Accounting for share Capital Test

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Accounting for share Capital Test - 61

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Weekly Quiz Competition

Question 1
1 / -0

Which of the following companies may issue share warrants?

A
Companies limited by guarantee

B
Private limited companies

C
Public limited companies

D
All of the above

Solution

Share warrants can be issued only by a public company limited by shares. The Articles of Association must authorize the company to issue share warrants. Share warrants can be issued only in respect of those shares that are fully paid up.
Hence, option (C) is the correct answer.
Question 2
1 / -0

In case of a company, ''Buy Back'' is related to ____________.

A
Prospectus

B
Shares

C
Debentures

D
Cheques

Solution

A buyback is when a corporation purchases its own shares in the stock market. A repurchase reduces the number of shares outstanding, thereby inflating (positive) earnings per share and, often, the value of the stock.
Question 3
1 / -0

Security premium reserve in an example of.....................?

A
revenue reserve

B
Capital reserve

C
reserve capital

D
Revaluation reserve
Question 4
1 / -0

When the stock market index is rising, a company may issue in order to meet its financial requirements.

A
Equity shares

B
Debentures

C
Bonds

D
None of the above

Solution

Equity shares are the most potent source of financing. It provides substantially large amount of capital without involving the company and management in any fixed obligations. New equity shares are often issued via an initial public offering (IPO), allowing investors to buy the stock of a previously private company for the first time.
Question 5
1 / -0

Conversion of physical shares into electronic securities is called ________.

A
Dematerialization

B
Price rigging

C
Rematerialization

D
None of these

Solution

This is compulsory to have the shares in a demat account. Every shareholder must have a demat account. Conversion of physical shares in to the electronic form is called dematerialization.
Question 6
1 / -0

'Call in arrear' is shown in the balance sheet on the liability side _______________.

A
by deducting the amount from the called up capital

B
under the heading 'Reserve and Surplus'

C
by deducting the amount from the capital reserve

D
by deducting the amount from the 'Share Forfeited Account'

Solution

Calls in arrears is the amount which is called by the company but unpaid. Once the company confirm the allotment of shares, it becomes a valid contract. In such situation, shareholder becomes liable to pay the entire amount of shares. In case, the called up amount is not paid,the unpaid amount is called as calls in arrears.
Calls in arrears is shown in the liability side by deducting from the called up capital. If shares are forfeited, than it is deducted from share forfeited account.
Question 7
1 / -0

When an existing company is liquidated and a new company is formed with the same shareholders to take over its business, it is called __________.

A
Absorption

B
External reconstruction

C
Amalgamation

D
Internal reconstruction

Solution

External reconstruction takes place when an existing company goes into liquidation for the purpose of selling its assets and liabilities to a newly formed company which is generally owned and named alike. External reconstruction is one in which the company undergoing reconstruction is liquidated to take over the business of existing company
Question 8
1 / -0

In case of public company total managerial remuneration can't exceed ___________ per cent of the net profits.

A
$$5$$

B
$$7$$

C
$$11$$

D
$$12$$

Solution

Section 198 of the Companies Act lays down the overall managerial remuneration which can be paid by a public limited company. The total managerial remuneration to be paid to the directors or manager in respect to a financial year should not exceed 11% of the net profits.
Question 9
1 / -0

Which one of the following financial institutions shall not be regarded as Public financial institutions as per section $$2(72)$$ of Companies Act $$2013$$?

A
LIC

B
IDFCL

C
Institutions notified by central government in consultation with RBI

D
KFC

Solution

Below are the institutions falls under the category of Public financial institutions:

a) LIC of India established under section 3 of the life insurance corporation act 1956.
b) IDFCL referred to clause (vi) of sub section 1 of section 4A of the Companies Act 1956.
c) Institutions notified by central government under sub section 2 of section 4A of the companies act 1956.
d) Specified company referred to in the Unit Trust of India Act 2002.
e) Such other institutions notified by central government in consultation with RBI.

KFC does not fall under the above category, hence it is not a public financial institution.
Question 10
1 / -0

Salary payable to the managing director of the company is treated as _________.

A
Unsecured debt

B
Preferential debt

C
Unsecured credits

D
Liquidation expenses

Solution

Unsecured debt is a debt which is not backed up by an underlying asset, or we can say it is unsecured. Hence, salary payable to managing directors of the company is treated as unsecured debt.

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 61

Result

Accounting for share Capital Test - 61

Score

-

Rank

-

SHARING IS CARING

Question 1

Companies limited by guarantee

Private limited companies

Public limited companies

All of the above

Solution

Question 2

Prospectus

Shares

Debentures

Cheques

Solution

Question 3

revenue reserve

Capital reserve

reserve capital

Revaluation reserve

Question 4

Equity shares

Debentures

Bonds

None of the above

Solution

Question 5

Dematerialization

Price rigging

Rematerialization

None of these

Solution

Question 6

by deducting the amount from the called up capital

under the heading 'Reserve and Surplus'

by deducting the amount from the capital reserve

by deducting the amount from the 'Share Forfeited Account'

Solution

Question 7

Absorption

External reconstruction

Amalgamation

Internal reconstruction

Solution

Question 8

$$5$$

$$7$$

$$11$$

$$12$$

Solution

Question 9

LIC

IDFCL

Institutions notified by central government in consultation with RBI

KFC

Solution

Question 10

Unsecured debt

Preferential debt

Unsecured credits

Liquidation expenses

Solution

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