount.
Question 8
1 / -0

C consigned goods costing Rs 6,000 to his agent. Freight and insurance paid by consignor Rs 200. Consignee's expenses Rs 200. 4/5th of the goods were sold for Rs 3,000. Commission 2% on sales. Consignee wants to settle the balance with the help of a bank draft. The amount of draft will be _______________.

A
Rs 2,740

B
Rs 2,800

C
Rs 3,000

D
Rs 1,800

Solution

Here,
4/5th of goods were sold for Rs.3,000 = Rs. 2,400
Add -: freight and insurance Rs.200
Add -: consignee expenses Rs.200
Total -: Rs 2,800
Less -: 2% commission on sale (Rs. 60)
Total -: Rs.2,740
The amount of draft will be Rs. 2,740.
Question 9
1 / -0

A and B enter into a joint venture to underwrite the shares of a company which make an equity issue of 100,000 shares ofRs. 10 each. 80% of the issue was subscribed by the public. The profit sharing ratio between A and B is 3:2 . The balance shares not subscribed by the public were purchased by A and B in profit sharing ratio. How many shares is purchased by B?

A
80,000 shares

B
72,000 shares

C
12,000 shares

D
8,000 shares
Question 10
1 / -0

Mr. A had a beginning credit balance of Rs. 21,000 in his capital account.At the close of the period his drawing account had a debit balance of Rs. 2,200. On the end-of-period balance sheet, his capital balance is Rs. 32,000. If he contributed an additional Rs. 2,000 to the firm during the period, the period's net income is _______________.

A
Rs. 12,400

B
Rs. 11,200

C
Rs.9,000

D
Rs.10,800

Solution

32000 - 21000 = 11000
and, 2200 - 2000 = 200
so, here
11000 + 200 = 11200.

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Accounting for share Capital Test - 35

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Accounting for share Capital Test - 35

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SHARING IS CARING

Question 1

Getting the share certificates in bank account

Converting them into money by selling the shares

Getting the share certificate in the physical form

None of the above

Solution

Question 2

bankruptcy

equity financing

commercial loans

debt financing

Solution

Question 3

Income of Joint Venture, hence credited to Joint Venture A/c

Will be credited to Joint Bank A/c

Will be credited to Co-venturers Capital A/c

Will be ignored from the books

Solution

Question 4

Employee sale option plan

Employee stock option plan

Employee stock option procedure

None of the above

Solution

Question 5

Rs. 50,000

Rs. 55,000

Rs. 45,000

Rs. 57,000

Solution

Question 6

B will remit Rs. 1,05,000 to A

A will remit Rs.1,05,000 to B

A will remit Rs. 1,00,000 to B

B will remit Rs. 90,000 to A

Question 7

Debit profit and loss account and deduct interest from capital

Credit profit and loss account and deduct interest from capital

Debit profit and loss account and add interest to capital

Credit profit and loss account and add interest from capital

Solution

Question 8

Rs 2,740

Rs 2,800

Rs 3,000

Rs 1,800

Solution

Question 9

80,000 shares

72,000 shares

12,000 shares

8,000 shares

Question 10

Rs. 12,400

Rs. 11,200

Rs.9,000

Rs.10,800

Solution

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