Accounting for share Capital Test

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Accounting for share Capital Test - 69

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Weekly Quiz Competition

Question 1
1 / -0

Share Forfeiture account is a:

A
Nominal Account

B
Personal Account

C
Fictitious Asset

D
Misc. Expenditure

Solution

All accounts which are prepared for the calculation of profit or loss are nominal accounts. All assets accounts are real and liabilities are personal accounts.
Question 2
1 / -0

When a company makes an offer or invites the public in general to subscribe its shares, it is known as _______

A
Issue of shares at par

B
Initial Public Offer (IPO)

C
Private Placement of shares

D
Issue of shares at premium

Solution

When a company makes an offer or invites the public in general to subscribe its shares, it is known as Initial public offer (IPO).
Question 3
1 / -0

The capital which is part of the uncalled capital of the company which can be called up only in the event of its winding up it is called

A
Authorized Capital

B
Nominal capital

C
Issued capital

D
Reserve capital

Solution

Reserve Capital: It is uncalled capital which can be called up by the company in case of an emergency i.e. winding up. It is a part of Authorized Capital.
Question 4
1 / -0

Which of the following statement is false

A
Company is not affected by the death of its member

B
Company is managed by all the members

C
A company can buy its own share

D
A company is legal entity distinct from its owner

Solution

The Statement given as ‘Company is managed by all the members’ is not correct because it is not mandatory for all the members to run the company.
Question 5
1 / -0

Find out the amount of second & final call When a company issue its shares @ 10 each at a premium of 30%. Payable on Application Rs.4. On Allotment Rs.4. On First Call Rs.2.

A
Second & final call Rs.4

B
Second & final call Rs.1

C
Second & final call Rs.2

D
Second & final call Rs.3

Solution

Total amount should be 10 + 30% i.e. 10 + 3 = 13
On Application Rs.4
On Allotment Rs.4
On First call Rs.2
Second & final call Rs.3
Question 6
1 / -0

Stages of Incorporation of company are
a.Promotion
b.Capital subscription
c.Incorporation
d.Commencement of business
Arrange them in order

A
a,c,d,b

B
c,a,b,d

C
d,a,c,b

D
a,c,b,d

Solution

The Correct order is:

(a) Promotion-idea developed in the mind of promotors

(b) Incorporation- completion of documentation and legal formalities to start a company

(c) Capital Subscription- issue of shares for public subscription

(d) Commencement of business- on successful completion of all the requirements and subscription of share capital by public, company finally gets certificate of commencement of business
Question 7
1 / -0

_________ Shares are issued by a company to its employees or directors for their hard work and dedication towards the company.

A
Employees Stock Option Scheme

B
Only Preference Shares

C
Sweat Equity Shares

D
Bonus Shares

Solution

Sweat equity shares” are such equity shares, which are issued by a Company to its directors or employees at a discount or for consideration, other than cash, for providing their know-how or making available rights in the nature of intellectual property rights or value additions, by whatever name called.
Question 8
1 / -0

At the time of forfeiture of shares, with what amount share capital account will be debited, when share of Rs.20 on which Rs.16 called and Rs.12 is paid is forfeited?

A
12

B
20

C
08

D
16

Solution

Share Capital account will be debited with ₹16

i.e. Called up price on Share is 16.

Share capital account should be debited with the called up amount and not with the face value or paid up amount
Question 9
1 / -0

When will you record the following entry?

Share Applications A/c

To Bank A/c

A
When Application money is received

B
When Full amount is received on application

C
When Company pays to the Applicants

D
When Application money is refunded

Solution

When a company reject some applications and refund the money received on the same, following journal entry will take place:

Share Applications A/c

To Bank A/c

(Being Application money refunded)
Question 10
1 / -0

Securities premium account can be utilized for:

A
To write off the preliminary expenses

B
To pay the dividend to the equity shareholders

C
To create the General Reserve

D
To Distribute it among the promoters

Solution

As per the section 52 of the Companies Act, 2013 restricts the use of securities premium received, it can be used for the following purposes:

(i) To write off the preliminary expenses

(ii) To issue fully paid bonus shares to promoters

(iii) To purchase own shares

(iv) To write off the expenses

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Re-Attempt Weekly Quiz Competition

Accounting for share Capital Test - 69

Result

Accounting for share Capital Test - 69

Score

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Rank

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SHARING IS CARING

Question 1

Nominal Account

Personal Account

Fictitious Asset

Misc. Expenditure

Solution

Question 2

Issue of shares at par

Initial Public Offer (IPO)

Private Placement of shares

Issue of shares at premium

Solution

Question 3

Authorized Capital

Nominal capital

Issued capital

Reserve capital

Solution

Question 4

Company is not affected by the death of its member

Company is managed by all the members

A company can buy its own share

A company is legal entity distinct from its owner

Solution

Question 5

Second & final call Rs.4

Second & final call Rs.1

Second & final call Rs.2

Second & final call Rs.3

Solution

Question 6

a,c,d,b

c,a,b,d

d,a,c,b

a,c,b,d

Solution

Question 7

Employees Stock Option Scheme

Only Preference Shares

Sweat Equity Shares

Bonus Shares

Solution

Question 8

12

20

08

16

Solution

Question 9

When Application money is received

When Full amount is received on application

When Company pays to the Applicants

When Application money is refunded

Solution

Question 10

To write off the preliminary expenses

To pay the dividend to the equity shareholders

To create the General Reserve

To Distribute it among the promoters

Solution

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