CHAPTER 1: Accounting for Share Capital NCERT MCQ CLASS 12TH ACCOUNTS | EDUGROWN
NCERT MCQ ON Accounting for Share Capital:
Question1: Minimum number of members in a Private Company
- a) 2
- b) 5
- c) 7
- d) 1
Answer: 2
Question2: Minimum number of members in a Public Company
- a) 7
- b) 2
- c) 5
- d) 3
Answer: 7
Question3: Maximum number of members in a Private Company
- a) 50
- b) 60
- c) 70
- d) 100
Answer: 50
Question4: Maximum number of members in a Public Company
- a) Any Number of members
- b) 50
- c) 60
- d) None of the options
Answer: Any Number of members
Question5: Minimum Capital of a Private Company
- a) 1 Lakh
- b) 2 Lakh
- c) 3 Lakhs
- d) None of the options
Answer: 1 Lakh
Question6: Interest on calls in advance
- a) 6% P.A
- b) 5% P.A
- c) 9% P.A
- d) No Interest
Answer: 6% P.A
Question7: Interest on calls in arrear
- a) 5% P.A
- b) 6% P.A
- c) 9% P.A
- d) No Interest
Answer: 5% P.A
Question8: Minimum subscription in case of public company
- a) 90% of the entire issue
- b) 75% of the entire issue
- c) 50% of the entire issue
- d) None of the options
Answer: 90% of the entire issue
Question9: Minimum application money in case of public limited company
- a) 5% of the nominal face value
- b) 10% of the nominal face value
- c) 15% of the nominal face value
- d) None of the options
Answer: 5% of the nominal face value
Question10: Minimum Capital of a Public Company
- a) 5 Lakh
- b) 1 Lakh
- c) 2 Lakh
- d) None of the options
Answer: 5 Lakh
Question11: Maximum Rate of discount
- a) 10% of the nominal value of share
- b) 5% of the nominal face value
- c) 15% of the nominal face value
- d) None of the options
Answer: 10% of the nominal value of share
Question12: Issue of share at a discount
- a) Section 79
- b) Section 78
- c) Section 76
- d) None of the options
Answer: Section 79
Question13: Issue of share at a premium
- a) Section 78
- b) Section 79
- c) Section 76
- d) None of the options
Answer: Section 78
Question14: Which of the following statement is false:
- a) A shareholder is the agent of the company
- b) A company is a legal entity quite distinct from its members.
- c) A company can buy its own share
- d) Same person can agent and creditor of the company
Answer: A shareholder is the agent of the company
Question15: Which of the following are the characteristics of a company
- a) Liability of the members is limited upto the face value of shares held by them
- b) It is a voluntary association of persons.
- c) A company is a separate body can sue and be sued in its own name
- d) All of the above
Answer: Liability of the members is limited upto the face value of shares held by them
Question16: Formed by special act of the legislature or parliament Called
- a) Statutory Company
- b) Guarantee company
- c) Chartered companies
- d) None of the options
Answer: Statutory Company
Question17: Liability of the member is limited upto the amount he guaranteed to contribute in the event of winding up.
- a) Guarantee company
- b) Statutory Company
- c) Chartered companies
- d) None of the options
Answer: Guarantee company
Question18: Incorporated under special charter by the king or sovereign
- a) Chartered companies
- b) Statutory Company
- c) Guarantee company
- d) None of the options
Answer: Chartered companies
Question19: Minimum number of directors in Pvt. Ltd company
- a) 2
- b) 3
- c) 4
- d) No limit
Answer: 2
Question20: Minimum number of directors in Ltd company
- a) 3
- b) 2
- c) 4
- d) No limit
Answer: 3
Question21: Which of the following capital is not shown in companys balance sheet:
- a) Reserve Capital
- b) Authorised capital
- c) Issued and Subscribed capital
- d) Called and paid up capital
Answer: Reserve Capital
Question22: Permission from central government to issue share capital is required if Nominal capital exceeds
- a) 1 Crore
- b) 2 Crore
- c) 1 Lakh
- d) 2 Lakh
Answer: 1 Crore
Question23: A company is said to be Deemed Public company if its Annual Turnover exceeds
- a) 25 Crores.
- b) 20 Crore
- c) 30 Crore
- d) None of the options
Answer: 25 Crores.
Question24: Share application and allotment account is a:
- a) Personal account
- b) Real account
- c) Nominal account
- d) None of the options
Answer: Personal account
Question25: Securities premium account is shown on the liabilities side of the balance sheet under the head:
- a) Reserves and surplus
- b) Share capital
- c) Current liabilities
- d) None of the options
Answer: Reserves and surplus
Question26: Discount of issue of share shows debit balance and hence shown on the assets side of the balance sheet under the head
- a) Miscellaneous expenditure.
- b) Reserves and surplus
- c) Share capital
- d) Current liabilities
Answer: Miscellaneous expenditure.
Question27: As per section 78 of the companies act, amount collected as premium on securities cannot be utilised for:
- a) Purchase of fixed assets
- b) Writing off preliminary expenses
- c) Buy back of its own shares
- d) Premium payable on redemption of preference shares
Answer: Purchase of fixed assets
Question28: The portion of the authorised capital which can be called-up only on the liquidation of the company is called
- a) Reserve capital
- b) Authorised capita
- c) Issued capital
- d) Called up capital
Answer: Reserve capital
Question29: Penalty for delay in refunding application money
- a) 0.15
- b) 0.06
- c) 0.05
- d) 0.2
Answer: 0.15
Question30: Which of the following statement is false?
- a) A company can raise funds beyond its Authorised capital.
- b) Declared dividend should be classified in the balance sheet as a current liability.
- c) Dividends are usually paid as a percentage of paid-up-capital.
- d) As per the companies act, only preference shares which are redeemable within 20 years can be issued.
Answer: A company can raise funds beyond its Authorised capital
Question31: Which of the following statements are correct?
- a) Paid-up-capital = called-up-capital – calls in arrear
- b) Subscribed capital is that part of capital which is offered to the public for subscription.
- c) Issued capital is that part of authorised capital which is applied by the public and allotted by company.
- d) None of the options
Answer: Paid-up-capital = called-up-capital – calls in arrear
Question32: Which of the following is not a statistical book of a company?
- a) Register of debenture holders
- b) Share application and allotment book
- c) Register of share warrants
- d) Register of shares and debentures transferred
Answer: Register of debenture holders
Question33: Which of the following is not a statutory book of a company?
- a) Agenda book
- b) Annual returns
- c) Minutes book
- d) Register of fixed deposits
Answer: Agenda book
Question34: Securities premium once received cannot be cancelled.
- a) True
- b) False
- c) Both
- d) None of the options
Answer: True
Question35: Technique used for marketing a public offer of equity shares of a company is called book building process.
- a) True
- b) False
- c) Both
- d) None of the options
Answer: True
Question36: As per SEBI guidelines, A new company without any track record can issue share at a premium.
- a) False
- b) True
- c) Both
- d) None of the options
Answer: False
Question37: Share capital suspense account is opened when:
- a) When application money is received but balance sheet is prepared before allotment of shares.
- b) Balance sheet is not tallied
- c) When dividend is declared but not paid
- d) When shares are forfeited
Answer: When application money is received but balance sheet is prepared before allotment of shares.
Question38: A new company set up by existing companies with five year track record can issue share at premium provided:
- a) All of the options
- b) Participation of existing companies are not less that 50%
- c) Prospectus contains justification for issue price
- d) The issue price is made applicable to all new investors uniformly.
Answer: All of the options
Question39: Issue of share at a discount must be authorised by a resolution passed by the company in general meeting and duly sanctioned by the
- a) Central government.
- b) State government.
- c) Local government
- d) None of the options
Answer: Central government
Question40: A company can issue share at a discount if
- a) All of the options
- b) One year have been elapsed since the date at which the company was allowed to commence business
- c) Shares issued at a discount must belong to a class of shares already issued
- d) Issue must take place within two must after the date of sanction by the court or within extended time
Answer: All of the options
Question41: Maximum number of members in a private company is :
a) 7
b) 200
c) 20
d) No Limit
Answer: B
Question42: Capital of a Company is divided in units which is called :
a) Debenture
b) Share
c) Stock
d) Bond
Answer: B
Question43: Shareholders receive from the company :
a) Interest
b) Commission
c) Profit
d) Dividend
Answer: D
Question44: Voluntary return of shares for concellation by the shareholders is called
a) Cancellation of shares
b) Forfeiture
c) Surrender of shares
d) None of these
Answer: C
Question45: If the Premium on the forfeited shares has already been received, then Securities Premium A/c should be :
a) Credited
b) Debited
c) No treatment
d) None of these
Answer: C
Question46: Balance of share forfeiture account is shown in the balance sheet under the head
a) Share Capital Account
b) Reserve and Surplus
c) Current Liabilities and Provisions
d) Unsecured Loans
Answer: A
Question47: 700 shares of Rs. 10 each were reissued as Rs. 9 paid up for Rs.7 per share. Entiy for reissue will be :
a) Bank A/c Dr. 4,900
Share Discount A/c Dr. 1,400
To Share Capital A/c 6,300
b) Bank A/c Dr. 4,900
To Share Capital A/c 4,900
c) Bank A/c Dr. 4,900
Share Forfeiture A/c Dr. 1,400
To Share Capital A/c 6,300
d) Bank A/c Dr. 4,900
Share Forfeiture A/c Dr. 2,100
To Share Capital A/c 7,000
Answer: C
Question48: A Ltd. forfeited 2,000 shares of Rs.10 each fully called up for non-payment of final call of Rs.2 per share. 1,200 of these shares were reissued at Rs.7 per share, fully paid up. What is the amount to be transferred to Capital Reserve Account?
a) Rs. 7,600
b) Rs. 1,200
c) Rs. 12,400
d) Rs. 6,000
Answer: D
Question49: Using information given in above question, what is the net balance in Share Forfeiture Account:
a) Rs.9,600
b) Rs.6,400
c) Rs. 16,000
d) Rs.2,800
Answer: B
Question50: Maximum limit of Premium on shares is:
a) 5%
b) 10%
c) No Limit
d) 100%
Answer: C
Question51: When a company issues shares at a premium, the amount of premium should be received by the company :
a) Along with application money
b) Along with allotment money
c) Along with calls
d) Along with any of the above
Answer: D
Question52: Amount of securities premium can be utilised for:
a) Writing off the preliminary expenses of the company
b) Issuing bonus shares to the shareholders of the company
c) Buy-back of its own shares
d) All of the above
Answer: D
Question53: Which shareholders are returned their capital after some specified time :
a) Redeemable Preference Shares
b) Irredeemable Preference Shares
c) Cumulative Preference Shares
d) Participating Preference Shares
Answer: A
Question54: The following statements apply to equity/preference shareholders. Which one of them applies only to preference sharehoders?
a) Shareholders risk the loss of investment
b) Shareholders bear the risk of no dividends in the event of losses
c) Shareholders usually have the right to vote
d) Dividends are usually given at a set amount in every financial year.
Answer: D
Question55: Unless otherwise stated, a preference share is always deemed to be :
a) Cumulative, participating and non-convertible
b) Non-cumulative, non-participating and non-convertible
c) Cumulative, non-participating and non-convertible
d) Non-cumulative, participating and non-convertible
Answer: C
Question56: A company has _______
a) Separate Legal Entity
b) Perpetual Existence
c) Limited Liability
d) All of the Above
Answer: D
Question57: Shareholders are :
a) Customers of the Company
b) Owners of the Company
c) Creditors of the Company
d) None of these
Answer: B
Question58: Who are the real owners of a company?
a) Government
b) Board of Directors
c) Equity shareholders
d) Debentureholders
Answer: C
Question59: Authorised capital of a Company is divided into 5,00,000 shares of Rs. 10 each. It issued 3,00,000 shares. Public applied for 3,60,000 shares. Amount of issued capital will be :
a) Rs.30,00,000
b) Rs.36,00,000
c) Rs.50,00,000
d) Rs.6,00,000
Answer: A
Question60: A Company invited applications for 1,00,000 shares and it received applications for 1,50,000 shares. Applications for 30,000 shares were rejected and the remaining were allotted shares on prorata basis. How many shares an applicant for 3,000 shares will be allotted :
a) 2,500 Shares
b) 3,600 Shares
c) 4,500 Shares
d) 2,000 Shares
Answer: A
Question61: E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The amount payable on application was Rs.2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from F will be :
a) 60 shares; Rs.120
b) 340 shares; Rs.160
c) 320 shares, Rs.200
d) 300 shares; U40
Answer: D
Question62: Using information given in Q. 117, what is the net balance left in Share Forfeiture Account:
a) Rs. 1,400
b) Rs. 1,500
c) Rs.900
d) Rs. 1,000
Answer: D
Question63: P Ltd. forfeited 150 shares of Rs.10 each, issued at a premium of Rs.2, for non-payment of the final call of Rs.3. Out of these, 100 shares were re-issued at Rs. 11 per share. How much amount would be transferred to capital reserve?
a) Rs.700
b) Rs.500
c) Rs. 1,200
d) Rs.300
Answer: A
Question64: XY Limited issued 2,50,000 equity shares of Rs. 10 each at a premium of Rs.1 each payable as Rs.2.5 on application, Rs.4 on allotment and balance on the first and final call. Applications were received for 5,00,000 equity shares but the company allotted to them only 2,50,000 shares. Excess money was applied towards amount due on allotment. Last call on 500 shares was not received and shares were forfeited after due notice. This is a case of:
a) Over subscription
b) Pro-rata allotment
c) Forfeiture of Shares
d) All of the above
Answer: D
Question65: 800 shares of Rs.10 each issued at 20% premium were forfeited for non-payment of allotment money of Rs.5 (including premium) and first & final of Rs.3 per share. Share Forfeiture Account will be credited with :
a) Rs. 1,600
b) Rs.2,400
c) Rs.3,200
d) Rs.4,800
Answer: C
Question66: 800 shares of Rs.10 each issued at 30% premium (to be paid on allotment) were forfeited for non-payment of Rs.2 per share on first call and Rs.2 per share on final call. Share Forfeiture Account will be credited with :
a) Rs.2,400
b) Rs.4,800
c) Rs.3,200
d) Rs.7,200
Answer: B
Question67: A Company forfeited 300 shares of Rs.10 each, Rs.8 per share called up, on which X had paid application and allotment money of Rs.6 per share. Share Forfeiture Account will be credited with :
a) Rs. 600
b) Rs. 1,800
c) Rs. 1,200
d) Rs.2,400
Answer: B
Question68: For what purpose securities premium reserve account cannot be utilized?
a) Amortization of preliminary expenses
b) Distribution of dividend
c) Issue of fully paid bonus shares
d) Buy Back of own shares
Answer: B
Question69: Premium on the issue of shares should be shown :
a) On the Assets side of balance sheet
b) On the Equity & Liabilities side of balance sheet
c) In profit & loss Statement
d) None of the Above
Answer: B
Question70: A Company issued 50,000 shares of Rs.20 each at 5% premium. Rs.10 were payable on application and balance on allotment. What will be the allotment amount?
a) Rs.5,00,000
b) Rs.4,75,000
c) Rs.5,50,000
d) Rs.5,25,000
Answer: C
Question71: Equity shares cannot be issued for the purpose of:
a) Cash Receipts
b) Purchase of assets
c) Redemption of debentures
d) Distribution of dividend
Answer: D
Question72: A Company may issue
a) Equity Shares
b) Preference Shares
c) Equity and Preference both shares
d) None of the Above
Answer: C
Question73: A company cannot issue :
a) Redeemable Equity Shares
b) Redeemable Preference Shares
c) Redeemable Debentures
d) Fully Convertible Debentures
Answer: A
Question74: Authorised Capital of a Company is mentioned in :
a) Memorandum of Association
b) Articles of Association
c) Prospectus
d) Statement in lieu of Prospectus
Answer: A
Question75: In case of private placement of shares, the lock in period is :
a) 1 Year
b) 2 Years
c) 3 Years
d) None of the above
Answer: C
Question76: A Company is
- a) All of the options
- b) Has separate legal identity
- c) Has Perpetual existence
- d) Has Common seal
Answer: All of the options
Question77: Restricts the right to transfer of shares for
- a) Private company
- b) Limited company
- c) Both
- d) None of the options
Answer: Private company
Question78: Prohibits any invitation to public to subscribe for shares and Debentures for
- a) Private company
- b) Limited company
- c) Both
- d) None of the options
Answer: Private company
Question79: Prohibits any invitation or acceptance of deposits from persons other than its members , directors or their relatives for
- a) Private company
- b) Limited company
- c) Both
- d) None of the options
Answer: Private company
Question80: As per section 617 is a company in which more than 50% of paid up capital is held by Central or State Government or both, Called
- a) Government Company
- b) Private company
- c) Limited company
- d) Foreign Company
Answer: Government Company
Question81: Section 591of Act states this type of company is incorporated outside India but has established business in India, Called
- a) Foreign Company
- b) Government Company
- c) Private company
- d) Limited company
Answer: Foreign Company
Question82: Authorised Capital is also known as
- a) Nominal or registered Capital
- b) Share capital.
- c) Called up Capital
- d) None of the options
Answer: Nominal or registered Capital
Question83: Which is the maximum amount of capital a company can issue
- a) Authorised Capital
- b) Share capital.
- c) Called up Capital
- d) None of the options
Answer: Authorised Capital
Question84: Which is part of authorized capital
- a) Issued Capital
- b) Paid up capital
- c) Called up Capital
- d) None of the options
Answer: Issued Capital
Question85: Capital raised by issue of shares is called
- a) Share capital.
- b) Authorised Capital
- c) Called up Capital
- d) None of the options
Answer: Share capital.
Question86: It cannot exceed authorized capital .
- a) Issued Capital
- b) Paid up capital
- c) Share capital.
- d) None of the options
Answer: Issued Capital
Question87: Subscribed Capital is part of
- a) Issued Capital
- b) Share capital.
- c) Paid up capital
- d) Called up Capital
Answer: Issued Capital
Question88: It is that part of uncalled capital which the company reserve to be called only upon winding up of company
- a) Reserve Capital
- b) Share capital.
- c) Called up Capital
- d) Called up Capital
Answer: Reserve Capital
Question89: Capital Reserve is
- a) Not available for distribution
- b) Available for distribution
- c) Both
- d) None of the options
Answer: Not available for distribution
Question90: How many classes of shares
- a) 2
- b) 3
- c) 4
- d) 5
Answer: 2
Question91: Classes of shares is
- a) Both
- b) Preference shares
- c) Equity shares
- d) None of the options
Answer: Both
Question92: Preference shares : are shares which get preferential right in respect of
- a) Both
- b) Right of dividend
- c) Repayment of capital on winding up
- d) None of the options
Answer: Both
Question93: Shares can be issued
- a) Both
- b) for cash
- c) for consideration other than cash
- d) None of the options
Answer: Both
Question94: Terms of issue of share
- a) All of the options
- b) Issue of shares at Par
- c) Issue of shares at Premium
- d) Issue of shares at Discount
Answer: All of the options
Question95: First instalment paid along with application is called
- a) Application money
- b) Allotment Money
- c) Both
- d) None of the options
Answer: Application money
Question96: When Second instalment paid
- a) On allotment
- b) On Application
- c) Both
- d) None of the options
Answer: On allotment
Question97: Issues Of Shares At Premium means Issue Of Share At
- a) More than face value
- b) Face Value
- c) Discount Value
- d) Premium value
Answer: More than face value
Question98: Issue Of Shares For Cash At Par Means shares are issued
- a) Face Value
- b) Premium value
- c) Discount Value
- d) None of the options
Answer: Face Value
Question99: Issue Of Shares At Discount, Rate of discount should not be more than
- a) 0.1
- b) 0.05
- c) 0.12
- d) None of the options
Answer: 0.1
Question100: Issue Of Shares At Discount, Sanction from company Law board must be obtained and shares must be issued within
- a) 2 Months of permission
- b) 3 Months of permission
- c) 4 Months of permission
- d) None of the options
Answer: 2 Months of permission