Accounting for share Capital Test

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Accounting for share Capital Test - 4

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following is not a situation of oversubscription or not concerned with over subscription?

A
Rejecting Excess Applications

B
Under subscription

C
Both Rejecting Excess Applications and Pro-rata allotment

D
Pro-rata allotment

Solution

Situations at the time oversubscriptions are:
1.Rejecting Excess Applications
2.Pro-rata allotment
3.Both Rejecting some applications and pro-rata allotment to remaining applicants
Note: Under subscription is a different situation, it is not concerned with over subscription
Question 2
1 / -0

What type of shares can be issued at discount?

A
Sweat Equity Shares

B
Preference Shares

C
Equity Shares

D
Both Preference Shares and Equity Shares

Solution

As per the Companies Act, 2013, A company cannot issue its shares at discount except sweat equity shares.
Question 3
1 / -0

Find out the amount of second & final call When a company issue its shares @ 10 each at a premium of 30%. Payable on Application Rs.4. On Allotment Rs.4. On First Call Rs.2.

A
Second & final call Rs.2

B
Second & final call Rs.4

C
Second & final call Rs.1

D
Second & final call Rs.3

Solution

Total amount should be 10 + 30% i.e. 10 + 3 = 13
On Application Rs.4
On Allotment Rs.4
On First call Rs.2
Second & final call Rs.3
Question 4
1 / -0

A company can sell its shares only through___

A
Media

B
Stock Exchange

C
Banks

D
Only Newspapers

Solution

A company can sell its shares only through stock exchange. Company should be listed in the stock exchange to sell its shares.
Question 5
1 / -0

__________ Shareholders have voting rights in all circumstances.

A
Preference Share

B
Bonus Share

C
Equity Share

D
Both Preference Share and Bonus Share

Solution

Equity Shareholders have voting rights in all circumstances. Preference shareholders have voting rights only in special situations.
Question 6
1 / -0

What is the correct order of the following items?
•Authorised Capital
•Subscribed but not fully paid-up
•Issued Capital
•Subscribed and Fully paid-up

A
•Authorised Capital
•Issued Capital
•Subscribed but not fully paid-up
•Subscribed and Fully paid-up

B
•Issued Capital
•Authorised Capital
•Subscribed and Fully paid-up
•Subscribed but not fully paid-up

C
•Authorised Capital
•Issued Capital
•Subscribed and Fully paid-up
•Subscribed but not fully paid-up

D
•Authorised Capital
•Subscribed but not fully paid-up
•Issued Capital
•Subscribed and Fully paid-up

Solution

Correct order of Share Capital is:
•Authorised Capital- it is the total amount of capital that the company is authorised to issue during its lifetime.
•Issued Capital- it is that part of authorised capital that has been issued or offered by company for public subscription.
•Subscribed and Fully paid-up- it is that part of issued capital which has been subscribed by public and fully called up by company and paid up by public.
•Subscribed but not fully paid-up- it is that part of issued capital which is subscribed by public by either not fully called up by company or not fully paid up by some of the shareholders and there are calls in arrears.
Question 7
1 / -0

Stages of Incorporation of company are
a.Promotion
b.Capital subscription
c.Incorporation
d.Commencement of business
Arrange them in order

A
c,a,b,d

B
a,c,d,b

C
a,c,b,d

D
d,a,c,b

Solution

The Correct order is:
(a) Promotion-idea developed in the mind of promotors
(b) Incorporation- completion of documentation and legal formalities to start a company
(c) Capital Subscription- issue of shares for public subscription
(d) Commencement of business- on successful completion of all the requirements and subscription of share capital by public, company finally gets certificate of commencement of business
Question 8
1 / -0

Amount of Calls in Arrears will be deducted from______ under share capital.

A
Subscribe but not fully paid up

B
Called up capital

C
Issued Capital

D
Authorised capital

Solution

The amount of Calls in Arrears should be deducted from Subscribe but not fully paid up under share capital, while preparing notes to accounts for share capital.
Question 9
1 / -0

Share capital is shown in the balance sheet under the heading of_______

A
Shareholders’ Funds

B
Reserves and Surplus

C
Non-current liabilities

D
Non-current Assets

Solution

Share capital is shown in the balance sheet under the heading of Shareholders’ Funds because share capital is that amount of capital which is contributed by the shareholders.
Question 10
1 / -0

When a company purchases any fixed asset or a running business and makes payment to the vendor in form of issue of shares in place of cash it is called

A
Private Placement of shares

B
The issue of shares for cash.

C
The issue of shares for consideration other than cash

D
Both The issue of shares for consideration other than cash and The issue of shares for cash.

Solution

Company may issue shares to the vendor as a consideration for amount payable on purchase of fixed asset or running business. Company may issue such shares at par, premium or discount.

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Accounting for share Capital Test - 4

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Accounting for share Capital Test - 4

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SHARING IS CARING

Question 1

Rejecting Excess Applications

Under subscription

Both Rejecting Excess Applications and Pro-rata allotment

Pro-rata allotment

Solution

Question 2

Sweat Equity Shares

Preference Shares

Equity Shares

Both Preference Shares and Equity Shares

Solution

Question 3

Second & final call Rs.2

Second & final call Rs.4

Second & final call Rs.1

Second & final call Rs.3

Solution

Question 4

Media

Stock Exchange

Banks

Only Newspapers

Solution

Question 5

Preference Share

Bonus Share

Equity Share

Both Preference Share and Bonus Share

Solution

Question 6

•Authorised Capital •Issued Capital •Subscribed but not fully paid-up •Subscribed and Fully paid-up

•Issued Capital •Authorised Capital •Subscribed and Fully paid-up •Subscribed but not fully paid-up

•Authorised Capital •Issued Capital •Subscribed and Fully paid-up •Subscribed but not fully paid-up

•Authorised Capital •Subscribed but not fully paid-up •Issued Capital •Subscribed and Fully paid-up

Solution

Question 7

c,a,b,d

a,c,d,b

a,c,b,d

d,a,c,b

Solution

Question 8

Subscribe but not fully paid up

Called up capital

Issued Capital

Authorised capital

Solution

Question 9

Shareholders’ Funds

Reserves and Surplus

Non-current liabilities

Non-current Assets

Solution

Question 10

Private Placement of shares

The issue of shares for cash.

The issue of shares for consideration other than cash

Both The issue of shares for consideration other than cash and The issue of shares for cash.

Solution

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•Authorised Capital
•Issued Capital
•Subscribed but not fully paid-up
•Subscribed and Fully paid-up

•Issued Capital
•Authorised Capital
•Subscribed and Fully paid-up
•Subscribed but not fully paid-up

•Authorised Capital
•Issued Capital
•Subscribed and Fully paid-up
•Subscribed but not fully paid-up

•Authorised Capital
•Subscribed but not fully paid-up
•Issued Capital
•Subscribed and Fully paid-up