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.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Ans – d)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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)
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
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.
