Company Accounts – Issue of shares questions, forfeiture and reissue of shares:
Public limited companies cannot issue __
(a) equity shares
(b) deferred shares
(c) preference shares
(d) right shares
___ shares are repayable after the expiry of the fixed period or at the option of the company.
(a) Participating
(b) Convertible
(c) Cumulative
(d) Redeemable
The company can issue shares for a discount immediately after getting certificate of commencement of business.
(a) Yes
(b) No
Credit balance left on forfeited shares is transferred to
(a) General reserve account
(b) Capital reserve account
(c) Share premium account
(d) Share capital account
Share premium amount is treated as the _____ capital of a company
(a) issued
(b) Reserve
(c) Subscribe
Share application account is a __
(a) nominal
(b) real
(c) personal
(d) none of these
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Conversion of physical shares in to electronic securities is called __
(a) dematerialization
(b) price rigging
(c) re-materialization
(d) none of these
Issue of preference shares is
(a) Cash flow from Operating activities
(b) Cash flow from Financing activities
(c) Cash flow from Investing activities
(d) Cash flow from Commercial activities
Consideration shall be paid if share holder surrender his shares
(a) Yes
(b) No
IPO stands for ___
(a) Initial Private Offer
(b) International Public Offer
(c) Initial Public Offer
(d) International Private Offer
Preference shareholders are __ of the company
(a) creditors
(b) owners
(c) customers
(d) borrowers
The rate of discount on issue of shares should not exceed __ % of the nominal value of shares.
(a) 10
(b) 2
(c) 4
(d) 5
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Right shares are those shares which are issued to
(a) directors
(b) promoters
(c) existing shareholders
(d) none of these
______ arises in respect of debt due on shares as well as on other transactions.
(a) Forfeiture
(b) Lien
Which of the following statement is not correct?
(a) Discount on issue of shares is the excess of nominal value over issue price
(b) Discount on issue of shares should be shown in the assets side of balance sheet
(c) In case of forfeiture of shares, discount on forfeited shares should be debited
(d) In case of forfeiture of shares, amount already received should be credited to Share forfeiture account
Share application account is a ___
(a) Real Account
(b) Nominal Account
(c) Impersonal Account
(d) Personal Account
After completing __ years a company can issue shares at discount.
(a) 2
(b) 3
(c) 1
(d) 4
The profit on reissue of shares is transferred to __
(a) general reserve
(b) capital reserve
(c) P/L Account
(d) P/L Appropriation account
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When shares are forfeited, share capital account is debited by __ paid up
(a) amount of shares
(b) called up amount of shares
(c) face value of shares
(d) uncalled capital
Issue of equity shares for providing know-how or making available intellectual property rights is known as
(a) Issue of bonus shares
(b) Issue of sweat shares
(c) Issue of rights shares
(d) Issue of convertible shares
Balance of forfeited share is …….
(a) Revenue Reserve
(b) Capital Reserve
(c) Secret Reserve
(d) Security Premium
Voluntary return of shares by shareholders to the company for cancellation is called
(a) transfer of shares
(b) forfeiture of shares
(c) surrender of shares
(d) buyback of shares
Stock is a consolidation of __ Shares.
(a) partly paid shares
(b) fully paid shares
(c) equity shares
(d) Sweat shares
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Preference share holders are entitled to a fixed rate of __
(a) interest
(b) dividend
(c) coupon
(d) capital
The amount received in excess of face value of share is transferred to
(a) Share capital account
(b) Share redemption account
(c) Share premium account
(d) Share call account
The forfeited shares can be reissued at …………
(a) Par
(b) Premium
(c) Discount
(d) All of these
Those preference shares which do not carry the right of share in excess profits are known as __ preference shares.
(a) irredeemable
(b) non-cumulative
(c) non –convertible
(d) non-participating
Forfeiture of shares results in compulsory termination of __ due to non payment of allotment/call money.
(a) allotment
(b) membership
(c) subscription
(d) issue
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On forfeiture of shares, which of the following account is credited with the amount of money already received on such shares?
(a) shares forfeited a/c
(b) share capital a/c
(c) unpaid calls a/c
(d) share premium a/c
Which of the following is not concerned with equity shares?
(a) Ownership
(b) Fixed rate of dividend
(c) Voting power
(d) Rights Issue
The allotment of shares in case of oversubscription is called…..
(a) Pro‐rata allotment
(b) Private Placement
(c) Offer for sale
(d) None of these
The discount on re-issue of forfeited shares is debited to __ a/c
(a) share capital
(b) shares forfeited
(c) bank
(d) discount on issue of shares
__ implies issue and allotment of shares to a selected group of persons and not to general public
(a) initial public offer
(b) right issue
(c) private placement
(d) pre-emptive right
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Right shares are issued to __
(a) directors
(b) promoters
(c) existing share holders
(d) debenture holders
Return of partly paid shares by the shareholders to the company is_______
(a) Surrender
(b) Forfeiture
(c) Lien
(d) None of the above
Shares which carry preferential rights are called __
(a) equity shares
(b) preference shares
(c) sweaty equity
(d) green shoe
A bundle of fully paid shares is called___.
(a) Stock
(b) Sweat Equity
(c) Warrant
(d) None of these
A company cannot issue redeemable preference shares for a period exceeding __
(a) 6 years
(b) 7years
(c) 10 years
(d) 20 years
Preference shares can be redeemed __
(a) If they are fully paid up
(b) if they are partly paid up
(c) if they are convertible
(d) None of these
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Premium on redemption of preference shares can be provided out of __
(a) securities premium account
(b) capital reserve account
(c) general reserve account
(d) all of these
Qualification shares for a director are provided in the____
(a) Company Act
(b) MOA
(c) AOA
(d) Contract b/w Company & Directors
Which of the following is not a source of redemption of preference shares?
(a) divisible profit
(b) securities premium a/c
(c) realization of asset
(d) proceeds of fresh issue
The shares of a company can be issued at ___.
(a) Par
(b) Premium
(c) Discount
(d) All of these
The nominal value of preference shares to be redeemed can be provided out of __
(a) general reserve
(b) capital reserve
(c) CRR
(d) securities premium
Redemption of preference shares should not be regarded as reduction of —– capital of the company.
(a) paid-up
(b) called-up
(c) subscribed
(d) authorized
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Deferred shares are also known as ___ shares
(a) Founders
(b) Equity
(c) Preference
The shares firstly offered to the existing shareholders are called as ___
(a) Right shares
(b) Bonus shares
(c) Ordinary shares
(d) None of these
Which of the following reserves cannot be distributed as dividend to share holders?
(a) securities premium
(b) profit on forfeiture of shares
(c) profit on sale of fixed assets
(d) all of these
For amalgamation in the nature of merger, the shareholders holding at least or more of the equity shares of the transferor company becomes the equity shareholders of the transferee company.
(a) 90%
(b) 80%
(c) 100%
(d) none of these
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When shares are issued at a price higher than their face value, it is called issue at___.
(a) Par
(b) Premium
(c) Discount
(d) None of these
Discount on reissue of forfeited shares should not exceed ___
(a) Amount forfeited
(b) Face value
(c) Issued price
(d) Market price
