Accounting for share Capital Test

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Accounting for share Capital Test - 62

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Weekly Quiz Competition

Question 1
1 / -0

In India, dividend distribution tax is paid on:

A
Equity Share

B
Preference Share

C
Debenture

D
Both A and B

Solution

Dividend distribution Tax is the tax imposed by the Indian government on companies according to the dividend paid to the company's investors. At present the dividend distribution tax is 15%.
Question 2
1 / -0

As per sec $$4(1)$$(e) of Companies Act $$2013$$, a company having a share capital, the memorandum of association must state the amount of ___________.

A
Authorised/ registered capital

B
Paid-up share capital

C
Called-up capital

D
Reserved capital

Solution

The Authorized capital of the company is the maximum amount of share capital that a company is authorized by its constitutional document to issue to shareholders.
The Capital clause of memorandum of association must incorporate the amount of its share capital and division thereof.
Question 3
1 / -0

In order to calculate the proportion of equity financing used by the company, which of the following should be used?

A
Authorised Share Capital

B
Equity Share Capital plus Reserves and Surplus

C
Equity Share Capital plus Preference Share Capital

D
Equity Share Capital plus Long-term Debt

Solution

Reserves and surpluses are part of owners equity, hence while calculating the cost of equity, reserves & surplus are also to be added with equity shares.
Question 4
1 / -0

Which one of the following is not a relaxation given to an OPC?

A
Need not prepare Cash Flow Statement

B
Annual report can be signed by Director

C
No need to hold AGM

D
No need to appoint Company Secretary

Solution

The Companies Act 2013 introduced a new concept of "One Person Company". Its basically giving a corporate form to the proprietorship organization.
Section 92 of the Companies Act 2013 provides that the annual return of an OPC is to be signed by the Company Secretary or where there is no Company Secretary , by the director of the company. Hence , there is no need to appoint Company Secretary by OPC.
Question 5
1 / -0

If a share of Rs. 10 on which Rs. 6 has been paid is forfeited, the minimum price it can be reissued is ________.

A
Rs. 10

B
Rs. 8

C
Rs. 6

D
Rs. 4

Solution

The forfeited shares can be reissued by the company at any price. But in no case, the amount collected on reissue of share price plus the amount already forfeited be less than the amount credited as paid upon reissue of shares. For example, if a share of Rs. 10 on which Rs 6 has already been paid is forfeited and reissued as fully paid, the a minimum of Rs. 4 must be collected.
Question 6
1 / -0

_____________ is debited with the amount called-up in respect of shares are forfeited and credited with _________, as the case may be.

A
Share premium account, share capital account

B
Share capital account, calls in arrears account

C
Share capital account, share premium account

D
Calls in arrears, share forfeited account

Solution

Some shareholders fail to pay one or more installments, viz. allotment money and/or call money. When shares are forfeited all entries relating to the shares forfeited, except those relating to premium, which are already recorded in the accounting records, are reversed. Share capital account is debited with the amount called-up if shares are forfeited and credited with the respective unpaid call account or calls in arrears account, as the case may be.
Question 7
1 / -0

In case the shares have been issued at a premium and the amount of premium has been received, then at the time of forfeiture of such shares _______________________.

A
Securities premium account should be debited

B
Securities premium account should be credited

C
Securities premium account should be neither debited nor credited

D
None of the above

Solution

Share Capital A/c ….Dr. (With amt., called up on forfeited shares excluding premium)
Securities Premium Reserve A/c ….Dr. (With premium amount)
To Share forfeiture A/c (With amt., received on forfeited shares)
To Calls-in-arrears A/c (With amt., not received on forfeited shares)
Question 8
1 / -0

Shares can be forfeited ______________.

A
For non-payment of call money

B
For failure to attend meetings

C
For failure to repay the loan to the bank

D
For which shares are pledged as a security

Solution

If a member fails to pay a valid call within the stipulated time, the company may sue him for recovery of the amount of the call after waiting for a reasonable period or may forfeit the shares for non-payment of any call or installment of a call. Thus, shares can be forfeited for non-payment of any call or installment of a call if and only is special or clear power on the articles is given to the directors to do so. Where power is given in the articles, it must be exercised strictly in accordance with the regulations regarding notice, procedure and manner stated therein, otherwise the forfeiture will be void.
Question 9
1 / -0

If the securities premium has not been received, either wholly or partially, in respect of the shares forfeited, the ________ will also be debited with the amount of premium not received along-with _________ at the time of forfeiture.

A
Share premium account, Share capital account

B
Share capital account,Share premium account

C
Share forfeited account, Share premium account

D
Share capital account, Share forfeited account

Solution

In case, the securities premium has not been received either wholly or partially, in respect of the shares forfeited, the Share Premium account will be debited with the amount of premium not received along with the Share Capital account at the time of forfeiture. This will usually be the case when the amount due on the allotment has not been received either.
Question 10
1 / -0

When the shareholder makes the payment of calls-in-arrears together with interest, the entry will be:

A
Calls-in-Arrears A/c Dr.
To Bank A/c
To Interest A/c

B
Bank A/c Dr.
To Calls-in-Arrears A/c
To Interest A/c

C
Bank A/c Dr.
To Share Application A/c
To Calls in arrears A/c

D
Share Application A/c Dr.
To Bank A/c
To Calls-in-Arrears A/c

Solution

It often happens that shareholders do not pay the call amount when it becomes due. When any shareholder fails to pay the amount due on allotment or on any of the calls, such amount is known as 'Calls-in-Arrears'/'Unpaid Calls'.
On receipt of the call amount together with interest, the amount of interest shall be credited to interest account while call money shall be credited to the respective call account or to calls-in-arrears account. The entry will be as follows:
Bank A/c Dr.
To Calls-in-Arrears A/c
To Interest A/c
If nothing is specified, there is no need to take the interest on calls-in-arrears account and record the above entry.

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 62

Result

Accounting for share Capital Test - 62

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SHARING IS CARING

Question 1

Equity Share

Preference Share

Debenture

Both A and B

Solution

Question 2

Authorised/ registered capital

Paid-up share capital

Called-up capital

Reserved capital

Solution

Question 3

Authorised Share Capital

Equity Share Capital plus Reserves and Surplus

Equity Share Capital plus Preference Share Capital

Equity Share Capital plus Long-term Debt

Solution

Question 4

Need not prepare Cash Flow Statement

Annual report can be signed by Director

No need to hold AGM

No need to appoint Company Secretary

Solution

Question 5

Rs. 10

Rs. 8

Rs. 6

Rs. 4

Solution

Question 6

Share premium account, share capital account

Share capital account, calls in arrears account

Share capital account, share premium account

Calls in arrears, share forfeited account

Solution

Question 7

Securities premium account should be debited

Securities premium account should be credited

Securities premium account should be neither debited nor credited

None of the above

Solution

Question 8

For non-payment of call money

For failure to attend meetings

For failure to repay the loan to the bank

For which shares are pledged as a security

Solution

Question 9

Share premium account, Share capital account

Share capital account,Share premium account

Share forfeited account, Share premium account

Share capital account, Share forfeited account

Solution

Question 10

Calls-in-Arrears A/c Dr. To Bank A/c To Interest A/c

Bank A/c Dr. To Calls-in-Arrears A/c To Interest A/c

Bank A/c Dr. To Share Application A/c To Calls in arrears A/c

Share Application A/c Dr. To Bank A/c To Calls-in-Arrears A/c

Solution

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Calls-in-Arrears A/c Dr.
To Bank A/c
To Interest A/c

Bank A/c Dr.
To Calls-in-Arrears A/c
To Interest A/c

Bank A/c Dr.
To Share Application A/c
To Calls in arrears A/c

Share Application A/c Dr.
To Bank A/c
To Calls-in-Arrears A/c