Accounting for share Capital Test

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Accounting for share Capital Test - 42

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following Table of Schedule I to the Companies Act, 2013 contains the provisions relating to Calls-in-Advance & Calls-in-Arrears?

A
Table F

B
Table A

C
Table C

D
Table G

Solution

Sub-section (6) of Section 5 of the Companies Act, 2013 provides that the articles of a company shall be in respective forms specified in Tables, F, G, H, I and J in Schedule I as may be applicable to such company. Table F talks about AOA of company limited by shares. Under table F, there are 91 provisions regarding what all to be covered under the AOA. The provisions also talk about Calls in Advance and Calls in Arrears.
Calls in arrears is the amount which defaulter shareholders have not paid on the amount called up by company. Calls in arrears may be recovered in future or in the event not received shares may be forfeited. Interest on calls in arrears is the income of company.
Calls in advance is the amount which is received in advance before the amount is due from shareholders. Calls in advance is adjusted in future at the time of relevant call. Interest on calls in advance is the expenses of company
Question 2
1 / -0

Which of the following securities can be forfeited for non-payment of allotment or call money?
(I) Equity Shares
(II) Equity Shares, Preference Shares
(III) Preference Shares, Equity Shares & Debentures
(IV) Debentures
Select the correct answer from the options given below -

A
(I) only

B
(Iii) only

C
(I) & (IV) only

D
(II) only

Solution

Forfeiture of shares is a process where the company forfeits the shares of a member or shareholder who fails to pay the call on shares or installments of the issue price of his shares within a certain period of time after they fall due. In other words, when the shareholder fails to pay the full amount of share which he agreed to pay in installments the company can cancel his shares. Only equity and preference shares can be forfeited for non-payment and under the provisions of Companies Act, 2013 debentures cannot be forfeited by company.
Question 3
1 / -0

________ shares is the most important source of raising long term capital by a company.

A
Equity

B
Preference

C
Bonus

D
Right

Solution

Equity shares is the most important source of raising long term capital by a company.
Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. Equity share capital is the prerequisite before creation of a company.
Question 4
1 / -0

The forfeited shares may be re-issued____.
(I) at par only
(II) at par or at premium only
(III) at par or at discount only
(IV) at par or at premium or at discount
The correct answer is -

A
(II)

B
(III)

C
(I)

D
(IV)

Solution

A forfeited share is share which is lost by share holder for failing to meet the purchase requirements. i.e. if a share holder is unable to pay some of the pending installments during the purchase of remaining shares, the earlier allotted shares are forfeited. The issuing company can reissue forfeited shares at par, a premium or a discount as determined by directors. Typically, forfeited shares are reissued at a discount i.e., at a price below their nominal or face value.
Question 5
1 / -0

Equity shares represent the __________ of a company.

A
Creditors

B
Debtors

C
Ownership

D
Capital

Solution

Equity shares is the most important source of raising long term capital by a company.
Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. Equity share capital is the prerequisite before creation of a company.
Question 6
1 / -0

Capital of the company which is usually divided into different units of a fixed amount known as_____.

A
Debentures

B
Shares

C
Profit Ratio

D
None of the Above

Solution

The amount provided by the owner is known as capital. The capital of a company is share capital. Total capital id divided into a number of small indivisible units of a fixed amount and each such unit is known as share.
Question 7
1 / -0

If the number of shares issued for is more than the number of shares applied, the shares are said to be______.

A
Oversubscribed

B
Undersubscribed

C
Minimum subscription

D
None of the above

Solution

Undersubscribed is a situation in which the demand for an initial public offering of securities is less than the number of shares issued. This situation is also known as an "underbooking." Undersubscribed offerings are often a matter of overpricing the securities for sale.
Question 8
1 / -0

The money raised by issue of preference shares is called as _________ share capital.

A
Equity

B
Preference

C
Right

D
Bonus

Solution

The capital raised by issue of preference shares is called as preference share capital. The preference share holders enjoy a preferential position over equity shareholder in receiving fixed dividend out of the net profits of the company and receiving capital at the time of liquidation.
Question 9
1 / -0

The money raised by issue of equity shares is called ________ share capital.

A
Equity

B
Preference

C
Bonus

D
Right

Solution

The money raised by issue of equity shares is called equity share capital.Equity share represent the ownership of a company and thus thus the capital raised by equity shares are also known as ownership capital or ownership funds.
Question 10
1 / -0

B Ltd. issued 1,00,000 equity shares of Rs. 10 each to the public at par. The details of the amount payable are as follows:
Application Rs. 2.00
Allotment Rs. 3.00
First & final call Rs. 5.00
Applications were received for 1,20,000 shares. Excess application monies were refunded. All other amount was received excepting final call on 1,000 shares. These shares were forfeited and reissued at Rs. 8 per share.
On reissue of forfeited shares, discount debited to share forfeiture account will be ______.

A
Rs. 3,000

B
Rs. 5,000

C
Rs. 8,000

D
Rs. 2,000

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Accounting for share Capital Test - 42

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Accounting for share Capital Test - 42

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Question 1

Table F

Table A

Table C

Table G

Solution

Question 2

(I) only

(Iii) only

(I) & (IV) only

(II) only

Solution

Question 3

Equity

Preference

Bonus

Right

Solution

Question 4

(II)

(III)

(I)

(IV)

Solution

Question 5

Creditors

Debtors

Ownership

Capital

Solution

Question 6

Debentures

Shares

Profit Ratio

None of the Above

Solution

Question 7

Oversubscribed

Undersubscribed

Minimum subscription

None of the above

Solution

Question 8

Equity

Preference

Right

Bonus

Solution

Question 9

Equity

Preference

Bonus

Right

Solution

Question 10

Rs. 3,000

Rs. 5,000

Rs. 8,000

Rs. 2,000

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