[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
A company has
a) Separate Lega Entity
b) Perpetual Existence
c) Limited Liability
d) All of the above
Ans – d)
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)
A company is created by:
a) Special act of the Parliament
b) Companies Act
c) Investors
d) Members
Ans – b)
An artifical person created by Law is called:
a) Sole Tradership
b) Partnership Firm
c) Company
d) All of the above
Ans – c)
The liability of members in a company is:
a) Limited
b) Unlimited
c) Stable
d) Fluctuating
Ans – a)
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)
Maximum number of members is a parivate company is:
a) 7
b) 200
c) 20
d) No limit
Ans – b)
Capital of a company is divided in units which is called:
a) Debenture
b) Share
c) Stock
d) Bond
Ans – b)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
Reserce 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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
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)
