Accounting for share Capital Test

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Accounting for share Capital Test - 38

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Weekly Quiz Competition

Question 1
1 / -0

Which one of the following securities cannot be issued by a company in India?

A
Participating preference shares.

B
Redeemable preference shares.

C
Deferred shares.

D
Debentures.

Solution

A deferred share is a share that does not have any rights to the assets of a company undergoing bankruptcy until all common and preferred shareholders are paid.
Question 2
1 / -0

Following are the differences between Capital Amount and Current Account ______________.

A
Capital Account is prepared under fixed capital method whereas current account is prepared under fluctuating capital method.

B
In capital account only capital introduced and withdrawn is recorded, all order transactions between the firm and partners is recorded in the current account.

C
Interest is sometimes paid on capital account balance but no such interest is payable on current account balances.

D
Both (b) and (c).
Solution
The current and capital accounts are two components of a nation
's balance of payments
current account :- An account which records the export and import of merchandise and unilateral transfers done during the year by a nation are known as current account
Net Income of the country
capital account :- An account which records the trading of foreign assets and liabilities during the year by a country is known as capital account.
Net change in ownership in national assets.
Question 3
1 / -0

The following information pertains to X Ltd:
(i) Equity share capital called-up $$Rs. 5,00,000$$
(ii) Calls-in-arrear $$Rs. 40,000$$
(iii) Calls-in-advance $$Rs. 25,000$$
(iv) Proposed dividend $$12.5$$%
Amount of dividend will be ______________.

A
$$Rs. 61,800$$

B
$$Rs. 72,750$$

C
$$Rs. 57,500$$

D
$$Rs. 60,000$$

Solution

Equity share capital called - up - calls in arrear
5,00,000 - 40,000 = 4,60,000
4,60,000 x 12.5% = 57,500.
Question 4
1 / -0

Which one of the following is known as Registered Capital of the Company?

A
Paid-up capital.

B
Authorised capital.

C
Uncalled capital.

D
Reserved capital.

Solution

The authorized capital of a company (sometimes referred to as the authorized share capital, registered capital or nominal capital) is the maximum amount of share capital that the company is authorized by its constitutional documents to issue (allocate) to shareholders.
Question 5
1 / -0

Right shares are the shares _____________.

A
issued to the directors of the company

B
first offered to the debenture holders

C
first offered to the existing shareholders

D
issued by a newly formed company

Solution

A rights issue is a way by which a listed company can raise additional capital. However, instead of going to the public, the company gives its existing shareholders the right to subscribe to newly issued shares in proportion to their existing hold.
Question 6
1 / -0

$$500$$ shares of $$Rs. 20$$ each issued at $$5$$% discount are forfeited for non-payment of allotment and final call money @ $$Rs. 9$$ and $$Rs. 5$$ respectively. Amount credited to share forfeited A/c is ______________.

A
$$Rs. 2,000$$

B
$$Rs. 2,500$$

C
$$Rs. 3,000$$

D
$$Rs. 7,000$$

Solution

particular Dr. Cr.
Share capital A/c 10,000
To discount of issue of share 5,000
To call in arrears 4,500
To share forfeited A/c 2,500.
Question 7
1 / -0

Pro-rata allotment of shares means allotment of shares _____________.

A
equally among all the applicants

B
at the discretion of the directors

C
to all the applicants in proportion to the shares applied for

D
to only a few selected applicants

Solution

Pro-rata allotment refers to the allotment of shares in proportion of the shares applied for. When a company makes pro-rata allotment, it adjusts the excess money received at the time of application firstly, towards the allotment and then towards calls.
Question 8
1 / -0

A Company forfeited 20 shares of Rs.10 each, Rs.7 called up, on which application money of Rs.5 per share was paid. The entry for forfeiture is ___________.

A
Share Capital A/c Dr. Rs.100
To Share Forfeited A/c Rs.140

B
Share Capital A/c Dr. Rs.140
To Share Application A/c Rs.140

C
Share Capital A/c Dr. Rs.140
To Share Forfeited A/c Rs.100
To Calls-in-arrears A/c RS.40

D
Share Capital A/c Dr. Rs.50
To Share Allotment A/c Rs.50

Solution

Share capital is to be debited with 20 x Rs.7 (called up) = Rs.140. Money received on application is 20 x Rs.5 = Rs. 100 (to be credited). Amount not received per share = Rs.(7 - 5) = Rs.2 per share. Calls in arrears = 20 x Rs.2 = Rs.40 (to be credited).
Journal entry entry will be:
Share Capital A/c Dr. Rs.140
To Share Forfeited A/c Rs.100
To Calls-in-arrears A/c Rs.40
Question 9
1 / -0

X Co. forfeits $$1000$$ shares. If $$Rs. 10$$ each called up and only $$Rs. 5$$ paid on application. The amount to be forfeited is ___________.

A
$$Rs. 5,000$$

B
$$Rs. 700$$

C
$$Rs. 200$$

D
$$Rs. 300$$

Solution

Share capital A/c Dr. 5,000
To share forfeited A/c 5,000.
Question 10
1 / -0

IJL Ltd. Issued 20,000 shares of 10 each at a

premium of 20% on May 1, 2004, payable as follows:
On application 4.50 (inclusive of premium)
On allotment 2.50
On first and final call 5.00
Mrs. M, to whom 1,000 shares were allotted, paid

5,000 on June 1, 2004. At the time of remitting the allotment money, she

indicated that the excess money should be adjusted towards the call money. The directors

of the company made the first and final call on October 31, 2004. The company

has a policy of paying interest on calls-in-advance. The amount of interest

paid to Mrs. M on calls-in-advance = ?

A
62.50

B
52.08

C
125.00

D
150.00

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On application	4.50 (inclusive of premium)
On allotment	2.50
On first and final call	5.00

Accounting for share Capital Test - 38

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Accounting for share Capital Test - 38

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Question 1

Participating preference shares.

Redeemable preference shares.

Deferred shares.

Debentures.

Solution

Question 2

Capital Account is prepared under fixed capital method whereas current account is prepared under fluctuating capital method.

In capital account only capital introduced and withdrawn is recorded, all order transactions between the firm and partners is recorded in the current account.

Interest is sometimes paid on capital account balance but no such interest is payable on current account balances.

Both (b) and (c).

Solution

Question 3

$$Rs. 61,800$$

$$Rs. 72,750$$

$$Rs. 57,500$$

$$Rs. 60,000$$

Solution

Question 4

Paid-up capital.

Authorised capital.

Uncalled capital.

Reserved capital.

Solution

Question 5

issued to the directors of the company

first offered to the debenture holders

first offered to the existing shareholders

issued by a newly formed company

Solution

Question 6

$$Rs. 2,000$$

$$Rs. 2,500$$

$$Rs. 3,000$$

$$Rs. 7,000$$

Solution

Question 7

equally among all the applicants

at the discretion of the directors

to all the applicants in proportion to the shares applied for

to only a few selected applicants

Solution

Question 8

Share Capital A/c Dr. Rs.100 To Share Forfeited A/c Rs.140

Share Capital A/c Dr. Rs.140 To Share Application A/c Rs.140

Share Capital A/c Dr. Rs.140 To Share Forfeited A/c Rs.100 To Calls-in-arrears A/c RS.40

Share Capital A/c Dr. Rs.50 To Share Allotment A/c Rs.50

Solution

Question 9

$$Rs. 5,000$$

$$Rs. 700$$

$$Rs. 200$$

$$Rs. 300$$

Solution

Question 10

62.50

52.08

125.00

150.00

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Share Capital A/c Dr. Rs.100
To Share Forfeited A/c Rs.140

Share Capital A/c Dr. Rs.140
To Share Application A/c Rs.140

Share Capital A/c Dr. Rs.140
To Share Forfeited A/c Rs.100
To Calls-in-arrears A/c RS.40

Share Capital A/c Dr. Rs.50
To Share Allotment A/c Rs.50