[250] MCQs of Accounting for Share Capital class 12

Looking for important MCQs of Accounting for share capital with answers of Accountancy class 12 CBSE, ISC and state board.

We have compiled the MCQs on the issue of shares with answers. Apart from it
forfeiture and reissue of shares MCQs have also been given with answers.

Practical Multiple Choice Questions with answers of Accounting for share capital chapter of accountancy class 12

Lets Practice

Authorised or Nominal or Registered Capital is

(a) that part of authorised capital which is issued for subscription by the company
(b) the amount of capital which is applied by prospective shareholders
(c) the amount of capital which is paid by the shareholders
(d) the maximum amount of share capital that a company can issue for subscription.

Ans – (d)

A company has

a) Separate Lega Entity
b) Perpetual Existence
c) Limited Liability
d) All of the above

Ans – d)

Which of the following statements is correct?

(a) Authorised Capital is always more than the Issued capital
(b) Issued Capital is always equal to Authorised Capital
(c) Authorised Capital can be more or equal but can not be less than issued capital
(d) Issued capital is independent of Authorised Capital

Ans – (c)

Shareholders are:

a) Customers of the company
b) Owners of the company
c) Creditors of the company
d) None of these

Ans – b)

In One Person Company (OPC), which of the following can be a member?

(a) A partnership firm
(b) A private company
(c) A natural person
(d) All of the above

Ans – (c)

Who are the real owners of a company?

a) Government
b) Board of Directors
c) Equity shareholders
d) Debentureholders

Ans – c)

Tulip Ltd. allotted 45,000 Equity Shares of ₹ 10 each to the public. The first and final call of ₹ 2 per share was not received on 1,000 shares, which were forfeited by the company. Later, 600 of the forfeited shares were reissued at ₹ 7 as fully paid-up.

What is the Subscribed Capital of the Company?

(a) ₹ 4,49,200
(b) ₹ 4,50,000
(c) ₹ 4,40,000
(d) ₹ 4,46,000

Ans – (d)

A company is created by:

a) Special act of the Parliament
b) Companies Act
c) Investors
d) Members

Ans – b)

Paras Ltd. purchased assets of ₹ 7,50,000 from H Ltd. by issue of shares of ₹ 100 each at a premium of 25%. The number of shares to be issued by Pawan Ltd. as purchase consideration will be

(a) 6,000 shares
(b) 7,500 shares
(c) 9,375 shares
(d) 5,625 shares

Ans – (a)

An artifical person created by Law is called:

a) Sole Tradership
b) Partnership Firm
c) Company
d) All of the above

Ans – c)

If shares are oversubscribed, the company can issue shares

(a) on pro rata basis to all the applicants
(b) rejecting some of the applications, accepting some of the applications in full and allotting on pro rata basis to the remaining
(c) rejecting some of the applications and accepting in full the remaining applications
(d) All of the above

Ans – (d)

The liability of members in a company is:

a) Limited
b) Unlimited
c) Stable
d) Fluctuating

Ans – a)

At the time of forfeiture of shares which are issued on premium, Share Capital Account is debited with

(a) the amount of nominal (face) value of shares.
(b) the amount called-up on the shares forfeited till the stage of forfeiture
(c) paid-up value of shares as on the date of forfeiture
(d) market value of shares as on the date of forfeiture of shares

Ans – (b)

Liability of a shareholder is limited to _____ of the shares allotted to
him.

a) Paid up value
b) Called up value
c) Face value
d) Reserve Price

Ans – c)

White Ltd. offered 20,000 shares of ₹ 10 each to the public. The public applied for 30,000 shares. The company made pro rata allotment in the ratio of 6 : 5 and the remaining applications were rejected and money refunded to the applicants.

How many shares did shareholder Aarti apply for, if the company had allotted 80 shares to her?

(a) 66 shares
(b) 96 shares
(c) 90 shares
(d) 120 shares

Ans – (b)

Maximum number of members is a parivate company is:

a) 7
b) 200
c) 20
d) No limit

Ans – b)

Apple Orchards Ltd. issued 2,00,000 Equity Shares of ₹ 10 each at par payable ₹ 4 on application, ₹ 3 on allotment and balance as first and final call. It received ₹ 6,80,000 as Application Money.

The amount that it should receive on Allotment will be

(a) ₹ 6,00,000
(b) ₹ 5,10,000
(c) ₹ 5,55,000
(d) Nil

Ans – (d)

Capital of a company is divided in units which is called:

a) Debenture
b) Share
c) Stock
d) Bond

Ans – b)

Sunrise Ltd. purchased machinery of ₹ 11,50,000 from Indian Traders, payment was made as follows: ₹ 1,00,000 by cheque and balance by issue of equity shares of nominal (face) value of ₹ 100 each fully paid at an issue price of ₹ 105 each. Amount of securities premium will be

(a) ₹ 60,000
(b) ₹ 70,000
(c) ₹ 50,000
(d) ₹ 40,000

Ans – (c)

The following amounts were payable on the issue of shares by a company: ₹ 3 on application, ₹2 on the first call, and ₹2 on the final call. S holding 500 shares paid only application and allotment money whereas Y holding 400 shares did not pay a final call. Amount of calls in arrear will be:

a) ₹3,800
b) ₹2,800
c) ₹1,800
d) ₹6,200

Ans – b)

If 500 shares of ₹ 10 each issued at a premium of ₹ 2 on which the total amount of issue price has been called and ₹ 8 (including premium) paid are forfeited, Share Capital Account will be debited by

(a) ₹ 6,000
(b) ₹ 5,000
(c) ₹ 4,000
(d) ₹ 3,000

Ans – (b)

The subscribed capital of a company is ₹80,00,000 and the nominal value of the share is ₹100 each. There were no calls in arrear till the final call was made. The final call made was paid on 77,500 shares only. The balance in the calls in arrear amounted to ₹62,500. Calculate the final call on share.
a) ₹7
b) ₹20
c) ₹22
d) ₹25

Ans – d)

If discount on reissue of forfeited shares is less than the amount forfeited, the surplus is transferred to

(a) Capital Reserve
(b) Reserve Capital
(c) Securities Premium
(d) Statement of Profit & Loss

Ans – (a)

A shareholder holding 600 shares paid the amount of call @ ₹5 per share on 1st November 2018 whereas the call was due on 1st March 2019. Interest on calls in advance as per Table F will be:

a) ₹45
b) ₹60
c) ₹50
d) ₹120

Ans – d)

Calls-in-Arrears Account is shown as

(a) Current Assets
(b) deduction from Shares Subscribed but not Fully Paid-up
(c) deduction from Shares Subscribed and Fully Paid-up
(d) Reserves and Surplus

Ans – (b)

Krishan Ltd. has Issued 20,00,000 Equity Shares of ₹ 10 each. Till Date ₹ 8 per share have been called up and the entire amount received except calls of ₹ 4 per share on 800 shares and ₹ 3 per share from another holder who held 500 shares. What will be amount appearing as ‘Subscribed but not fully paid Capital’ in the balance sheet of the company?

(a) ₹ 5,700
(b) ₹ 1,95,99,000
(c) ₹ 1,59,95,300
(d) ₹ 1,99,95,300

Ans – (c)

If a shareholder does not pay the due amount on allotment, for the amount due, there will be a

(a) Credit balance in Shares Allotment Account
(b) Debit balance in Calls-in-Arrears Account
(c) Credit balance in Calls-in-Arrears Account
(d) Debit balance in the Shares Allotment Account

Ans – (b)

Authoried capital of a company is divided into 5,00,000 shares and ₹10 each. It issued 3,00,000 shares. Public applied for 3,60,000 shares. Amount of issued capital will be:

a) ₹30,00,000
b) ₹36,00,000
c) ₹50,00,000
d) ₹6,00,000

Ans – a)

The issue of minimum subscription does not arise in case of

(a) Oversubscription
(b) Undersubscription
(c) Shares fully subscribed
(d) Both (a) and (c)

Ans – (d)

For shares issued to promoters for their services, the account debited is

(a) Goodwill Account
(b) Incorporation Cost Account
(c) Either (a) or (b)
(d) Promotors Account

Ans – (c)

Interest charged on Calls-in-Arrears as per Table F is

(a) 8% p.a.
(b) 10% p.a.
(c) 12% p.a.
(d) 6% p.a.

Ans – (b)

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 a pro-rata basis. How many shares on the applicant for 3,000 shares will be allotted?

a) 2,500 shares
b) 3,600 shares
c) 4,500 shares
d) 2,000 shares

Ans – a)

E Ltd had allotted 10,000 shares to the applications of 14,0000 shares on a pro-rata basis. The amount payable on the application was ₹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, ₹120
b) 340 shares, ₹160
c) 320 shares, ₹200
d) 300 shares, ₹240

Ans – d)

Shareholders receive from the company:

a) Interest
b) Commission
c) Profit
d) Dividend

Ans – d)

Equity shares can not be issued for the purpose of :

a) Cash receipts
b) Purchsae of assets
c) Redemption of debentures
d) Distribution of dividend

Ans – d)

A company may issue __

a) Equity Shares
b) Preference Shares
c) Equity and Preference Both Shares
d) None of the above

Ans – c)

A company can not issue:

a) Redeemable Equity Shares
b) Redeemable Preference Shares
c) Redeemable Debentures
d) Fully Convertible Debentures

Ans – a)

To whom dividend is given at a fixed rate in a company?

a) To equity shareholdres
b) To preference shareholders
c) To debentureholders
d) To Promoters

Ans – b)

Preference shareholders have

a) Preferential right as to dividend only
b) Preferential right in the Management
c) Preferenctial right as to repayment of capital at the time of liquidation of the company
d) Preferential right as to dividend and repayment of capital at the time of
liquidation of the company

Ans – d)

The shares on which there is a no any pre-fixed rate of dividend is decided, but the
rate of dividend is fluctuating every year according to the availability of profits,
such share are called:

a) Equity share
b) Non-Cumulative preference share
c) Non-Convertible Preference Share
d) Non-Guarantedd preference share

Ans – a)

Preference shares, in case the holders of these have a right to convert their preference shares
into equity shares at their option according to the terms of issue, such shares are
called:

a) Cumulative Preference Share
b) Non-Cumulative Preference Shre
c) Convertible Preference Share
d) Non-Convertible Preference Share

Ans – c)

A preference share which does not carry the right of sharing in surplus profits is called

a) Non-Cumulative Preference Share
b) Non-Participating Preference Share
c) Irredeemable Preference Share
d) Non-convertible Preference Share

Ans – b)

Which shareholders have a right to receive the arrears of dividend from future profits:

a) Redeemable Preference Shares
b) Paticipating Preference Shares
c) Cumulative Preference Shares
d) Non-Cumualative Preference Shares

Ans – c)

If applicants for 80,000 shares were allotted 60,000 shares on a pro-rata basis, the shareholder who was allotted 1,200 shares must have applied for:

a) 900 shares
b) 3,600 shares
c) 1,600 shares
d) 4,800 shares

Ans – c)

A company offered 50,000 shares of ₹10 each at par payable as to ₹3 on applications, ₹5 on the allotment, and the balance of final call. Applications were received for 60,000 shares and the allotment was made pro-rata. The excess application money was to be adjusted on allotment and call. How much amount will be transferred from share application A/c to share allotment A/c?

a) ₹1,80,000
b) ₹30,000
c) ₹1,50,000
d) ₹50,000

Ans – b)

A company issued 4,000 equity shares of ₹10 each at par payable as under: On Application ₹3, on allotment ₹2, on first call ₹4 and on final call ₹1 per share. Applications were received for 13,000 shares. Applications for 3,000 shares were rejected and pro-rata allotment was made to the applicants for 10,000 shares. How much amount will be received in cash on the first call? Excess application money is adjusted towards due on allotment and calls.

a) ₹6,000
b) Nil
c) ₹16,000
d) ₹10,000

Ans – a)

Which shareholders are returned their capital after some specified time:

a) Redeemable Preference Shares
b) Irredeemable Preference Shares
c) Cumulative Preference Shares
d) Paticipating Preference Shares

Ans – a)

The following statements apply to equity/preference shareholders. Which one of them
applies only to preference shareholders?

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.

d)

Which Table of Schedule I of the Companies Act, 2013, mentions the rate at which a company can charge interest on Calls-in-Arrears?

(a) Table A
(b) Table F
(c) Table G
(d) Table D

Ans – (b)

Rate of interest paid on calls-in-Advance as per Table F is

(a) 8% p.a.
(b) 10% p.a.
(c) 12% p.a.
(d) None of these

Ans – (c)

Unless otherwise stated, a preference share is always deemed to be:

a) Cumulative, participating and non convertible
b) Non-cumulative, non-participating and non-converitble
c) Cumulative, non-participating and non-convertible
d) Non-cumulative, participating and non-convertible

Ans – c)

Nominal Share capital is ______ ,

a) that part of authorised capital which is issued by the company
b) the amount of capital which is actually applied by the prospective shareholders
c) the amount of capital which is actually paid by the shareholders
d) the maximum amount of share capital which a company is authorised to issue.

Ans – d)

Subscribed capital is:

a) That part of authorised capital which is issued to the public for subscription
b) That part of issed capital which has been actually subscribed by the public
c) That part of subcribed capital which has been called up on the shares.
d) That part of subscribed capital which has not yet been called up on the shares.

Ans – b)

Pro-rata allotment is made in case of

(a) Full subscription
(b) Oversubscription
(c) Undersubscription
(d) Minimum Subscription

Ans – (b)

A forfeited share

(a) cannot be reissued at discount
(b) can be reissued at a maximum discount of 10%
(c) cannot be reissued for an amount less than the amount not received
(d) can be reissued at the discretion of the company

Ans – (c)

The portion of the capital which can be called up only on the winding up of the company
is called___________

a) Authorised Capital
b) Called up Capital
c) Uncalled Capital
d) Reserve Capital

Ans – d)

Capital included in the Total of Balance Sheet of a company is called:

a) Issued Capital
b) Subscribed Capital
c) called up capital
d) Authorised Capital

Ans – b)

_ is transferred to capital reserve.

a) Profit from sale of fixed assets
b) Premium on issue of shares
c) Profit on foreiture of shares
d) All of the above

Ans – d)

Reserve Capital is also known by:

a) Capital Reserve
b) Called up Capital
c) Subscribed Capital
d) None of the above

Ans – d)

Petromax Ltd. had invited applications for 80,000, 8% Preference Shares of ₹ 100 each. Applications were received for 1,20,000 shares and allotment was made on pro rata basis to all the applicants. Virat was allotted 1,600 shares, the number of shares he applied were

(a) 3,200 shares
(b) 2,400 shares
(c) 3,000 shares
(d) 1,600 shares

Ans – (b)

Reserve capital is:

a) Subscribed capital
b) Capital Reserve
c) Uncalled Capital
d) Part of the uncalled capital which may be called only at the time of liquidation
of the company

Ans – d)

Reserve Capital is a part of :

(a) Paid-up Capital
(b) Forfeited Share Capital
(c) Assets
(d) Capital to be called up only on liquidation of company

Ans – (d)

A company issued 4,000 equity shares of ₹10 each at par payable as under: On application ₹3; on allotment ₹2; on first call ₹4 and on final call ₹1 per share. Applications were received for 10,000 shares Allotment was made pro-rata. How much amount will be received in cash on the allotment?

a) ₹8,000
b) ₹12,000
c) ₹Nil
d) None

Ans – c)

A company issued 5,000 equity shares of ₹100 each at par payable as to:
₹40 on the application; ₹50 on the allotment and ₹10 on call. Applications were received for 8,000 shares. The allotment was made on pro-rata. How much amount will be received in cash on
allotment?

a) ₹2,50,000
b) ₹1,20,000
c) ₹1,30,000
d) ₹50,000

Ans – c)

If fully paid shares of ₹ 8,00,000 ar issued for purchase of business with net assets of ₹ 6,00,000, then the balance of ₹ 2,00,000 will be

(a) Debited to Profit & Loss Account
(b) Debited to Goodwill Account
(c) Credited to Capital Reserve Account
(d) Credited to Securities Premium Account

Ans – (b)

If fully paid shares of ₹ 10,00,000 are issued for purchase of business having net assets of ₹ 12,00,000, the balance of ₹ 2,00,000 will be

(a) Credited to Goodwill Account
(b) Debited to Vendor’s Account
(c) Credited to Capital Reserve Account
(d) Debited to Asset Account

Ans – (c)

Blue Berry Ltd. had issued 50,000 Equity Shares of ₹ 20 each and had called-up ₹ 16 but received ₹ 10 per share. Equity Share Capital Account will be credited by

(a) ₹ 10,00,000
(b) ₹ 8,00,000
(c) ₹ 3,00,000
(d) ₹ 5,00,000

Ans – (b)

Gold Leaf Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. the amount payable on application was ₹ 2 per share. Mohan had applied for 420 shares. The number of shares allotted and the amount carried forward to be adjusted against allotment money due from Mohan are

(a) 60 shares, ₹ 120
(b) 320 shares, ₹ 200
(c) 340 shares, ₹ 100
(d) 300 shares, ₹ 240

Ans – (d)

Which of the following statement is/are true?

(i) Authorized Capital < Issued Capital
(ii) Authorized Capital Issued Capital
(iii) Subscribed Capital Issued Capital
(iv) Subscribed Capital Issued Capital

Options

(a) (i) only
(b) (i) and (iv) Both
(c) (ii) and (iii) Both
(d) (ii) only

Ans – (c)

Super Seal Ltd. issued 1,00,000 equity shares of ₹ 10 each at a premium of ₹ 2 per share. Harleen, who was allotted 2,000 shares did not pay first and final call of ₹ 5 per share. on forfeiture of Harleen’s shares, Securities Premium Account will be debited by

(a) ₹ 5,000
(b) ₹ 10,000
(c) ₹ 15,000
(d) Nil

Ans – (d)

4,000 Equity Shares of ₹ 10 each were issued at 8% premium to the promoters of a company for their services. Which account will be debited?

(a) Share Capital Account
(b) Goodwill Account/Incorporation Cost Account
(c) Securities Premium Account
(d) Cash Account

Ans – (b)

Newfound Ltd. took over business of Old Land Ltd. and paid for it by issue of 30,000, Equity Shares of ₹ 100 each at a par along with 6% Preference Shares of ₹ 1,00,00,000 at a premium of 5% and a cheque of ₹ 8,00,000. What was the total agreed purchase consideration payable to Old Land Ltd.

(a) ₹ 1,05,00,000
(b) ₹ 1,43,00,000
(c) ₹ 1,40,00,000
(d) ₹ 1,35,00,000

Ans – (b)

In which of the following situation Companies Act 2013 allows for issue of shares at discount?

(a) Issued to Vendors
(b) Issued to public
(c) Issued as sweat equity
(d) None of the above

Ans – (c)

A company purchased a building for ₹3,60,000 and issued as payment equity shares at 20% premium. Journal Entry will be:

a) Building A/c Dr. 4,00,000
To Share Capital A/c 3,20,000
To Securities Premium Reserve A/c 80,000
b) Share Capital A/c Dr. 4,00,000
To Building A/c 3,60,000
To Securities Premium Reserve A/c 40,000
c) Building A/c Dr. 3,60,000
To Share Capital A/c 3,00,000
To Securities Premium Reserve A/c 60,000
d) Building A/c Dr. 3,60,000
To Share Capital A/c 60,000
To Securities Premium Reserve A/c 3,00,000

Ans – c)

Net Assets minus Capital Reserve is:

(a) Purchase consideration
(b) Goodwill
(c) Total Assets
(d) Liquid Assets

Ans – (a)

As per the Companies Act, 2013, company can not issue

(a) Bonus Shares
(b) Irredeemable Preference Shares
(c) Preference Shares
(d) Cumulative Preference Shares

Ans – (b)

Those preference shares which do not enjoy the right to share additional profit come under the category of

(a) Irredeemable Preference Shares
(b) Participating Preference Shares
(c) Non-Cumulative Preference Shares
(d) Non-Participating Preference Shares

Ans – (d)

Lemon Tree Ltd. issued 40,000 Equity Shares of ₹ 10 each at par payable ₹ 3 on Application, ₹ 4 on Allotment and Balance on First and Final Call. Applications were received for 1,10,000 shares. Applications for 20,000 shares were refused allotment and pro rata allotment was made to the remaining applicants. Amount received and refunded on allotment is

(a) ₹ 1,00,000 and Nil
(b) ₹ 10,000 and ₹ 60,000
(c) Nil and ₹ 1,00,000
(d) Nil and ₹ 10,000

Ans – (b)

Metacaf Ltd. issued 50,000 shares of ₹ 100 each payable ₹ 20 on application (on 1st May, 2023); ₹ 30 on allotment (on 1st January, 2024); ₹ 20 on first call (on 1st July, 2024) and the balance on final call (on 1st February, 2025). Shankar, a Shareholder holding 5,000 shares did not pay the first call on the due date. The second call was made and Shankar paid the first call amount along with the second call. Total amount received on 1st February, 2025 was

(a) ₹ 15,00,000
(b) ₹ 16,00,000
(c) ₹ 10,00,000
(d) ₹ 11,00,000

Ans – (b)

According to Sec 50 of the Companies Act 2013, the amount of Calls in Advance can be accepted by the Company only when it is authorised by:

(a) Board of Directors
(b) Equity Shareholders
(c) Articles of Association
(d) Memorandum of Association

Ans – (c)

Bamboo Tree Ltd. issued 50,000 Equity shares of ₹ 10 each at a premium of ₹ 2 per share for subscription payable as Application Money ₹ 5 (including premium) and balance on allotment. Applications were received for 3,00,000 Equity Shares. Applications for 2,225,000 shares were refused allotment and pro rata allotment was made to the remaining applicants.

The amount due, if any as Allotment Money, as duly received. The amount that the company will transfer to Securities Premium and received as Allotment Money will be

(a) ₹ 6,00,000, ₹ 2,75,000
(b) ₹ 1,00,000, ₹ 4,75,000
(c) ₹ 1,00,000, ₹ 2,25,000
(d) ₹ 1,00,000, ₹ 3,75,000

Ans – (c)

Which of the following statements does not relate to ‘Reserve Capital'”

a) It is part of uncalled capital of a company
b) It can not be uesd during the lifetime of a company
c) It can be used for writing off capital losses
d) It is part of subscribed capital

Ans – c)

The Interest on Calls-in-Arrears Account is closed by

(a) Crediting it to Statement of Profit & Loss
(b) Crediting it to Profit & Loss Appropriation Account
(c) Debiting it to Profit & Loss Appropriation Account
(d) Debiting is to Statement of Profit & Loss

Ans – (a)

In the Balance Sheet of a company, under the heading share capital, at the last is
shown:

a) Authorised Share capital
b) Subscribed share capital
c) Issued share capital
d) Reserve Share capital

Ans – b)

Apple Tree Ltd. issued 50,000 Equity Shares of ₹ 10 each at par for subscription payable ₹ 3 on Application, ₹ 4 on Allotment and ₹ 3 as First and Final Call.

It received applications for 1,45,000 Equity Shares. Applicants for 20,000 Equity Shares were refused allotment and remaining applicants were allotted shares on pro rata basis. The amount that the company credits to Calls-in-Advance Account will be

(a) ₹ 2,25,000
(b) ₹ 25,000
(c) ₹ 1,75,000
(d) Nil

Ans – (b)

Which of the following is not shown under the heading ‘share capital; in a Balance Sheet.

a) Subscribed capital
b) Issued capital
c) Reserve Capital
d) Authorised Capital

Ans – c)

Authorised capital of a Company is divided into 5,00,000 shares of ₹ 10 each. It issued 3,00,000 shares. Public applied for 3,60,000 shares. Amount of issued capital will be:

(a) ₹ 30,00,000
(b) ₹ 36,00,000
(c) ₹ 50,00,000
(d) ₹ 6,00,000

Ans – (a)

Bharat Earth Ltd. issued 40,000 equity shares of ₹ 20 each payable as ₹ 5 on application; ₹ 7 on allotment and ₹ 8 on first and final call. Company received the due amount but Akhil holding 250 shares did not pay the allotment money and call money and Shammi holding 150 shares did not pay the amount due on call. Total amount of Calls-in-Arrears is

(a) ₹ 1,750
(b) ₹ 3,200
(c) ₹ 6,000
(d) ₹ 4,950

Ans – (d)

Anish Ltd. issued a prospectus inviting applications for 2,000 shares. Applications were received for 3,000 shares and pro-rata allotment was made to the applicants of 2,400 shares. If Dhruv has been allotted 40 shares, how may shares he must have applied for?

(a) 40
(b) 44
(c) 48
(d) 52

Ans – (c)

Jeevan Ltd. forfeited 50 shares of ₹ 100 each on which allotment money of ₹ 30 per share (including premium) of ₹ 10 per share) and first call of ₹ 30 per share was not received. The second and final call of ₹ 20 per share was not yet made. The amount credited to ‘Share Forfeiture Account’ on forfeiture of these shares will be:

(a) ₹ 2,500
(b) ₹ 2,000
(c) ₹ 5,000
(d) ₹ 1,500

Ans – (d)

Pawan Hans Ltd. forfeited 7,000 equity shares of ₹ 100 each issued at a premium of 10% for non-payment of first and final call of ₹ 40 per share. The maximum amount of discount at which these shares can be reissued will be

(a) ₹ 2,80,000
(b) ₹ 4,20,000
(c) ₹ 4,90,000
(d) ₹ 3,50,000

Ans – (b)

Reserve capital is a part of:

a) Paid up capital
b) Foreited share capital
c) Assets
d) Capital to be called up only on liquidation of company

Ans – d)

Mohit had applied for 900 shares, and was allotted in the ratio 3 : 2. He had paid application money of ₹ 3 per share and couldn’t pay allotment money of ₹ 5 per share. First and Final call of ₹ 2 per share was not yet made by the company. His shares were forfeited. The following entry will be passed

Share Capital A/c Dr.
To Share Forfeited A/c
To Share Allotment A/c

Here X, Y and Z are:

(a) ₹ 6,000; ₹ 2,700; ₹ 3,300
(b) ₹ 4,800; ₹ 2,700; ₹ 2,100
(c) ₹ 4,800; ₹ 1,800; ₹ 3,000
(d) ₹ 6,000; ₹ 1,800; ₹ 4,200

Ans – (b)

Which of the following statements is true?

a) Authorised capital = Issued capital
b) Authorised capital > Issued capital
c) Paid up capital > Issued capital
d) None of the above

Ans – b)

Authorised capital of a company is mentioned in:

a) Memorendum of Association
b) Articles of Association
c) Prospectus
d) Statement in lieu of Prospectus

Ans – a)

A company forfeits 1,000 shares of ₹ 10 each. It had received ₹ 6,000 on these shares. What is the maximum discount that can be allowed on reissue of 400 shares?

(a) ₹ 4,000
(b) ₹ 400
(c) ₹ 1,600
(d) ₹ 2,400

Ans – (d)

In case of Private placement of shares, the lock in period is:

a) 1 year
b) 2 year
c) 3 year
d) None of the above

Ans – c)

X Ltd. forfeited 500 shares of ₹ 10 each fully called up for non-payment of final call of ₹ 3 per share 300 of these shares were reissued at ₹ 9 per share, fully paid up. What is the amount to be transferred to Capital Reserve Account?

(a) ₹ 3,500
(b) ₹ 2,100
(c) ₹ 3,200
(d) ₹ 1,800

Ans – (d)

Y Ltd. forfeited 400 shares of ₹ 10 each, ₹ 7 called up, for non-payment of first call of ₹ 2 per share. Out of these, 300 shares were reissued for ₹ 6 per share as ₹ 7 paid up. What is the amount to be transferred to Capital Reserve Account?

(a) ₹ 1,700
(b) ₹ 1,200
(c) ₹ 2,100
(d) ₹ 300

Ans – (b)

Palm Tree Ltd. had forfeited 35,000 Equity Shares of ₹ 10 each that were issued at a premium of ₹ 3 per share, for non-payment of First and Final Call of ₹ 3 per share. The minimum reissue price of these shares can be

(a) ₹ 3,50,000
(b) ₹ 4,20,000
(c) ₹ 1,05,000
(d) ₹ 3,15,000

Ans – (c)

Ashoka Tree Ltd. forfeited 1,000 shares of ₹ 10 each on which the shareholder had paid only the application money of ₹ 3 per share. Out of these, 400 Equity Shares reissued as fully paid for ₹ 9 per share. The gain on reissue is

(a) ₹ 3,000
(b) ₹ 1,200
(c) ₹ 800
(d) None of these

Ans – (c)

400 shares of ₹ 10, on which ₹ 8 has been called and ₹ 5 has been paid, are forfeited. Out of these, 300 shares are re-issued for ₹ 9 as fully paid. What is the amount to be transferred to capital Reserve Account?

(a) ₹ 1,200
(b) ₹ 1,600
(c) ₹ 2,000
(d) ₹ 1,700

Ans – (a)

In case of private palcement of shares and company does not invite the general public for subscription of shares in that case, company instead of issuing prospectus:

a) Prepares the statement in lieu of prospectus
b) Prepares the report
c) Prepares the Budget
d) Preapres the Asset side of Balance Sheet

Ans – a)

Jamun Tree Ltd. had issued 10,000 Equity Shares of ₹ 10 each at a premium of ₹ 2. It had called the total issue price of the share. Few shareholders had not paid the First and Final Call of ₹ 3 and their shares were forfeited. On forfeiture, Share Capital Account will be debited by

(a) ₹ 10 per share
(b) ₹ 12 per share
(c) ₹ 7 per share
(d) ₹ 3 per share

Ans – (a)

Wellness Ltd. forfeited 100 shares of ₹ 100 each issued at 10% premium on which allotment money of ₹ 30 per share (including premium) and first call of ₹ 30 per share were not received and the second and final call of ₹ 20 per share was not yet called. 40 of these shares were re-issued as ₹ 80 paid-up for ₹ 70 per share.

On forfeiture, the Share Capital will be

(a) Debited with ₹ 3,200
(b) Credited with ₹ 3,200
(c) Debited with ₹ 8,000
(d) Credited with ₹ 2,800

Ans – (c)

C Ltd. forfeited 5,000 shares of ₹ 10 each fully called up, on which the holder has paid only the application & allotment money of ₹ 7 per share. Out of these, 2,000 shares were re-issued in such a way that ₹ 8,000 were transferred to capital reserve, Shares were reissued for __.

(a) ₹ 4 per share
(b) ₹ 10 per share
(c) ₹ 3 per share
(d) ₹ 7 per share

Ans – (d)

In case of private placement of shares, to raise the amount of capital a company:

a) invites the public thorugh prospectus
b) does not invite the public
c) invites the public through advertisement
d) invites the public thorugh memorendum of association

Ans – b)

As per Section 52 of Companies Act 2013, Securities Premium can not be utilised for:

(a) Issue of fully paid bonus shares
(b) Writing off capital losses
(c) Writing off discount on issue of securities
(d) Writing off preliminary expenses

Ans – (b)

Reserve Capital is not a part of

(a) Authorised Capital
(b) Subscribed Capital
(c) Unsubscribed Capital
(d) Issued Capital

Ans – (c)

Asha Ltd. forfeited 70,000 equity shares of ₹ 10 each, ₹ 10 called-up, for non-payment of final call of ₹ 3 per share. Half of the forfeited shares were reissued at ₹ 20 per share as Fully Paid-up. On reissue of forfeited shares, amount that will be transferred to the Capital Reserve Account is

(a) ₹ 4,90,000
(b) ₹ 6,30,000
(c) ₹ 3,15,000
(d) ₹ 2,45,000

Ans – (d)

Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are called:

a) Right Equity Shares
b) Private Equity Shares
c) Sweat Equity Shares
d) Bonus Equity Shares

Ans – c)

Yuvraj Ltd. forfeited 1,000 shares of ₹ 10 each issued at 20% premium (₹ 8 Called up) on which application of ₹ 2 each and allotment of ₹ 5 each (including premium) has been received. Out of these, __ shares were reissued for ₹ 6 per share (₹ 8 paid up) and ₹ 2,100 was transferred to Capital Reserve. How many shares were re-issued?

(a) 420
(b) 262
(c) 700
(d) 300

Ans – (c)

A company purchased a Building for ₹12,00,000 out of which ₹2,00,000 were paid in cash. The Balance amount was paid by the issue of equity shares of ₹10 each at a 25% premium. How many shares will be issued by the company?

a) 1,00,000 Shares
b) 80,000 Shares
c) 1,20,000 Shares
d) 96,000 Shares

Ans – b)

Gati Ltd. forfeited 1,200 shares of ₹ 100 each, issued at a premium of 30% to Dinesh on which he had paid application money of ₹ 50 per share and allotment money of ₹ 50 per share (including premium), for non-payment of first call of ₹ 10 per share. Out of these, certain shares were re-issued as fully paid for ₹ 90 per share and ₹ 30,000 were transferred to Capital Reserve. How many shares were reissued?

(a) 333
(b) 300
(c) 428
(d) 500

Ans – (d)

If Shares of ₹4,00,000 are issued for purchase of assets of ₹5,00,000, ₹1,00,000 will be treated as___________

a) Discount
b) Premium
c) Profit
d) Loss

Ans – b)

Sal Tree Ltd. had forfeited 5,000 Equity Shares of ₹ 10 each that were issued at a premium of ₹ 5 per share for non-payment of First and Final Call of ₹ 4 per share. The forfeited shares were reissued for ₹ 8 per share as fully paid-up. The amount that will be transferred to Capital Reserve will be

(a) ₹ 10,000
(b) ₹ 20,000
(c) ₹ 30,000
(d) Nil

Ans – (b)

Shakti Ltd. forfeited 10,000 shares of ₹ 10 each for non-payment of final call money of ₹ 3 per share. Out of forfeited shares, 7,000 shares were re-issued as fully paid-up. What is the minimum amount that company must collect at the time of reissue of the remaining 3,000 shares?

(a) ₹ 21,000
(b) ₹ 9,000
(c) ₹ 16,000
(d) ₹ 30,000

Ans – (a)

Ratnakar Ltd. offered 20,000 shares of ₹ 100 each at a premium of 10% payable as follows:

On Application ₹ 20 (1st January), on Allotment ₹ 40 (including premium) (1st April), on First Call ₹ 30 (1st June), on second and Final Call ₹ 20 (1st August).

Applications were received for 18,000 shares and directors made allotment. One Shareholder to whom 400 shares were allotted paid the entire balance on his share holdings with allotment money and another shareholder did not pay allotment and first call money on his 600 shares but which he paid with final call.

(i) Interest received on Calls-in-Arrears will be

(a) ₹ 1,200
(b) ₹ 1,100
(c) ₹ 1,000
(d) ₹ 900

Ans – (b)

(ii) Interest paid on Calls-in-Advance will be

(a) ₹ 550
(b) ₹ 560
(c) ₹ 580
(d) ₹ 600

Ans – (b)

A building was purchased for ₹9,00,000 and payment was made in ₹100 shares at 20% premium. Securities Premium Reserve A/c will be____________

a) Debited by ₹1,50,000
b) Credited by ₹1,50,000
c) Debited by ₹1,80,000
d) Credited by ₹1,80,000

Ans – b)

Elite Ltd. invited applications for issuing 2,00,000 shares of ₹ 50 each at a premium of ₹ 15 per share. The amount was payable as follows:

On Application	₹ 20 (including premium ₹ 10)
On Allotment	₹ 30 (including premium ₹ 5)
On First and Final Call	₹ 15

Applications were received for 3,00,000 shares and pro-rata allotment was made to all the applicants. All calls were made and were duly received except allotment and first and final call from Rashmi who applied for 600 shares. Her shares were forfeited.

Amount Credited to Share Forfeiture Account will be:

(a) ₹ 12,000
(b) ₹ 8,000
(c) ₹ 6000
(d) ₹ 10,000

Ans – (b)

Aspen Tree Ltd. had forfeited 3,000 Equity Shares of ₹ 10 each that were issued at par from non-payment of Allotment Money of ₹ 3 per share and First and Final Call of ₹ 3 per share. 1,500 Equity Shares out of the forfeited shares were reissued for ₹ 8 per share as ₹ 9 paid-up. The amount that will be transferred to Capital Reserve and Securities Premium will be

(a) ₹ 5,500 and Nil
(b) ₹ 4,500 and Nil
(c) ₹ 2,500 and Nil
(d) Nil and Nil

Ans – (b)

Jackfruit Tree Ltd. had forfeited 4,000 Equity Shares of ₹ 10 each that were issued at par for non-payment of Allotment Money of ₹ 3 per share and First and Final Call of ₹ 3 per share. 2,000 Equity shares out of the forfeited shares were reissued for ₹ 8 per share as ₹ 7 paid-up. The amount that will be transferred to Capital Reserve and Securities Premium will be

(a) ₹ 24,000 and ₹ 2,000
(b) ₹ 8,000 and ₹ 2,000
(c) ₹ 6,000 and ₹ 2,000
(d) Nil and Nil

Ans – (b)

A company purchased machinery for ₹1,80,000 and in consideration issued shares at a 20% premium. What will be the face value of shares issued:

a) ₹1,50,000
b) ₹1,44,000
c) ₹1,80,000
d) ₹2,16,000

Ans – a)

On an equity share of ₹10 the company has called up ₹8 but ₹6 have been received by the company is forfeited, the capital account should be debited by:

a) ₹10
b) ₹8
c) ₹6
d) ₹2

Ans – b)

X Ltd. issued a prospectus inviting applications for 10,000 shares of ₹ 50 each at a premium of ₹ 20 per share, payable as follows:

On Application	₹ 10 (including ₹ 4 premium)
On Allotment	₹ 20 (including ₹ 5 premium)
On First Call	₹ 30 (including ₹ 6 premium)
On Second & Final Call	Balance Amount

A shareholder holding 1,000 shares failed to pay the first call and second & final call money and his shares were forfeited after the final call.

In the entry for forfeiture of shares, Share Capital Account will be debited with:

(a) ₹ 29,000
(b) ₹ 50,000
(c) ₹ 70,000
(d) ₹ 11,000

Ans – (b)

Papaya Tree Ltd. had forfeited 3,000 Equity Shares of ₹ 10 each that were issued at premium of ₹ 2 per share for non-payment of Allotment Money of ₹ 5 (including premium) per share and First and Final call of ₹ 3 per share. 1,500 Equity Shares out of the forfeited Shares were reissued for ₹ 8 per share as Fully Paid-up. The amount that will be transferred to Capital Reserve and debited to Securities Premium will be

(a) ₹ 3,000 and ₹ 3,000
(b) ₹ 3,000 and Nil
(c) ₹ 3,000 and ₹ 6,000
(d) Nil and Nil

Ans – (c)

A company can issue shares for consideration other than cash to

(i) Promotors
(ii) Underwriters of issue
(iii) Vendors of Machinery and other assets
(iv) Employees

Choose the correct option from the following:

(a) (i), (iii), (iv)
(b) (i), (ii), (iv)
(c) (i), (ii), (iii)
(d) (i), (ii), (iii), (iv)

Ans – (c)

A company may issue the shares:

a) By Private Placement of shares
b) By public subscription of shares
c) For consideration other than cash
d) By all of the above

Ans – d)

Which of the following items is not a part of subscribed capital?

(a) Equity Shares
(b) Preference Shares
(c) Forfeited Shares
(d) Bonus Shares

Ans – (c)

Public subscription of shares include:

a) To issue prospectus
b) To receive applications
c) To make Allotment
d) All of the above

Ans – d)

R Ltd. forfeited 600 shares of ₹ 100 each ₹ 70 called up on which Mahesh has paid application and allotment money of ₹ 50 per share. Of these, 400 shares were re-issued to Naresh as fully paid-up for ₹ 110 per share. What is the amount to be transferred to Capital Reserve?

(a) ₹ 30,000
(b) ₹ 36,000
(c) ₹ 24,000
(d) ₹ 20,000

Ans – (d)

X Ltd. forfeited 400 shares of ₹ 10 each issued at a premium of 40% to Kiran who had applied for 480 shares. After having paid ₹ 6 (including ₹ 2 premium) on application, she did not pay allotment and first and final call. The amount to be Credited to ‘Forfeited Shares Account’ will be:

(a) ₹ 2,080
(b) ₹ 2,880
(c) ₹ 1,920
(d) ₹ 1,600

Ans – (a)

Choose the correct option in respect of Securities Premium:

(a) Securities Premium Account is always debited on forfeiture of shares.
(b) Securities Premium Account is debited on forfeiture of shares by the amount not received on forfeited shares.
(c) Securities Premium Account is not debited on forfeiture of shares by the amount not received on forfeited shares.
(d) Securities Premium Account is credited on forfeiture of shares by the amount not received on forfeited shares.

Ans – (b)

Amount transferred to Capital Reserve Account on reissue of 600 Equity Shares out of 1,000 Equity Shares. Forfeited Shares Account was credited by ₹ 5,000 on forfeiture of shares and debited by ₹ 2,000 on reissue of forfeited equity shares, will be

(a) ₹ 1,000
(b) ₹ 2,000
(c) ₹ 3,000
(d) ₹ 5,000

Ans – (a)

Sun Ltd. issued 50,000 Equity Shares of ₹ 10 each. Amount payable on application is ₹ 3 per share, on allotment ₹ 4 per share and balance as first and final call. Applications were received for 1,20,000 equity shares. Shares were allotted to all the applicants on pro rata basis. Raman had applied for 3,600 Equity Shares. The number of shares allotted to Raman and excess application money adjusted towards allotment money was:

(a) 1,500 shares; ₹ 6,300
(b) 1,800 shares; ₹ 6,300
(c) 1,500 shares; ₹ 6,000
(d) 3,000 shares; ₹ 3,150

Ans – (a)

Sunflower Ltd. issued 60,000 Equity Shares of ₹ 10 each. Amount payable on application is ₹ 2 per share, on allotment ₹ 5 per share and balance as first and final call. Applications were received for 90,000 equity shares. Shares were allotted to all the applicants on pro-rata basis. Allotment money that will be received from shareholders will be

(a) ₹ 1,20,000
(b) ₹ 1,80,000
(c) ₹ 2,40,000
(d) ₹ Nil

Ans – (c)

Which of the following will define, when appropriatoins of a certain number of shares in made to an applicant in response to his application?

a) Share allotment
b) Share forfeiture
c) Share Trading
d) Share Purchase

Ans – a)

Ahir Ltd. forfeited 3,000 Equity Shares on which ₹ 10 were called-up and ₹ 4 per share was received. These shares were reissued to Kamal for ₹ 15,000, being ₹ 6 paid-up per share. Amount transferred to Capita Reserve Account is

(a) ₹ 900
(b) ₹ 9,000
(c) ₹ 9,900
(d) ₹ Nil

Ans – (b)

Akhil Ltd. had issued 50,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share. The issue was underwritten by Parul & Co. and were to be paid 2% commission. The issue was less subscribed by 5,000 Equity Shares. Parul & Co.

(a0 will not be paid commission
(b) will be paid commission @ 2% on ₹ 7,50,000
(c) will be paid commission @ 2% on ₹ 5,00,000
(d) will be paid commission @ 2% on ₹ 75,000

Ans – (b)

Issue of shares at a price lower than its face value is called:

a) Issue at a loss
b) Issue at a profit
c) Issue at a discount
d) Issue at a premium

Ans – c)

Rosebud Ltd issued 50,000 Equity Shares of ₹ 10 each. Amount payable on application is ₹ 3 per share, on allotment ₹ 4 per share and balance as first and final call. Applications were received for 1,20,000 equity shares. Shares were allotted to all the applicants on pro rata basis. Pawan had applied for 3,600 equity shares. First and Final Call was not yet made. Pawan did not pay the allotment money and his share were forfeited. Share Capital Account, on forfeiture of Pawan’s shares will be debited by

(a) ₹ 11,500
(b) ₹ 12,500
(c) ₹ 13,500
(d) ₹ 10,500

Ans – (d)

X Ltd. purchased the following assets from Y Ltd.:

	Book Value	Agreed Value
Plant and Machinery	10,00,000	20% less
Stock	2,50,000	60% more

Payment was made 20% by Cheque and the remaining amount by equity shares of ₹ 10 each, ₹ 6 paid.

Number of equity shares issued will be:

(a) ₹ 2,00,000
(b) ₹ 96,000
(c) ₹ 1,20,000
(d) ₹ 1,60,000

Ans – (d)

Suzlon Ltd. had issued 50,000 Equity Shares of ₹ 10 each at a premium of ₹ 5 per share. The issue was underwritten by Parul & Co. and were to be paid 2% commission to paid by issue of Equity Shares at par. The issue was fully subscribed. Parul & Co. will

(a) not be issued shares since the issue is subscribed
(b) be issued 1,500 Equity Shares
(c) be issued 1,000 Equity Shares
(d) be issued 150 Equity Shares

Ans – (b)

Gupta Ltd. forfeited 4,000 shares of ₹ 10 each for non-payment of Final Call of ₹ 3 per share. Out of these, 3,000 shares were re-issued as fully paid up in such a way that ₹ 9,000 were transferred to capital reserve. Shares were re-issued for __ .

(a) ₹ 4 per share
(b) ₹ 6 per share
(c) ₹ 10 per share
(d) ₹ 3 per share

Ans – (b)

According to SEBI Guidelines, Minimum Subscription has been fixed at_______of the issued amount.

a) 25%
b) 50%
c) 90%
d) 100%

Ans – c)

One of the conditions, in addition to others, for allotment of shares is:

a) Resolution in General Meeting
b) Receiving Minimum Subscription
c) Full Subscription by Public
d) Full Payment on Application

Ans – b)

Madhu Ltd. forfeited 800 shares of ₹ 10 each issued at 10% premium to Shyam (₹ 9 called up) on which he did not pay ₹ 3 of allotment (including premium) and first call of ₹ 2. Out of these, 600 shares were re-issued to Ram as fully paid up for ₹ 9 per share. What is the amount to be transferred to Capital Reserve?

(a) ₹ 2,400
(b) ₹ 1,800
(c) ₹ 3,000
(d) ₹ 3,600

Ans – (a)

X Ltd. forfeited 1,000 shares of ₹ 10 each, issued at 30% premium (to be paid at the time of allotment) for non-payment of first call of ₹ 2 per share. The second and final call of ₹ 3 has not yet been called. Out of these, 600 shares were re-issued as ₹ 7 paid up for ₹ 7 per share.

Amount transferred to Capital Reserve Account will be:

(a) ₹ 1,200
(b) ₹ 5,000
(c) ₹ 4,800
(d) ₹ 3,000

Ans – (d)

Persons who start a company are called____________

a) Shareholders
b) Directors
c) Promoters
d) Auditors

Ans – c)

Minimum subscription amount of 90% is related to which share capital:

a) Authorised Capital
b) Issued Capital
c) Paid up capital
d) Reserve Capital

Ans – b)

Ronaldo Ltd. forfeited 300 equity shares of ₹ 10 each, fully called up, on which ₹ 5 per share (including premium of ₹ 1 per share) was received. It later reissued these shares at a discount.

The maximum discount per share, which the company could have given on their reissue would be:

(a) ₹ 6 per share
(b) ₹ 5 per share
(c) ₹ 4 per share
(d) ₹ 3 per share

Ans – (c)

X Ltd. invited applications for issuing 2,00,000 shares of ₹ 100 each at a premium of ₹ 20 per share. The amount was payable as follows:

On Application	₹ 30
On Allotment	₹ 50
On First and Final Call	₹ 40

Applications were received for 3,00,000 shares and pro-rata allotment was made to all the applicants. All calls were made and were duly received except allotment and firs and final call from Tina who had applied for 2,400 shares. Her shares were forfeited.

Amount Credited to Share Forfeited Account will be:

(a) ₹ 72,000
(b) ₹ 48,000
(c) ₹ 40,000
(d) ₹ 16,000

Ans – (c)

Share Application Account is in the nature of:

a) Real Account
b) Personal Account
c) Nominal Account
d) None of the above

Ans – b)

As per SEBI guidellines, Application money should not be less than________

a) 10%
b) 15%
c) 25%
d) 50%

Ans – c)

Z Ltd. invited applications for issuing 40,000 equity shares of ₹ 100 each at a premium of ₹ 25 per share. The amount was payable as follows:

On Application	₹ 20 per share (including ₹ 4 premium)
On Allotment	₹ 30 per share (including ₹ 5 premium)
On First Call	₹ 40 per share (including ₹ 6 premium)
On Second and Final Call	Balance Amount

Gayatri, a shareholder holding 200 shares, did not pay the first and second and final call and her shares were forfeited after the second and final call.

Calls in Arrears Account will be credited by:

(a) ₹ 11,800
(b) ₹ 8,200
(c) ₹ 15,000
(d) ₹ 7,000

Ans – (c)

4000 Equity shares of ₹ 10 each were issued at 8% premium to the promoters of a company for their services. Which account will be debited?

a) Share Capital Account
b) Goodwill Account/Incorporation Cost Account
c) Securities Premium Reserve Account
d) Cash Account

Ans – b)

Surya Vanaspati issued prospectus inviting applications for 42,500 equity shares of ₹ 100 each payable as ₹ 10 on application, ₹ 20 on allotment, ₹ 30 on first call and balance on second and final call.

Applications were received for ₹ 40,000 shares. Suresh to whom 1,600 shares were allotted failed to pay final call money and these shares were forfeited. Of the forfeited shares, 600 shares were reissued to Mahesh, credited as fully paid for ₹ 95 per share.

Subscribed and Fully Paid Capital will be:

(a) ₹ 39,00,000
(b) ₹ 40,00,000
(c) ₹ 39,60,000
(d) ₹ 40,60,000

Ans – (a)

Excess value of net assets over purchase consideration at the time of purchase of business is:

a) Credited to the Capital Reserve
b) Debited to the Goodwill Account
c) Credited to the General Reserve Account
d) Credited to the Vendor’s Account

Ans – a)

Shiva Ltd. forfeited 4,000 shares of ₹ 10 each, ₹ 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non-payment of first call of ₹ 2 per share. Out of these, 3,000 shares were re-issued as ₹ 7 paid up for ₹ 5 per share.

Amount transferred to Capital Reserve Account will be:

(a) ₹ 15,000
(b) ₹ Nil
(c) ₹ 9,000
(d) ₹ 18,000

Ans – (c)

3,000 equity shares of ₹ 10 each were issued at ₹ 5 per share premium. Only ₹ 9 per share (including premium) has been paid on these shares. These shares were forfeited. Later on out of these, certain shares were reissued at a discount of ₹ 1 per share as fully paid and ₹ 4,800 were transferred to Capital Reserve. How many shares were re-issued?

(a) 960
(b) 600
(c) 1,200
(d) 1,600

Ans – (d)

B Ltd. forfeited 300 shares of ₹ 100 each, ₹ 70 called up, for non-payment of first call of ₹ 20 per share. Out of these, _ shares were reissued for ₹ 60 per share as ₹ 70 paid up and ₹ 8,000 were transferred to Capital Reserve. How many shares were re-issued?

(a) 1,000
(b) 200
(c) 400
(d) 160

Ans – (b)

If a share of ₹10 is issued at a premium of ₹3 on which the full amount has been called and ₹8 (including premium) paid is forfeited the capital account should be debited with:

a) ₹5
b) ₹8
c) ₹10
d) ₹13

Ans – c)

If a share of ₹10 is issued at a premium of ₹1 on which ₹9 (including premium) have been called and ₹7 including premium is paid is forfeited, the capital account should be debited by:

a) ₹10
b) ₹7
c) ₹8
d) ₹9

Ans – c)

Vishnu Ltd. forfeited 20 shares of ₹ 10 each, ₹ 8 called up, on which John had paid application and allotment money of ₹ 5 per share, of these, 15 shares were reissued to Parker as fully paid up for ₹ 6 per share. What is the balance in the share Forfeiture Account after the relevant amount has been transferred to Capital Reserve Account?

(a) ₹ 0
(b) ₹ 5
(c) ₹ 25
(d) ₹ 100

Ans – (c)

Z Ltd. forfeited 300 shares of ₹ 10 each issued at 20% premium (₹ 9 called up) on which ₹ 4 of allotment (including premium) and firs call of ₹ 2 has not been received. Out of these, 100 shares were re-issued as fully paid up for ₹ 9 per share. What is to amount to be transferred to Capital Reserve?

(a) ₹ 400
(b) ₹ 300
(c) ₹ 500
(d) ₹ 600

Ans – (a)

XY Limited issued 2,50,000 equity shares of ₹ 10 each at a premium of ₹ 1 each payable as ₹ 2.5 on application, ₹ 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

Ans – (c)

A Ltd. forfeited 2,000 shares of ₹ 10 each fully called up for non-payment of final call of ₹ 2 per share. 1,200 of these shares were reissued at ₹ 7 per share fully paid up. What is the amount to be transferred to Capital Reserve Account?

(a) ₹ 7,600
(b) ₹ 1,200
(c) ₹ 12,400
(d) ₹ 6,000

Ans – (d)

Z Ltd. forfeited 2,000 shares of ₹ 10 each, ₹ 7 called up, issued at a premium of 20% (to be paid at the time of allotment) for non-payment of allotment money of ₹ 4 per share (including premium) and first call of ₹ 2 per share. out of these, 1,500 shares were re-issued as ₹ 7 paid up for ₹ 6 per share. Amount transferred to Capital Reserve will be:

(a) Nil
(b) ₹ 3,000
(c) ₹ 1,500
(d) ₹ 4,500

Ans – (b)

600 shares of ₹10 each were forfeited for non-payment of ₹2 per share on the first call and ₹5 per share on the final call. Share forfeiture account will be credited with:

a) ₹1,200
b) ₹1,800
c) ₹3,000
d) ₹4,200

Ans – b)

Harish Ltd. forfeited 500 shares of ₹ 100 each issued at 40% premium (₹ 70 called up) on which application & allotment of ₹ 80 each (including premium) has been received. Out of these, ______ shares were reissued for ₹ 65 per share (₹ 70 paid up) and ₹ 7,000 were transferred to Capital Reserve. How many shares were re-issued?

(a) 93
(b) 175
(c) 500
(d) 200

Ans – (d)

Happy Garments Ltd. invited applications for issuing 1,00,000 shares of ₹ 10 each at a premium of ₹ 3 per share. The amount was payable as follows:

On Application	₹ 5 per share (including premium)
On Allotment	₹ 4
On First and Final Call	₹ 4

Applications were received for 1,50,000 shares. Applications for 10,000 shares were rejected and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except allotment and first and final call from Vishesh who was allotted 300 shares. His shares were forfeited.

Amount Credited to Share Forfeiture Account will be:

(a) ₹ 2,100
(b) ₹ 1,200
(c) ₹ 1,500
(d) ₹ 600

Ans – (b)

800 Shares of ₹10 each issued at 20% premium were forfeited for non-payment of allotment money of ₹5 (including premium) and first & final of ₹3 per share. Share forfeiture account will be credited with:

a) ₹1,600
b) ₹2,400
c) ₹3,200
d) ₹4,800

Ans – c)

800 Shares of ₹10 each issued at 30% premium (to be paid on allotment) were forfeited for non-payment of ₹2 per share on first call and ₹2 per share on final call. Share forfeiture account will be credited with:

a) ₹2,400
b) ₹4,800
c) ₹3,200
d) ₹7,200

Ans – b)

A company forfeited 300 shares of ₹10 each, ₹8 per share called up, on which X had paid application and allotment money of ₹6 per share. Share Forfeiture Account will be credited with:

a) ₹600
b) ₹1,800
c) ₹1,200
d) ₹2,400

Ans – b)

A company forfeited 1,000 shares of ₹ 10 each fully paid on which ₹ 7,000 has been paid. Out of these 800 shares were reissued upon payment of ₹ 7,600. Amount transferred to Capital Reserve will be:

(a) ₹ 6,600
(b) ₹ 9,000
(c) ₹ 5,200
(d) ₹ 7,600

Ans – (c)

R Ltd. forfeited 5,000 shares of ₹ 10 each issued at 10% premium to Shreya (₹ 9 called up) on which she did not pay ₹ 3 of allotment (including premium) and first call of ₹ 2. Out of these, 3,000 shares were re-issued as fully paid up for ₹ 8 per share.

Amount transferred to Capital Reserve will be:

(a) ₹ 9,000
(b) ₹ 6,000
(c) ₹ 3,000
(d) ₹ 12,000

Ans – (a)

On 300 Equity shares of ₹10 the company has called up ₹8 but ₹6 have been received by the company are forfeited, the forfeiture account should be credited by:

a) ₹2,400
b) ₹1,200
c) ₹1,800
d) ₹600

Ans – c)

Raja Ltd. forfeited 300 shares of ₹ 100 each, ₹ 75 called up, for non-payment of first call of ₹ 20 per share. All these shares were reissued for ₹ _ per share as ₹ 75 paid up. If amount transferred to Capital Reserve is ₹ 40 per share then What is the reissue price?

(a) ₹ 55 per share
(b) ₹ 45 per share
(c) ₹ 60 per share
(d) ₹ 40 per share

Ans (c)

If 400 shares of ₹10 are issued at a premium of ₹3 on which the full amount has been called and ₹8 (including premium) have been received are forfeited, the forfeiture account should be credited with:

a) ₹3,200
b) ₹2,000
c) ₹1,200
d) ₹2,800

Ans – b)

Yuvraj Sports Ltd. forfeited 5,000 Equity Shares of ₹ 10 each issued at a premium of ₹ 5 per share for non-payment of allotment money of ₹ 7 per share (including premium) ₹ 3 per share) and the first and final call of ₹ 5 per share (including premium ₹ 2). Out of these, 2,000 Equity Shares were subsequently re-issued at a premium of ₹ 5 per share.

Amount Credited to Capital Reserve will be:

(a) ₹ 16,000
(b) ₹ Nil
(c) ₹ 26,000
(d) ₹ 6,000

Ans – (d)

If 500 shares of ₹10 are issued at a premium of ₹1 on which ₹9 (including premium) have been called and ₹7 including premium have been paid are forfeited, the forfeiture account should be credited by:

a) ₹3,000
b) ₹3,500
c) ₹4,000
d) ₹4,500

Ans – a)

Pragya Ltd. forfeited 8,000 equity shares of ₹ 100 each issued at a premium of 10% for non-payment of first and final call of ₹ 30 per share. The maximum amount of discount at which these shares can be reissued will be:

(a) ₹ 80,000
(b) ₹ 3,20,000
(c) ₹ 5,60,000
(d) ₹ 2,40,000

Ans – (c)

Atul Ltd. invited applications for issuing 1,00,000 equity shares of ₹ 50 each at a premium of ₹ 10 per share. The amount was payable as follows:

On Application	₹ 15 per share (including ₹ 4 premium)
On Allotment	₹ 10 per share (including ₹ 2 premium)
On First Call	₹ 20 per share (including ₹ 3 premium)
On Second and Final Call	Balance Amount

Gopal, a shareholder holding 400 shares, did not pay the allotment and first call money and his share were forfeited after first call.

Share Forfeiture Account will be Credited by:

(a) ₹ 12,000
(b) ₹ 6,000
(c) ₹ 1,600
(d) ₹ 4,400

Ans – (d)

C Ltd. forfeited 1,000 shares of ₹ 100 each, issued at a premium of ₹ 5 per share (to be paid at the time of allotment) for non-payment of a first call of ₹ 20 per share. The second and final call of ₹ 20 has not yet been called. Out of these, 700 shares were re-issued as fully paid-up at a discount of ₹ 10 per share.

Amount transferred to Capital Reserve will be:

(a) ₹ 21,000
(b) ₹ 35,000
(c) ₹ 49,000
(d) ₹ 42,000

Ans – (b)

A company forfeited the following shares:

200 shares of ₹10 each; called up ₹9 per share, paid-up ₹7 per share, Journal Entry for forfeiture will be):

a) Share capital A/c Dr 2,000
To Share Forfeiture A/c 200
To Calls in Arrears A/c 1,800

b) Share Capital A/c Dr 2,000
To Share Forfeitrue A/c 1,800
To Calls in Arrears A/c 200

c) Share Capital A/c Dr 1,800
To Share Forfeiture A/c 1,400
To Calls in Arrears A/c 400

d) Share Capital A/c Dr 1,800
To Share Forfeiture A/c 400
To Calls in Arrears A/c 1,400

Ans – c)

X Ltd. issued a prospectus inviting applications for 1,10,000 equity shares. The company received applications for 1,00,000 shares. During the first year, ₹ 8 per share were called, Shyam holding 2,000 shares did not pay the first call of ₹ 2 per share. Shyam’s shares were forfeited after the first call and later on 1,500 of the forfeited shares were re-issued at ₹ 7 per share, ₹ 8 called up.

Subscribed but not fully paid Capital will be:

(a) ₹ 7,99,000
(b) ₹ 7,96,000
(c) ₹ 8,00,000
(d) ₹ 8,03,000

Ans – (b)

Raghu Ltd. forfeited, 3,000 shares of ₹ 10 each, issued at 30% premium for non-payment of allotment money of ₹ 5 per share (including premium) and first call of ₹ 2 per share. The second and final call of ₹ 2 has not yet been called. Out of these, 1,000 shares were re-issued as fully paid up for ₹ 12 per share.

Amount transferred to Capital Reserve will be:

(a) ₹ 7,000
(b) ₹ 3,000
(c) ₹ 6,000
(d) ₹ 4,000

Ans – (d)

If vendors are issued fully paid shares of ₹ 1,25,000 in consideration of net assets of ₹ 1,50,000, the balance of ₹ 25,000 will be credited to:

a) Statement of Profit & Loss
b) Goodwill Account
c) Security Premium Reserve Account
d) Capital Reserve Account

Ans – c)

Star Ltd. invited applications for issuing 2,00,000 shares of ₹ 10 each at par. The amount was payable as follows:

On Application – ₹ 2
On Allotment – ₹ 4
On First and Final Call – ₹ 4

Applications were received for 2,50,000 shares. Applications for 50,000 shares were made full allotment; Applications for 10,000 shares were rejected and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except allotment and first and final call from Jiya who was allotted 300 shares under pro-rata category. Her share were forfeited.

Amount Credited t0 Share Forfeiture Account will be:

(a) ₹ 600
(b) ₹ 760
(c) ₹ 160
(d) ₹ 1,040

Ans – (b)

On forfeiture of 100 shares of ₹ 50 each, ₹ 2,500 were credited to share forfeited account. These shares were re-issued at ₹ 25 per share fully paid up. The amount credited to ‘Capital Reserve Account’ will be:

(a) ₹ 2,500
(b) ₹ 5,000
(c) No Amount
(d) ₹ 3,000

Ans – (c)

Issue of shares at a price higher than its face value is called:

a) Issue at a profit
b) Issue at a premium
c) Issue at a discount
d) Issue at a loss

Ans – b)

Z Limited issued 20,000 shares of ₹ 100 each. The due amount was received except for 500 shares on which ₹ 75 per share was received. These 500 shares were forfeited and 300 shares were reissued for ₹ 60 each fully paid-up. Balance in Forfeited Shares Account will be:

(a) ₹ 15,000
(b) ₹ 37,500
(c) ₹ 22,500
(d) ₹ 10,500

Ans – (a)

X Ltd. issued shares of ₹ 100 each at a premium of ₹ 200 per share. Amount were payable as follows:

On Application	₹ 80 (including premium ₹ 60)
On Allotment	₹ 100 (including premium ₹ 50)
On First and Final Call	Remaining amount

Mona, a holder of 100 shares failed to pay allotment and first & final call money and her shares were forfeited. On forfeiture, Calls in Arrears Account will be:

(a) Debited with ₹ 8,000
(b) Credited with ₹ 8,000
(c) Credited with ₹ 22,000
(d) Debited with ₹ 22,000

Ans – (c)

On issue of shares Premium is:

a) Profit
b) Income
c) Revenue Receipt
d) Capital Profit

Ans – d)

Which of the following is not a capital profit?

a) Profit prior to incorporation of the company
b) Profit from the sale of fixed assets
c) Premium on issue of shares
d) compensation received on the termination of a contract

Ans – d)

Godrej Ltd. invited applications for issuing 3,20,000 equity shares of ₹ 20 each at par. The amount was payable as follows:

On Application – ₹ 6 per share
On Allotment – ₹ 7 per share
On First Call – ₹ 4 per share
On Final Call – ₹ 3 per share

Applications were received for 3,85,000 shares. Applications for 5,000 shares were rejected, full amount was made to the applicants for 80,000 shares and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except first call and final call from Sandhya who applied for 5,000 shares and was allotted shares on pro-rata basis. Her shares were forfeited.

Amount Credited to Share Forfeiture Account will be:

(a) ₹ 65,000
(b) ₹ 59,000
(c) ₹ 58,000
(d) ₹ 52,000

Ans – (d)

Zee Ltd. invited applications for issuing 50,000 equity shares of ₹ 100 each at a premium of ₹ 30 per share. The amount was payable as follows:

On Application	₹ 20 per share (including ₹ 5 premium)
On Alllotment	₹ 30 per share (including ₹ 8 premium)
On First Call	₹ 40 per share (including ₹ 7 premium)
On Second and Final Call	Balance Amount

Gopal, a shareholder holding 500 shares did not pay the second and final call money and his shares were forfeited after second and final call.

Share Forfeiture Account will be credited by:

(a) ₹ 45,000
(b) ₹ 35,000
(c) ₹ 4,000
(d) ₹ 18,500

Ans – (b)

Apaar Ltd. forfeited 4,000 shares of ₹ 20 each, fully called up, on which only application money of ₹ 6 has been paid. Out of these 2,000 shares were reissued and ₹ 8,000 has been transferred to Capital Reserve. Calculate the rate at which these shares were reissued.

(a) ₹ 20 per share
(b) ₹ 18 per share
(c) ₹ 22 per share
(d) ₹ 8 per share

Ans – (b)

Maximum limit of premium on shares is:

a) 5%
b) 10%
c) No limit
d) 100%

Ans – c)

Nandi Toys invited applications for issuing 2,00,000 shares of ₹ 10 each at par. The amount was payable as follows:

On Application – ₹ 4
On Allotment – ₹ 3
On First and Final Call – ₹ 3

Applications were received for 2,40,000 shares. Applications for 10,000 shares were rejected and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except first and final call from a shareholder who applied for 6,900 shares and was allotted shares on pro-rata basis. His shares were forfeited.

Amount Credited to Share Forfeiture Account will be:

(a) ₹ 48,300
(b) ₹ 42,000
(c) ₹ 45,600
(d) ₹ 38,400

Ans – (b)

X Ltd. issued ₹ 40,00,000 equity shares of ₹ 10 each. The amount payable on these shares was as follows:

On Application	₹ 1 per share
On Allotment	₹ 2 per share
On first call	₹ 3 per share
On second and final calll	₹ 4 per share

All calls were made and were duly received, except first and second & final call on 2,000 shares held by Raman and second & final call on 1,000 shares held by Krishan. These shares were forfeited.

Subscribed and Fully Paid Capital will be:

(a) ₹ 39,70,000
(b) ₹ 39,82,000
(c) ₹ 3,99,70,000
(d) ₹ 3,99,82,000

Ans – (a)

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

Ans – d)

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

Ans – d)

Which of the following is not a Capital Profit:

(a) Profit on Forfeiture and reissue of shares
(b) Securities Premium on issue of shares
(c) Profit on sale of fixed assets
(d) Profit earned by a Company after its incorporation

Ans – (d)

Securities Premium can not be utilized for:

(a) Buy-back of its own shares
(b) Writing off preliminary expenses of the Company
(c) Issuing partly paid bonus shares to shareholders
(d) Issuing fully paid bonus shares to Shareholders

Ans – (c)

Ganesh Ltd. forfeited 2,000 shares of ₹ 25 each (₹ 20 called up) held by Riya, for non-payment of allotment money of ₹ 10 per share (including ₹ 5 per share premium) and the first call of ₹ 6 per share. Out of these, 1,500 shares were reissued to Jiya as ₹ 20 called up for ₹ 16 per share. Amount transferred to capital reserve will be:

(a) ₹ 10,500
(b) Nil
(c) ₹ 7,500
(d) ₹ 15,000

Ans – (c)

Chandra Paints Ltd. invited applications for issuing 4,00,000 shares of ₹ 100 each at par. The amount was payable as follows:

On Application – ₹ 40
On Allotment – ₹ 30
On First and Final Call – ₹ 30

Applications were received for 5,00,000 shares. Applications for 20,000 shares were rejected, full allotment was made on applications for 80,000 shares and pro-rata allotment was made to the remaining applicants. All calls were made and were duly received except first and final call from Somesh who applied for 5,000 shares and was allotted shares under pro-rata category. His shares were forfeited.

Amount Credited to Share Forfeiture Account will be:

(a) ₹ 3,20,000
(b) ₹ 3,50,000
(c) ₹ 3,10,000
(d) ₹ 2,80,000

Ans – (d)

For what purpose securities premium account can not be utilized.

a) Amortization of preliminary expenses
b) Distribution of dividend
c) Issue of fully paid bonus shares
d) Buy Back of own shares

Ans – b)

The company has to get minimum subscription within ________ from the date of issue of the prospectus. When minimum subscription has been received, the directors of the company proceed to make _______ which implied a valid contract between the company and the applicants who now become the allottee and assume the status of shareholders or members.

(a) 30 days, allotment of shares
(b) 130 days, application of shares
(c) 14 days, allotment of shares
(d) 15 days, allotment of shares

Ans – (a)

What will be the correct sequence of events?

(i) Forfeiture of Shares
(ii) Default on Calls
(iii) Re-issue of shares
(iv) Amount transferred to Capital Reserve

Options:

(a) (i), (iv), (ii), (iii)
(b) (ii), (iv), (i), (iii)
(c) (ii), (i), (iii), (v)
(d) (iii), (iv), (i), (ii)

Ans – (c)

X Ltd. issued 1,40,000 equity shares of ₹ 10 each. During the first year, ₹ 7 per share were called. A holding 4,000 shares and B holding 3,000 shares did not pay the first call of ₹ 2 per share. B’s share were forfeited after the first call and later on were re-issued at ₹ 5 per share, ₹ 7 called up.

Subscribed but not fully paid Capital will be:

(a) ₹ 9,80,000
(b) ₹ 9,44,000
(c) ₹ 9,72,000
(d) ₹ 9,31,000

Ans – (c)

A company issued 20,000 equity shares of ₹ 10 each at par payable as under:

On application ₹ 3; on allotment ₹ 4; on first call ₹ 2 and on final call ₹ 1 per share.

Applications were received for 50,000 shares. Allotment was made pro-rata. How much amount will be received in cash on allotment?

(a) ₹ 10,000
(b) ₹ 80,000
(c) ₹ Nil
(d) ₹ 90,000

Ans – (c)

Which of the following is not a purpose for which the securities premium amount can be used?

a) Issuing fully paid bonus shares to shareholders
b) Issuing partly paid up bonus shares to shareholders
c) Writing off preliminary expenses of the company
d) In purchasing its own shares (buy back)

Ans – b)

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

Ans – b)

Interest on Calls in arrears is charged according to Table F at:

a) 6% p.a.
b) 10% p.a.
c) 5% p.a.
d) 12% p.a.

Ans – b)

Amount of Calls in Arrears is shown in the Balance Sheet

a) as deduction from issued capital
b) as deduction from subscribed capital
c) as addition to subscribed capital
d) on the assets side

Ans – b)

A company forfeited 3,000 shares of ₹ 10 each, on which only ₹ 5 per share (including ₹ 1 premium) has been paid. Out of these, few shares were re-issued at a discount of ₹ 1 per share and ₹ 6,000 were transferred to Capital Reserve. How many shares were re-issued?

(a) 3,000 shares
(b) 1,000 shares
(c) 2,000 shares
(d) 1,500 shares

Ans – (c)

As per Table F, the company is required to pay __________ interest on the amount of
calls in advance.

a) 12% p.a.
b) 5% p.a.
c) 10% p.a.
d) 6% p.a.

Ans – a)

X Ltd. Forfeited 500 shares of ₹10 each, ₹7 called up, issued at a premium of ₹2 per share to be paid at the time of allotment for non payment of first call of ₹2 per share. Entry on forfeiture will be:

a) Share capital A/c Dr 3,500
Securities Premium Reserve A/c Dr 1,000
To Share First Call A/c 1,000
To Share Forfeiture A/c 3,500

b) Share capital A/c Dr 4,500
Securities premium Reserve A/c Dr 1,000
To Share First Call A/c 1,000
To Share Forfeiture A/c 4,500

c) Share Capital A/c Dr 4,500
To Share first Calle A/c 1,000
To Share Forfeiture A/c 3,500

d) Share Capital A/c Dr
To Share First Call A/c 1,000
To Share Forfeiture A/c 2,500

Ans – d)

Mayfair Ltd. forfeited 2,000 shares of ₹ 10 each, ₹ 7 called up, on which ₹ 4 per share (including ₹ 2 premium) and ₹ 2 per share on first call has not been paid. Out of these 500 shares were reissued as fully paid and ₹ 750 was transferred to Capital Reserve. On re-issue, how much amount will be transferred to Bank A/c?

(a) ₹ 3,250
(b) ₹ 4,250
(c) ₹ 2,250
(d) ₹ 5,500

Ans – (b)

New India Ltd. forfeited 500 shares of ₹ 100 each, ₹ 75 called-up, issued at 10% premium (to be paid at the time of allotment) for non-payment of allotment money of ₹ 30 per share (including premium) and first call of ₹ 20 per share. Out of these, certain shares were re-issued as fully paid-up for ₹ 70 per share and ₹ 1,000 were transferred to Capital Reserve. How many shares were re-issued?

Amount transferred to Capital Reserve will be:

(a) ₹ 40
(b) ₹ 28
(c) ₹ 200
(d) ₹ 50

Ans – (c)

X Ltd. forfeited Monika’s shares who has applied for 5,000 shares and was allotted 4,000 shares failed to pay allotment money of ₹ 4 per share (including premium of ₹ 2) on which she had paid application money of ₹ 2 only.

Amount Credited to ‘Forfeited Shares Account’ will be:

(a) ₹ 2,000
(b) ₹ 14,000
(c) ₹ 16,000
(d) ₹ 10,000

Ans – (d)

Amount of Calls in Advance is

a) Added to share Capital
b) Deducted from share capital
c) shown on the assets side
d) shown on the equity & Liabilities side

Ans – d)

Sinoy Ltd. issued 20,000 shares of ₹ 10 each at a premium of ₹ 6. The amount was payable as follows:

On Application	₹ 7 per share (including Premium ₹ 1 per share)
On Allotment	₹ 5 per share (including Premium ₹ 2 per share)
On First and Final Call	Balance

The issue was fully subscribed. All the money was duly received except the allotment and first and final call on 1,000 shares. These shares were forfeited. On forfeiture of these shares, the ‘Securities Premium Account’ will be debited by:

(a) ₹ 2,000
(b) ₹ 3,000
(c) ₹ 5,000
(d) ₹ 20,000

Ans – (c)

Vandana Ltd. issued 6,000 equity shares of ₹ 10 each at 10% premium. The issue was fully subscribed. Amount per share was payable as follows:

On application ₹ 3, on allotment ₹ 3 (including premium), On first call ₹ 3 and on final call ₹ 2. A, a holder of 200 shares paid the entire money along with allotment. The amount received on allotment will be _ .

(a) ₹ 18,000
(b) ₹ 19,000
(c) ₹ 25,000
(d) ₹ 21,000

Ans – (b)

800 shares of ₹ 100 each issued at a premium of ₹ 20 each were forfeited for non-payment of allotment money of ₹ 20 per share (including premium ₹ 10 per share) and first call of ₹ 30 per share (including premium ₹ 10 per share). Final call on these shares at ₹ 30 per share was not made. 600 of the forfeited shares were re-issued @ ₹ 95 per share fully paid and ₹ 21,000 were transferred to Capital Reserve and many shares were re-issued?

Amount transferred to Capital Reserve will be:

(a) 600
(b) 1,400
(c) 525
(d) 700

Ans – (a)

First call amount received in advance from the shareholders before it is actually called up by the directors is:

a) Debited to calls in advance account
b) Credited to share allotment account
c) Debited to first call account
d) Credited to calls in advance account

Ans – d)

From which account, expenses on issue of shares will be written off first of all:

a) Statement of profit and loss
b) Miscellaneous Expenditure account
c) Share issue expenses account
d) Securities Premium Reserve Account

Ans – d)

Forfeiture of shares results in the reduction of :

a) Subscribed capital
b) Authorised Capital
c) Reserve Capital
d) Fixed Assets

Ans – a)

On 1st April, 2021, X Ltd. was formed with an authorised capital of ₹ 30,00,000 divided into 1,50,000 equity shares of ₹ 20 each. Out of these 20,000 shares were issued to the vendors as fully paid up for purchase of office premises. The directors offered 1,00,000 shares to the public and called up ₹ 12 per share and received the entire called up amount on these shares.

Subscribed Capital of the Company will be:

(a) ₹ 12,00,000
(b) ₹ 20,00,000
(c) ₹ 16,00,000
(d) ₹ 24,00,000

Ans – (c)

Parmanand limited forfeited 500 shares of ₹ 10 each (₹ 8 called up) held by Satish for non-payment of the First call of ₹ 3 per share. 300 of these shares are reissued immediately in such a manner that ₹ 600 is transferred to Capital Reserve A/c. what is the price at which the shares are reissued?

(a) ₹ 7 per share
(b) ₹ 5 per share
(c) ₹ 3 per share
(d) ₹ 2 per share

Ans – (b)

Which one of the following items is not a part of subscribed capital?

a) Equity Shares
b) Preference Shares
c) Forfeited Shares
d) Bonus Shares

Ans – c)

At the time of forfeiture of shares the share capital account is debited with

a) Face value
b) called up value
c) Paid up value
d) Issued value

Ans – b)

ABC Ltd. offered 60,000 shares of ₹ 10 each to the public. The public applied for 1,00,000 shares. The company made pro-rata allotment in the ratio of 3 : 2 and remaining applications were rejected and money refunded to the applicants. On how many share did the company refund the application money?

(a) ₹ 40,000 shares
(b) ₹ 10,000 shares
(c) ₹ 30,000 shares
(d) ₹ 20,000 shares

Ans – (b)

Voluntary return of shares for cancellation by the shareholders is called

a) Cancellation of shares
b) Forfeiture
c) Surrender of shares
d) None of these

Ans – c)

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

Ans – c)

If 10,000 shares of ₹ 10 each were forfeited for non-payment of final call money of ₹ 3 per share and only 7,000 of these shares were re-issued @ ₹ 11 per share as fully paid up, then what is the minimum amount that company must collect at the time of re-issue of the remaining 3,000 shares?

(a) ₹ 21,000
(b) ₹ 9,000
(c) ₹ 16,000
(d) ₹ 30,000

Ans – (b)

Attire Ltd, issued a prospectus inviting applications for 12,000 shares of ₹ 10 each payable ₹ 3 on application, ₹ 5 on allotment and balance on call. Public had applied for certain number of shares and application money was received. Which of the following application money, if received restricts the company to proceed with the allotment of shares, as per SEBI guidelines?

(a) ₹ 36,000
(b) ₹ 45,000
(c) ₹ 30,000
(d) ₹ 32,400

Ans – (c)

Santiago Ltd. invited applications for issuing 2,00,000 shares of ₹ 10 each payable ₹ 3 per share on application, ₹ 5 per share on allotment and ₹ 2 per share on first and final call. The issue was oversubscribed and the company received ₹ 9,60,000 as application money. The company rejected some applications and pro rata allotment was made to the remaining applicants in the ratio of 5 : 4. Applications for how many shares were rejected?

(a) 50,000
(b) 1,30,000
(c) 70,000
(d) 1,20,000

Ans – (c)

As per Companies Act, 2013, Securities Premium Balance can be utilised for which of the following purpose?

(a) Issuing Bonus to existing shareholders to convert partly paid up into fully paid-up shares.
(b) Providing for Premium Payable on Redemption of Debentures
(c) Writing off all Capitalised Expenditure
(d) Buy Back of Debentures

Ans – (b)

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

Ans – a)

Boyle Ltd. issued 40,000 shares of ₹ 10 each. Applications for 2,00,000 shares were received. Amount per share was payable as follows:

On Application – ₹ 4
On Allotment – ₹ 4
On first and final call – Balance

Shares were allotted on pro rata basis to all the applicants. Excess money received with applications was refunded after adjustment in allotment and first and final call. For refunding the excess amount, the Bank Account will be credited by:

(a) ₹ 4,80,000
(b) ₹ 4,00,000
(c) ₹ 80,000
(d) Nil

Ans – (b)

The amount of discount on reissue of forfeited shares can not exceed:

a) 5% of the face value
b) 10% of the face value
c) The amount received on forfeited shares
d) The amount not received on forfeited shares

Ans – c)

Discount allowed on re-issue of forfeited sahres is debited to:

a) Share capital A/c
b) Share Forfeiture A/c
c) Statement of Profit and loss
d) General Reserve A/c

Ans – b)

Alfa Ltd. invited applications for 50,000 equity shares of ₹ 10 each at a premium of 30%. The whole amount was payable on application. Applications were received for 2,50,000 shares. The company decided to allot the shares on a pro-rata basis to all the applicants. The amount refunded by the company was:

(a) ₹ 32,50,000
(b) ₹ 15,60,000
(c) ₹ 39,00,000
(d) ₹ 26,00,000

Ans – (d)

The balance of the forfeited shares account after reissue of forfeited shares is
transferred to:

a) Statement of Profit and Loss
b) Share Capital A/c
c) Capital Reserve A/c
d) General Reserve A/c

Ans – c)

Sarita Ltd. forfeited 100 shares of ₹ 10 each, ₹ 8 called up issued at a premium of ₹ 2 per share to Ramesh for non-payment of allotment money of ₹ 5 per share (including premium). The first and final call of ₹ 2 per share was not made. Out of these 70 shares were reissued to Ashok as ₹ 8 called up for ₹ 10 per share. The gain on reissue will be:

(a) ₹ 500
(b) ₹ 400
(c) ₹ 350
(d) ₹ 300

Ans – (c)

X Ltd. issued 40,000 equity shares of ₹ 10 each at a premium of 20%. The amount was payable as follows:

On application – ₹ 3 per share
On Allotment – ₹ 5 per share (including premium)
On first call – ₹ 2 per share
On final call – ₹ 2 per share

The issue was over subscribed. ‘A’, who applied for 900 shares and was allotted 600 shares paid the entire share money with application. At the time of transfer of share application money, ‘Calls in Advance Account’ will be:

(a) Credited with ₹ 6,000
(b) Debited with ₹ 2,400
(c) Credited with ₹ 2,400
(d) Credited with $ 3,600

Ans – (c)

Sushila Ltd. has an ‘Authorized Capital’, of ₹ 10,00,000 divided into equity shares of ₹ 10 each. Subscribed and fully paid up share capital of the company was ₹ 4,00,000. To meet its new financial requirement, the company issued 20,000 equity shares of ₹ 10 each. Amount per share was payable as ₹ 3 on application, ₹ 3 on allotment; ₹ 2 on first call and 2 on second and final call. The issue was fully subscribed. The allotment money was payable on or before May 1, 2020; first call money was due on August 1, 2020 and final call money was due on October 1, 2020. X whom 1,000 shares were allotted did not pay the allotment and both calls; Y an allottee of 600 shares; did not pay the two calls; and Z whom 300 shares were allotted did not pay the final call.

Subscribed capital presented in the Balance Sheet of the Company as per schedule III Part I of the Companies Act, 2013 will be:

(a) ₹ 9,800
(b) ₹ 5,90,000
(c) ₹ 10,00,000
(d) ₹ 6,00,000

Ans – (b)

Uncalled Capital is that portion of the which has not yet been called up and the portion of such uncalled capital to be called only in the event of winding up of the company is called .

(a) Subscribed Capital; Reserve Capital
(b) Issued Capital; Reserve Capital
(c) Authorised Capital; Capital Reserve
(d) Registered Capital; Capital Reserve

Ans – (a)

X Ltd. invited applications for issuing 10,00,000 equity shares of ₹ 10 each at a premium of ₹ 9 per share. The amount was payable as follows:

On Application	₹ 6 per share (including premium ₹ 3)
On Allotment	₹ 8 per share (including premium ₹ 4)
On First and Final Call	Balance

Applications for 15,00,000 shares were received. Shares were allotted on pro-rata basis to all applicants. Excess application money received with applications was adjusted towards sums due on allotment. Dharam to whom 600 shares were allotted failed to pay the allotment money. Allotment amount that was not paid by Dharam was:

(a) ₹ 4,800
(b) ₹ 600
(c) ₹ 3,000
(d) ₹ 2,400

Ans – (c)

Raghav Ltd. forfeited 100 shares of ₹ 10 each issued at a premium of 20% for non-payment of first call of ₹ 3 per share and final call of ₹ 1 per share. The minimum price per share at which these shares can be re-issued will be:

(a) ₹ 4
(b) ₹ 6
(c) ₹ 8
(d) ₹ 10

Ans – (a)

The Subscribed Capital of a company refers to:

(a) The paid-up value of the shares allotted on the date of the balance sheet
(b) The called-up value of all shares allotted on the date of the balance sheet.
(c) The nominal value of all shares allotted on the date of the balance sheet
(d) The paid-up value of all shares allotted on the date of the balance sheet and the balance of shares forfeited account, if any

Ans – (a)

An offer of securities or invitation to subscribe securities to a select group of persons is termed as:

(a) Buy back of shares
(b) Employee stock option plan
(c) Private placement of shares
(d) Sweat Equity

Ans – (c)

On 1st April 2022, Galaxy Ltd. had a balance of ₹ 8,00,000 in Securities Premium account. During the year company issued 20,000 Equity shares of ₹ 10 each as bonus shares and used the balance amount to write off Loss on issue of Debentures on account of issue of 2,00,000, 9% Debentures of ₹ 100 each at a discount of 10% redeemable @ 5% Premium. The amount to be charged to Statement of P&L for the year for Loss on issue of Debentures would be:

(a) ₹ 30,00,000
(b) ₹ 22,00,000
(c) ₹ 24,00,000
(d) ₹ 20,00,000

Ans – (c)

Forfeiture of shares leads to reduction of ______ Capital.

(a) Authorised
(b) Issued
(c) Subscribed
(d) Called up

Ans – (c)

Shares issued as sweat equity can be

(i) Issued at par
(ii) Issued at discount
(iii) Issued at a premium

Which of the following is correct?

(a) Only (i) is correct
(b) Both (i) and (iii) are correct
(c) All are correct
(d) Only (ii) is correct

Ans – (c)

X Ltd. purchased a running business from Y Ltd. payable by the issue of equity shares of ₹ 10 each, ₹ 8 paid. The assets and liabilities consisted of the following:

Particulars	Book Value (₹)	Agreed Value (₹)
Building	20,00,000	25,00,000
Plant & Machinery	6,00,000	3,55,000
Stock	3,00,000	90%
Sundry Debtors	5,00,000	Subject to Provision for Doubtful Debts @ 5%
Sundry Creditors	4,00,000	4,00,000

How many equity shares will be issued to Y Ltd.:

(a) 3,20,000
(b) 3,60,000
(c) 4,00,000
(d) 4,50,000

Ans – (c)

A company issued 20,000 equity shares of ₹ 10 each at par payable as under: On application ₹ 3: on allotment ₹ 2; on first call ₹ 4 and on final call ₹ 1 per share.

Applications were received for 65,000 shares. Applications for 15,000 were rejected and pro-rata allotment was made to the applicants for 50,000 shares. How much amount will be received in cash on first call? Excess application money is adjusted towards amount due on allotment and calls.

(a) ₹ 80,000
(b) ₹ 50,000
(c) ₹ 30,000
(d) Nil

Ans – (c)

X Ltd. forfeited 1,000 shares of ₹ 10 each for non-payment of final call of ₹ 3 each. After reissue of 600 of these shares, ₹ 3,000 were transferred to Capital Reserve. Shares were reissued for:

(a) ₹ 1,200
(b) ₹ 4,800
(c) ₹ 3,600
(d) ₹ 4,000

Ans – (b)

X Ltd. invited applications for issuing 1,60,000 shares of ₹ 10 each at par. The amount was payable as follows:

On Application – ₹ 3
On Allotment – ₹ 4
On First and Final Call – ₹ 3

Applications were received for 2,40,000 shares and pro-rata allotment was made to all the applicants. All calls were made and were duly received except allotment and first and final call from Aditya who was allotted 800 shares. His shares were forfeited.

Amount Credited to Share Forfeiture Account will be:

(a) ₹ 2,400
(b) ₹ 3,600
(c) ₹ 1,200
(d) ₹ 2,000

Ans – (b)

Goodluck Ltd. invited applications for issuing 80,000 shares of ₹ 10 each at a premium of ₹ 5 per share. The amount was payable as follows:

On Application	₹ 5 (including premium ₹ 3)
On Allotment	₹ 7 (including premium ₹ 2)
On First and Final Call	₹ 3

Applications were received for 1,00,000 shares and pro-rata allotment was made to all the applicants. All calls were made and were duly received except allotment and first and final call from Vidya who was allotted 3,200 shares. Her shares were forfeited. Amount credited to Share Forfeiture Account will be:

(a) ₹ 4,000
(b) ₹ 10,400
(c) ₹ 20,000
(d) ₹ 13,600

Ans – (b)

Zee Ltd. issued shares of ₹ 20 each at a premium of ₹ 10 per share. Amounts were payable as follows:

On Application	₹ 5 (including premium ₹ 1)
On Allotment	₹ 6 (including premium ₹ 2)
On First Call	₹ 7 (including premium ₹ 3)
On Second and Final Call	Remaining amount

Aryan, a holder of 500 share failed to pay allotment and first call and his shares were forfeited after the first call. On forfeiture, Calls in Arrears will be:

(a) Credited with ₹ 12,500
(b) Credited with ₹ 6,500
(c) Credited with ₹ 4,000
(d) Credited with ₹ 8,000

Ans – (b)