Accounting for share Capital Test

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Accounting for share Capital Test - 8

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Weekly Quiz Competition

Question 1
1 / -0

A company purchased a running business from Mahesh for a sum of ₹150,000 payable as ₹120000 in fully paid equity shares of ₹10 each and balance in cash. The assets and liabilities consisted of the following Plant and Machinery ₹40000 Stock ₹50000 Building ₹40000 Cash ₹20000 Sundry debtors ₹30000 Sundry creditors ₹20000.Calculate capital reserve.

A
₹10000

B
₹15000

C
₹20000

D
₹16000

Solution

Capital Reserve ₹10,000
Total of Assets = 40,000 + 50,000 + 40,000 + 20,000 + 30,000 = 1,80,000
Liabilities side = 1,50,000 + 20,000 = 1,70,000
Capital Reserve = 1,80,000 – 1,70,000 = 10,000
Question 2
1 / -0

Which account is debited When shares are issued to the promoters:

A
Preliminary Expenses A/c

B
Incorporation Expenses A/c

C
Discount A/c

D
Premium A/c

Solution

Following journal entry is to be recorded when shares are issued to the promoters:
Incorporation Expenses A/c Dr.
To Share Capital A/c
(Being shares issued to the promoters)
Question 3
1 / -0

________ Shares have the right to receive arrears of dividend before dividend is paid to the equity shareholders.

A
Cumulative Preference Shares

B
Only Convertible Shares

C
Equity Shares

D
Redeemable Preference Shares

Solution

a preference share whose annual fixed-rate dividend, if it cannot be paid in any year, accrues until it can.
Question 4
1 / -0

At what maximum premium companies can issue its shares?

A
25%

B
No Limit

C
20%

D
10%

Solution

There is no limit on issue of shares at premium. A company can issue its shares at any price (which is more than the face value).
Question 5
1 / -0

If a shareholder does not pay calls money on time a notice of ___________ days should be given to the shareholder to pay the amount.

A
60

B
14 days

C
30

D
15

Solution

If a shareholder does not pay calls money on time a notice of 14 days should be given to the shareholder to pay the amount. along with interest if any.
Question 6
1 / -0

Which type of shares can be issued at discount?

A
Convertible Preference Shares

B
Equity Shares

C
Sweat Equity Shares

D
Preference Shares

Solution

A company cannot its shares at discount as per the section 53 of the Companies Act, 2013. But Sweat Equity Shares can be issued at discount.
Question 7
1 / -0

What is the meaning of the following Entry?
Incorporation Expenses A/c Dr.
To Share Capital A/c

A
Issue of shares to Financial Institution

B
Issue of shares to Promoters

C
Issue of shares to other companies

D
Issue of shares to Public

Solution

When a company issue shares to the promoters for their services to the company, following journal entry is recorded in the books of accounts:
Incorporation Expenses A/c Dr.
To Share Capital A/c
Question 8
1 / -0

Which of the following way is not used by the company to issue the shares?

A
By public subscription

B
Without stock exchange

C
By Consideration other than cash

D
By private placement

Solution

It is compulsory for a company to issues its shares through stock exchange. A company can issue its shares in any of the following ways:
•By private placement
•By public subscription
•By Consideration other than cash
Question 9
1 / -0

Share Application A/c and Share Allotment A/c is:

A
Real Account

B
Personal Account

C
Fictitious Account

D
Nominal Account

Solution

Share Application Account and Share Allotment Account both are personal accounts because both accounts represent the amount of capital received through issue of shares.
Question 10
1 / -0

Where will you record premium received on issue of equity shares?

A
Long term Borrowings

B
Share Capital

C
Reserves and Surplus

D
Current Assets

Solution

The amount received as premium on issue of equity shares will be shown in the balance sheet under the heading of reserves and surplus.

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 8

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Accounting for share Capital Test - 8

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SHARING IS CARING

Question 1

₹10000

₹15000

₹20000

₹16000

Solution

Question 2

Preliminary Expenses A/c

Incorporation Expenses A/c

Discount A/c

Premium A/c

Solution

Question 3

Cumulative Preference Shares

Only Convertible Shares

Equity Shares

Redeemable Preference Shares

Solution

Question 4

25%

No Limit

20%

10%

Solution

Question 5

60

14 days

30

15

Solution

Question 6

Convertible Preference Shares

Equity Shares

Sweat Equity Shares

Preference Shares

Solution

Question 7

Issue of shares to Financial Institution

Issue of shares to Promoters

Issue of shares to other companies

Issue of shares to Public

Solution

Question 8

By public subscription

Without stock exchange

By Consideration other than cash

By private placement

Solution

Question 9

Real Account

Personal Account

Fictitious Account

Nominal Account

Solution

Question 10

Long term Borrowings

Share Capital

Reserves and Surplus

Current Assets

Solution

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