Accounting for share Capital Test

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Accounting for share Capital Test - 36

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Weekly Quiz Competition

Question 1
1 / -0

Rs.
Opening capital 80,000
Closing capital 1,20,000
Net profit during the year 20000
The trader has

A
Drawings of Rs. 20000

B
Brought additional capital of Rs. 30000

C
Brought additional capital of Rs. 40000

D
Both (a) and (c)
Question 2
1 / -0

Which of the following statements is false?

A
Interest on calls-in-advance is paid from the date of receipt of advance to the date of relevant call

B
Interest on calls-in-advance is paid at declared rate in the prospectus

C
Interest on calls-in-advance is paid at the rate of $$6$$% p.a.

D
Payment of interest on calls-in-advance is at the discretion of the company

Solution

A company may pay interest on such amount received in advance at the rate of 12% p.a. It adjusts the amount of calls-in-advance for the payment of calls when they become due. Interest payable on Calls in Advance is a liability against the profits of the company.
Question 3
1 / -0

The amount to be collected on application of share should ___________.

A
not be more than $$5$$% of the nominal value of shares

B
not be less than $$5$$% of the nominal value of shares

C
not be more than $$5$$% of the issue price of the share

D
not be less than $$5$$% of the issue price of the share

Solution

As per section $$69(3)$$ of the Companies Act, $$1956$$, the amount on application shall not be less than $$5$$% of the nominal value of share. Therefore, correct answer is (b).
Question 4
1 / -0

Which of the following statements is true?

A
Rights shares are shares offered to the promoters.

B
Rights shares are offered in lieu of dividends to existing shareholders.

C
Rights shares are offered to the existing shareholders.

D
Rights shares are shares offered to employees.

Solution

A rights issue or rights offer is a dividend of subscription rights to buy additional securities in a company made to the company's existing security holders. A rights issue to shareholders is generally made as a tax-free dividend on a ratio basis.
Question 5
1 / -0

Share premium amount cannot be used for _____________.

A
Writing off preliminary expenses

B
Writing off discount on issue of shares account

C
To pay dividend

D
Both (a) and (b)
Question 6
1 / -0

The excess price received over the par value of shares, should be credited to _______________.

A
Calls-in-advance account

B
Share capital account

C
Capital account

D
Securities premium account

Solution

The premium amount as we discussed is credited to the Securities Premium Account. This accountis found under the heading of Reserves and Surplus on the cannot exceed the limit of the unissued share capital of the company for shares issued at a premium will differ slightly than those issued at par.
Question 7
1 / -0

In case the whole or a part of the shares issued are not subscribed by the public, who will subscribe such unsubscribed securities for a fixed commission?

A
Brokers

B
Commission agents

C
Underwriters

D
Sales agents

Solution

A company may enter into an underwriting or brokerage agreement for the sale of its shares and debentures. An underwriter guarantees that if the public do not take up all the shares, the underwriter will himself purchase the remaining shares and thus the company is able to obtain subscription for all the shares issued.
Question 8
1 / -0

When shares are forfeited, the share capital account is debited with _______ and the Share Forfeited Account is credited with ________.

A
Paid-up capital of shares forfeited; Called up capital of shares forfeited

B
Called up capital of shares forfeited; Calls-in-arrears of shares forfeited

C
Called up capital of shares forfeited; Amount received on shares forfeited

D
Calls-in-arrears of shares forfeited; Amount received on shares forfeited

Solution

The company debits the Share Capital Account with the amount called-up up to the date of forfeiture on shares. It credits the Shares Allotment Amount or Shares Call Account with amount called-up on forfeited shares but due from the shareholders.
Question 9
1 / -0

A company issued $$25,000$$ shares of $$Rs. 10$$ each. The amount was demanded as under:
On application - $$Rs. 2$$ On allotment - $$Rs. 4$$
On $$1st$$ Call - $$Rs. 2$$ On $$2nd$$ Call - $$Rs. 2$$
A shareholder, who was allotted $$500$$ shares did not pay $$1st$$ Call and $$2nd$$ Call money. His shares have been forfeited. What amount will be credited to share forfeited account?

A
$$Rs. 1,000$$

B
$$Rs. 3,000$$

C
$$Rs. 4,000$$

D
$$Rs. 2,000$$

Solution

The amount credited to the Share Forfeited account is that amount which we have already received from the shareholder. Therefore, in this question, we can simply calculate it by adding all the money he has paid.
Amount to be credited to Share forfeiture account = Application money received + Allotment money received on 500 shares.
= $$2 \times 500 + 4 \times 500$$
= 1000 + 2000
= Rs. 3000
Thus, the correct option is B.
Question 10
1 / -0

A company may issue shares at a discount in a class already issued, if ________________.

A
it is authorised by a resolution passed at the General Meeting and approved by the Company Law Board

B
at least one year has elapsed since the receipt of the certificate to commence business

C
the particulars of the discount allowed on the issue of shares are clearly mentioned in the prospectus issued

D
all the above conditions are fulfilled

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	Rs.
Opening capital	80,000
Closing capital	1,20,000
Net profit during the year	20000

Accounting for share Capital Test - 36

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Accounting for share Capital Test - 36

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Question 1

Drawings of Rs. 20000

Brought additional capital of Rs. 30000

Brought additional capital of Rs. 40000

Both (a) and (c)

Question 2

Interest on calls-in-advance is paid from the date of receipt of advance to the date of relevant call

Interest on calls-in-advance is paid at declared rate in the prospectus

Interest on calls-in-advance is paid at the rate of $$6$$% p.a.

Payment of interest on calls-in-advance is at the discretion of the company

Solution

Question 3

not be more than $$5$$% of the nominal value of shares

not be less than $$5$$% of the nominal value of shares

not be more than $$5$$% of the issue price of the share

not be less than $$5$$% of the issue price of the share

Solution

Question 4

Rights shares are shares offered to the promoters.

Rights shares are offered in lieu of dividends to existing shareholders.

Rights shares are offered to the existing shareholders.

Rights shares are shares offered to employees.

Solution

Question 5

Writing off preliminary expenses

Writing off discount on issue of shares account

To pay dividend

Both (a) and (b)

Question 6

Calls-in-advance account

Share capital account

Capital account

Securities premium account

Solution

Question 7

Brokers

Commission agents

Underwriters

Sales agents

Solution

Question 8

Paid-up capital of shares forfeited; Called up capital of shares forfeited

Called up capital of shares forfeited; Calls-in-arrears of shares forfeited

Called up capital of shares forfeited; Amount received on shares forfeited

Calls-in-arrears of shares forfeited; Amount received on shares forfeited

Solution

Question 9

$$Rs. 1,000$$

$$Rs. 3,000$$

$$Rs. 4,000$$

$$Rs. 2,000$$

Solution

Question 10

it is authorised by a resolution passed at the General Meeting and approved by the Company Law Board

at least one year has elapsed since the receipt of the certificate to commence business

the particulars of the discount allowed on the issue of shares are clearly mentioned in the prospectus issued

all the above conditions are fulfilled

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