Assertion Reason MCQs of Accounting for share capital Class 12
Looking for Assertion Reason Based MCQs with answers of Accounting for share capital chapter of Accountancy Class 12 CBSE, ISC and other state Board.
We have compiled very important assertion reason-based Multiple Choice Questions of chapter 7 of volume 2 of Accountancy Class 12
Assertion Reason based Multiple Choice Questions of Accountancy for share capital class 12
Let’s Practice
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): A company is created through the process of incorporation under the Companies Act, 2013.
Reason (R): It is an artificial person which is a separate legal entity from its members (Shareholders).
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – b)
Explanation:- Both assertion and reason true but reason doesn not explain why company is formed under companies act 2013.
Assertion (A): A company is a legal entity separate and distinct from its members.
Reason (R): A company can enter a contract. It can sue and be used in its own name.
Options:
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): The liability of a shareholder is limited up to the nominal price of shares subscribed by one.
Reason (R): Paid-up Capital is the amount of nominal value of shares that have been called up by the company for payment by the subscriber towards the share.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – c
Explanation:- Paid up capital is the part of called up capital that actually has been paid by the subscriber.
Assertion (A): A company has perpetual succession.
Reason (R): Insolvency or death of a shareholder will not affect its existence.
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): Proportionate allotment or pro-rata allotment is made in case of oversubscriptions of shares.
Reason (R): In the case of over-subscription, it is not possible for the company to allot shares to every applicant in the number that he desires.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – a)
Assertion (A): Issued Share Capital and Subscribed Share Capital are always different.
Reason (R): Subscribed Share Capital is a part of Issued Share Capital. Thus, it will always be different from Issued Share Capital.
Options:
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Forfeiture of a share refers to the cancellation or termination of membership of a shareholder by taking away the shares and rights of membership.
Reason (R): Forfeited shares can be reissued at a discount.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – b)
Explanation:- Both Assertio and Reason are true. But Reason does not explain why share are foreited as per the law.
Assertion (A): A share is considered to be a movable property.
Reason (R): A share can be purchased or sold in a stock exchange in case of a listed company.
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): A company can issue its share either at par, at a premium, or even at a discount.
Reason (R): Amount in excess of the nominal value of the share is termed as premium and such amount of premium is credited to Securities Premium Account or Securities premium Reserve Account.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – b)
Explanation:- Share can also be issued at discount to its employees and directors as sweat equity shares but not to the general public.Both Assertion and Reason are true but Reason does not explain why share are issued into three format.
Assertion (A): A company must have equity share capital.
Reason (R): A company may not have any preference share capital.
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (a)
Assertion (A): Lotus Flowers Ltd. had issued 10,000, Equity shares of ₹ 10 each. It received the nominal (face) value of the shares except First and Final call of ₹ 3 per share on 1,000 shares. These 1,000 Equity Shares will be shown as ‘Subscribed but not fully paid-up’ under ‘Subscribed Capital’.
Reason (R): The company has not received ₹ 3 per share on 1,000 Equity shares. Hence, these shares are not fully paid-up. They will be shown as ‘Subscribed but not fully paid-up’ under ‘Subscribed Capital’.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – a)
Assertion (A): A company has perpetual succession.
Reason (R): Shares of a company are transferable in the manner provided in the articles of the company.
Options
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): Every company is required to have its own seal.
Reason (R): The company being an artificial person, can not sign its name by itself and thus its seal acts as the official signature of the company.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – a)
Assertion (A): A public company must have at least 7 members and there is no limit as to the maximum number of members.
Reason (R): A private company must have at least 2 members and maximum 200 excluding its present or past employees.
(a) Both (A) and (R) are true, and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) Only (R) is correct
(d) Both (A) are (R) are wrong
Ans – (b)
Assertion (A): Called-up Capital means share capital called-up by the company on the Susbcribed Shares.
Reason (R): When a company issues shares amount of which is receivable in instalments, it calls upon the shareholders to pay the amount as called. Thus, it is the Called-up Capital.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – a)
Assertion (A): Securities Premium may be used for issue of partly-paid bonus shares.
Reason (R): Securities Premium may be used for issue of partly-paid or fully paid bonus shares.
Options:
(a) (A) is correct, but (R) is wrong
(b) Both (A) and (R) are correct
(c) (A) is wrong, but (R) is correct
(d) Both (A) and (R) are wrong
Ans – (d)
Assertion (A): The company has to get a minimum subscription within 120 days from the date of the issue of the prospectus.
Reason (R): If the company fails to receive the minimum subscription, the company can proceed with the allotment of shares and application money only after 130 days of the date of issue of prospectus.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Both Assertion (A) and Reason (R) is False.
And – d)
Explanation:- Unless 90% of the sum payable on application for shares issued to the public for subscription is received by the company, shares can not be allotted.
Assertion (A): Forfeited shares may be reissued by the company at a discount also.
Reason (R): Amount of discount on reissue of forfeited shares cannot exceed the amount forfeited on reissued shares.
(a) Both (A) and (R) are true, (R) is the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is not the correct explanation of (A)
(c) Only (R) is correct.
(d) Both (A) and (R) are wrong
Ans – (a)
Assertion (A): Calls not yet made by the company but received in advance is shown as Paid-up Capital
Reason (R): Calls not made but received are shown as Other Current Liabilities under Current Liabilities.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (c)
Assertion (A): Asian Cables Ltd. issued for subscription 2,00,000 equity shares of ₹ 10 each payable ₹ 3 on application. It received ₹ 5,40,000 as application money. Full allotment was made to each applicant.
Reason (R): In this case, there is undersubsctiption of shares. However, since minimum subscription of 90% has been received, full allotment will be made to each applicant.
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): Calls in Advance are shown as an asset in the Balance Sheet.
Reason (R): Sometimes shareholders pay a part, or the whole of the amount of the calls not yet made, which is known as ‘Calls in Advance’.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
And – d)
Assertion (A): X Ltd. issued 50,000 Equity Shares of ₹ 100 each. It received the full amount on shares except first and final of ₹ 25 on 200 shares. These 200 shares will be shown as ‘Subscribed but not fully paid capital’.
Reason (R): The shares on which calls are in arrears are not fully paid. Hence, they will be shown as ‘Subscribed but not fully paid Capital’.
(a) Both (A) and (R) are true, and (R) is the correct explanation of (R)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) Only (R) is true
(d) Both (A) and (R) are false
Ans – (a)
Assertion (A): In case of shares issued on Pro rata basis, excess application money can be utilised till allotment only.
Reason (R): Company has to pay interest on Calls-in-Advance @ 12% p.a. for amount adjusted towards calls (if any).
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (c)
Assertion (A): Calls in Arrears are deducted from Subscribed but not fully paid Capital
Reason (R): Calls in Advance are added to Subscribed but not fully paid Capital.
Options
(a) Both (A) and (R) are true, and (R) is the correct explanation of (R)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) Only (A) is correct
(d) Both (A) and (R) are wrong
Ans – (c)
Assertion (A): The Securities Premium Account is not to be debited at the time of forfeiture if the premium has been received in respect of the forfeited shares.
Reason (R): Section 52(2) of the Companies Act 2013 restricts the use of Securities Premium Received and credited to Securities Premium Reserve Account.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – a)
Assertion (A): If 1,00,000 shares of ₹ 10 each of X Ltd. are fully called, Share Forfeiture amount of ₹ 6,000 on 1,000 forfeited shares will be added to Subscribed and Fully Paid Capital of ₹ 9,90,000.
Reason (R): If 1,00,000 shares of ₹ 10 each are ₹ 7 Called, Share Forfeiture amount of ₹ 8,000 on 2,000 forfeited shares will be added to Subscribed but Not Fully Paid Capital of ₹ 6,86,000.
Options
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (R)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (c)
Assertion (A): Reserve Capital and Capital Reserve are synonymous terms, i.e., they mean the same.
Reason (R): Reserve Capital is the capital which the company resolves to call on its winding up. Capital Reserve is a reserve to which capital profits are transferred.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (c)
Assertion (A): A company cannot make allotment of shares unless minimum subscription is received.
Reason (R): As per SEBI Guidelines minimum subscription has been fixed at 90% of the issued amount.
(a) Both (A) and (R) are true, and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) Only (R) is true.
(d) Both (A) and (R) are wrong
Ans – (a)
Assertion (A): The Forfeited Shares can not be reissued at a loss.
Reason (R): The forfeited shares can be reissued at a discount provided the amount of discount allowed does not exceed the credit balance of the share forfeiture account relating to shares being reissued.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – a)
Explanation:- Forfeited shares can only be reissued at discount upto the amount of forfeited.
Assertion (A): Securities Premium can be used for issue of fully paid bonus shares and for distribution of dividend in cash.
Reason (R): Balance of Securities Premium may be transferred to General Reserve Account.
Options:
(a) Both (A) and (R) are true, and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) Only (R) is true
(d) Both (A) and (R) is false
Ans – (d)
Assertion (A): Share cannot be allotted unless minimum subscription is received.
Reason (R): SEBI has prescribed that a company issuing shares to public cannot allot shares unless it receives subscription of 90% of the shares issued.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – a)
Assertion (A): Equity Shares bear the maximum risk and also get the maximum reward.
Reason (R): Dividend on equity shares will be paid only when profits are left after payment of fixed rate of dividend on preference Shares. As such, dividend may not be paid every year but in some years they may be paid large dividend and they may be issued bonus shares also. Market value of equity shares may also increase to a great extent.
Options:
(a) Both (A) and (R) are true, and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) Only (R) is true
(d) Both (A) and (R) are false
Ans – (a)
Assertion (A): A company can issue shares at a discount.
Reason (R): A company can issue shares at a discount only in cases such as reissue of forfeited shares and issue of sweat equity shares.
Alternatives:
a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation
of Assertion (A).
b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation
of Assertion (A).
c) Assertion (A) is true but Reason (R) is False
d) Assertion (A) is False but Reason (R) is true.
Ans – a)
Explanation:- Issue of shares at discount to public is restricted. But company can issue shares at discount to its employees and directors as sweat equity shares. Apart from it, Company can also issue forfeited shares at discount upto the limit of forfeited amount.
Assertion (A): Reserve Capital and Capital Reserve are the same.
Reason (R): Reserve Capital is a part of Subscribed Capital which the Company may decide to call at the time of winding up of the Company.
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Premium received on issue of shares is debited to Sucurities Premium Account.
Reason (R): Securities Premium Account is a reserve hence, may be credited to General Reserve.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (d)
Assertion (A): Securities Premium can be used to issue partly paid Bonus Shares.
Reason (R): The Companies Act, 2013 prescribes that Securities Premium Account can be used for issue of Bonus Shares, fully paid or partly paid.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (d)
Assertion (A): In case of shares issued on Pro-rata basis, excess money received at the time of application in the absence of information can be utilised till allotment only.
Reason (R): Company has to pay interest on calls in advance for amount adjusted towards calls (if any)
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (d)
Assertion (A): Forfeited shares cannot be reissued by the company at a discount.
Reason (R): It being sale of shares and not an issue of shares, the company can reissue them at any price.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (d)
Assertion (A): Securities Premium cannot be used for writing off capital losses of the business.
Reason (R): Securities Premium may be applied only for the purpose mentioned in Section 52(2) of the Companies Act, 2013.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (a)
Assertion (A): Securities Premium cannot be utilised for writing off loss on sale of a fixed asset.
Reason (R): Securities Premium may be applied only for the purposes mentioned in Section 52(2) of the Companies Act, 2013.
Options
(a) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(b) Both (A) and (R) are true and (R) is the correct explanation of (A)
(c) Both (A) and (R) are false
(d) (A) is false, but (R) is true
Ans – (b)
Assertion (A): A company can reissue a forfeited share at an amount which is less than the amount not received on it.
Reason (R): A company can write off the net loss on the reissue of a forfeited share from its capital Reserve.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (d)
Assertion (A): Forfeited shares cannot be issued at a price that is higher than its nominal (face) value.
Reason (R): Forfeited shares is not an issue of shares but sale of shares.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (c)
Assertion (A): Maximum amount of discount allowed at the time of reissue of forfeited shares should not exceed the forfeited amount.
Reason (R): The excess amount of forfeited shares account is transferred to capital reserve account.
Options:
(a) (A) is correct, but (R) is wrong
(b) Both (A) and (R) are correct
(c) (A) is wrong, but (R) is correct
(d) Both (A) and (R) are wrong
Ans – (b)
Assertion (A): Forfeited shares can be issued at a price that is lower than its nominal (face) value but discount cannot be more than the amount not received on forfeited shares.
Reason (R): Forfeited shares, if reissued at a price that is more than its nominal (face) value, the difference amount between issue price and nominal (face) value is credited to Securities Premium Account.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (b)
Statement I: When the directors of a Joint-stock company decide to ask for the ‘Call money’ they have to make sure that the amount called is not more than 25% of the ‘Issue price’ of the share.
Statement II: There must be an interval of at least one month between the making of the two calls unless otherwise provided by the Articles of Association of the company.
Options:
(a) Both Statement I and Statement II are correct
(b) Both Statement I and Statement II are incorrect
(c) Statement I is correct but Statement II is incorrect
(d) Statement I is incorrect but Statement II is correct
Ans – (a)
Assertion (A): Securities Premium can be used for making partly paid shares as fully paid-up.
Reason (R): Reissue of Forfeited shares being sale of forfeited shares can be reissued at any price the company decides and the loss, if any can be written off from Securities Premium Accout.
Options
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (d)
Assertion (A): A Company is Registered with an authorised Capital of 5,00,000 Equity Shares of ₹ 10 each of which 2,00,000 Equity Shares were issued and subscribed. All the money had been called up except ₹ 2 per share which was declared as ‘Reserve Capital’. The Share Capital reflected in balance sheet as ‘Subscribed and Fully paid up’ will be Zero.
Reason (R): Reserve Capital can be called up only at the time of winding up of the company.
(a) Both (A) and (R) are correct, and (R) is the correct explanation of (A)
(b) Both (A) and (R) are correct but (R) is not the correct explanation of (A)
(c) (A) is incorrect, but (R) is correct
(d) (A) is correct, but (R) is incorrect
Ans – (a)
Assertion (A): A company can reissue forfeited shares at an amount which is less than the amount not received.
Reason (R): A company can write off Discount on Reissue of Forfeited Shares from Securities Premium.
Options:
(a) Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is false but Reason (R) is true
(d) Both Assertion (A) and Reason (R) are false
Ans – (d)
Assertion (A): A company can reissue a forfeited share at an amount which is less that the amount not received on it.
Reason (R): A company can write off the net loss made on the reissue of a forfeited share from its capital reserve.
Options
(a) Both (A) and (R) are true, and (R) is the correct explanation of (A)
(b) Both (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is false and (R) is true
(d) Both (A) and (R) is true
Ans – (d)
