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Accounting for share Capital Test - 58

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Accounting for share Capital Test - 58
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  • Question 1
    1 / -0
    The difference between Subscribed Capital and Called-up Capital is called _________.
    Solution
    Uncalled capital is the capital which is not yet called by the company. The subscribed capital is the capital that is subscribed by the public and called up capital is the capital called up by the company. The difference between this two is uncalled capital.
  • Question 2
    1 / -0
    Which of the following should be deducted from the share capital to find out paid up capital of a company?
    Solution
    Paid up capital is the total amount which is paid by the shareholders when the company has called up the required amount per share.
    The paid up capital is calculated after deducting the call-in-arrear from the share capital. This is because the call-in-arrear is the amount which has to be paid by shareholders in near future due to their inability to pay the amount now. After deducting it from share capital, the actual amount paid by shareholders is formulated.
  • Question 3
    1 / -0
    Voluntary return of shares for cancellation by the shareholders is called _______.
    Solution
    Surrender of shares means voluntary return of shares by the shareholder. Surrender of shares takes place due to inability of the shareholder to pay the call money.
  • Question 4
    1 / -0
    At the time of forfeiture, share capital Account is debited with ________.
    Solution
    Forfeiture of shares is the cancellation of the shares of those shareholders who haven't paid the required value.
    When share forfeiture account is debited the called up value is considered because the company cancel only that amount which is demanded by them not that value which hasn't been demanded yet.
  • Question 5
    1 / -0
    Reserve share capital means ____________.
    Solution
    Reserve capital is that part of subscribed capital which is not called up yet. 
    It will be called up only in case of winding up or liquidation of a company.
  • Question 6
    1 / -0
    A company issued $$5,000$$ shares of Rs. $$10$$ each at $$20\%$$ premium payable as follows: Application- Rs. $$2$$, allotment Rs. $$5$$ (including premium) and first and Final Call Rs. $$5$$. A holder of $$200$$ shares failed to pay the first and final call. His shares were forfeited. Calculate the amount to be credited to share Forfeiture Account.
    Solution
    When a shareholder doesn't pay up the called up value, his shares are forfeited and the amount is credited to forfeiture account at the time of forfeiture.
    $$Forfeiture\quad Amount=\quad Application\quad amount+Allotment\quad amount$$
    Substitute values in the above equation
    $$Forfeiture\quad Amount=\quad Rs2+Rs3\quad =Rs5$$

    $$Forfeiture\quad Amount\quad to\quad be\quad credited=\quad Shares\quad forfeited\times Forfeiture\quad amount$$
    Substitute values in the above equation
    $$Forfeiture\quad Amount\quad to\quad be\quad credited=\quad 200shares\times Rs5\quad =\quad Rs1,000$$.
  • Question 7
    1 / -0
    A Ltd. Acquired assets worth Rs. $$11,25,000$$ from B. Ltd. by issue of equality shares of Rs. $$100$$ at premium of $$25\%$$. The number of shares to be issued by A Ltd, for the purchase consideration.
    Solution
    The equity shares benefits a company with issue of such as purchase consideration, that is, purchase of assets.
    $$Market\quad Value\quad of\quad share=\quad Face\quad value+Premium$$
    Substitute values in the above equation
    $$Market\quad Value\quad of\quad share=\quad Rs100+Rs25\quad =Rs125$$

    $$Number\quad of\quad shares=\quad \cfrac { Purchase\quad value }{ Market\quad value\quad of\quad share } $$
    Substitute values in the above equation
    $$Number\quad of\quad share=\quad \cfrac { Rs11,25,000 }{ Rs125 } \quad =9,000shares$$.
  • Question 8
    1 / -0
    When shares are issued at a premium and the amount is already received by company. Later on, when such shares are forfeited.
    Solution
    When the shares are issued at premium and the company has received that premium at the time of forfeiture the Premium A/c remains unchanged.
    This all is because the company cannot demand the premium again on forfeiture of shares even when they have received the amount due on premium.
  • Question 9
    1 / -0
    If a shares of Rs. $$10$$ on which Rs. $$8$$ has been paid up is forfeited, it can be re-issued at the minimum price of ______.
    Solution
    As per the companies act 2013 the minimum amount at which the company can reissue the shares is the amount they have received on forfeit of shares.
    The amount that the company has received on forfeiture of shares is Rs 8 so the minimum amount that the company can reissue shares must be Rs 2. Below that amount company will suffer a loss as it has received Rs 8 so it cannot charge less than Rs 2.
    Hence, minimum reissue amount is Rs2 per share.
  • Question 10
    1 / -0
    The O and M staff also helps other departments in the implementation of their _____________ .
    Solution
    The O and M staff helps other departments in the implementation of their programmes. They provide assistance and advises for the successful implementation of the planned programme.
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