Accounting for Issue of Shares – Corporate and Management Accounting MCQ

Students should practice Accounting for Issue of Shares – Corporate and Management Accounting CS Executive MCQ Questions with Answers based on the latest syllabus.

Accounting for Issue of Shares – Corporate and Management Accounting MCQ

Question 1.
Premium on issue of shares must be treated as
(A) Revenue Receipt
(B) Deferred Revenue Receipt
(C) Capital Receipt
(D) Capital Loss
Answer:
(C) Capital Receipt

Question 2.
Premium on issue of shares must be credited to a separate account called
(A) Share Premium Account
(B) Securities Premium Account
(C) Discount on Issue of Shares
(D) Securities Profit Account
Answer:
(B) Securities Premium Account

Question 3.
Securities premium account must be shown separately on the liabilities side of the balance sheet under the heading
(A) Share Capital; Shareholders Funds
(B) Reserves & Surplus; Shareholders Funds
(C) Secured Loan; Reserves & Sur-plus
(D) Unsecured Loan; Profit or Loss
Answer:
(B) Reserves & Surplus; Shareholders Funds

Question 4.
Which of the following type of security can be issued at discount as per the Companies Act, 2013?
(1) Equity Shares
(2) Sweat Equity Shares
(3) Preference Shares
(4) Debentures
(5) Bonds
Select the correct answer from the options given below –
(A) (1) & (3) only
(B) (1), (3) & (4) only
(C) (2), (4) & (5) only
(D) (3), (4) & (5) only
Answer:
(C) (2), (4) & (5) only

Question 5.
Which of the following Table of Schedule I to the Companies Act, 2013 contains the provisions relating to Calls-in-Advance & Calls-in-Arrears?
(A) Table F
(B) Table A
(C) Table C
(D) Table G
Answer:
(A) Table F

Question 6.
Amount received as calls-in-advance
is a of the company.
(A) right
(B) asset
(C) debt
(D) revenue
Answer:
(C) debt

Question 7.
Amount due on calls made but not paid is known as –
(A) Calls-in-Advance
(B) Calls-in-Arrear
(C) Unpaid amounts
(D) Defaulting amounts
Answer:
(B) Calls-in-Arrear

Question 8.
If the number of shares issued is more than the number of shares applied the shares are said to be –
(A) Oversubscribed
(B) Undersubscribed
(C) Minimum subscription
(D) None of above
Answer:
(B) Undersubscribed

Question 9.
If the number of shares applied for is more than the number of shares issued the shares are said to be –
(A) Oversubscribed
(B) Undersubscribed
(C) Minimum subscription
(D) None of above
Answer:
(A) Oversubscribed

Question 10.
In case of oversubscription of shares each applicant receives the shares in some proportion, it is known as –
(A) Bonus allotment
(B) Right allotment
(C) Per applicant allotment
(D) Pro-rata allotment
Answer:
(D) Pro-rata allotment

Question 11.
If authorized by the company may receive from a shareholder the amount remaining unpaid on shares, even though the amount has not been called up which is known as calls-in-advance.
(A) Memorandum of Association (MOA)
(B) Articles of Association (AOA)
(C) Prospectus
(D) Securities Exchange Board of India
Answer:
(B) Articles of Association (AOA)

Question 12.
______paid on calls-in-advance.
(A) Share of company’s profit can be
(B) Dividend can be
(C) No dividend is
(D) None of above
Answer:
(C) No dividend is

Question 13.
As per Table F of Schedule I of the Companies Act, 2013, interest on calls in advance can be paid at p.a.
(A) 8%
(B) 10%
(C) 12%
(D) 15%
Answer:
(C) 12%

Question 14.
As per Table F of Schedule I to the Companies Act, 2013, interest on calls in arrear can be received at p.a.
(A) 10%
(B) 12%
(C) 15%
(D) 8%
Answer:
(A) 10%

Question 15.
Interest on calls-in-advance is paid for the period from the –
(A) Date of receipt of application money to the date of appropriation
(B) Date of receipt of allotment mon¬ey to the date of appropriation
(C) Date of receipt of calls-in-advance to the date of appropriation of the call
(D) Date of appropriation to the date of dividend payment
Answer:
(C) Date of receipt of calls-in-advance to the date of appropriation of the call

Question 16.
Balance of interest on the calls-in-arrear account is transferred to at the end of the year.
(A) Share capital account
(B) Calls in advance account
(C) Securities premium account
(D) Profit & loss account
Answer:
(D) Profit & loss account

Question 17.
Balance of interest on calls-on- advance account is transferred to the at the end of the year.
(A) Share capital account
(B) Calls in advance account
(C) Securities premium account
(D) Profit & loss account
Answer:
(D) Profit & loss account

Question 18.
A company may allot fully paid shares to promoters or any other party for the services rendered by them, share capital account is credited and debited.
(A) Preliminary expenses account
(B) Goodwill account
(C) Capital reserve account
(D) Suspense account
Answer:
(B) Goodwill account

Question 19.
_____may be said to be the compulsory termination of membership by way of penalty for non-payment of allotment and/or any call money.
(A) Surrender of shares
(B) Forfeiture of shares
(C) Transfer of shares
(D) Transmission of shares
Answer:
(B) Forfeiture of shares

Question 20.
Which of the following security can be forfeited for non-payment of allotment or call money?
(I) Equity Shares
(II) Equity Shares, Preference Shares
(III) Preference Shares, Equity Shares & Debentures
(IV) Debentures
Select the correct answer from the options given below –
(A) (I) only
(B) (III) only
(C) (I) & (IV) only
(D) (II) only
Answer:
(D) (II) only

Question 21.
The subscribed share capital of S Ltd. is ₹ 80,00,000 of 1100 each. There were no calls in arrear till the final call was made. The final call made was paid on 77,500 shares. The calls in arrear amounted to ₹ 62,500. The final call per share = ?
(A) ₹ 25
(B) ₹ 7.80
(C) ₹ 20
(D) ₹ 62.50
Hint:
Total shares = \(\frac{80,00,000}{100}\) = 80,000
80,000 – 77,500 = 2,500; \(\frac{62,500}{2,500}\) = 25
Answer:
(A) ₹ 25

Question 22.
An Ltd. acquired assets worth ₹ 71,25,000 from H Ltd. by the issue of shares of ₹ 10 @ premium of ₹ 25%. The number of shares issued to settle the purchase consideration will be
(A) 5,70,000 shares
(B) 7,12,500 shares
(C) 84,375 shares
(D) 50,625 shares
Hint:
No. of shares to be issued = \(\frac{\text { Purchase Consideration }}{\text { Issue Price }}\)
\(\frac{71,25,000}{12.5}\) = 5,70,000 shares
Answer:
(A) 5,70,000 shares

Question 23.
N Ltd. has allotted 10,000 shares to the applicants of 14,000 shares on a pro-rata basis. The amount payable on the application is ₹ 2. Ram applied for 420 shares. The number of shares allotted and amount carried forward for adjustment against allotment –
(A) 300 shares; ₹ 240
(B) 60 shares; ₹ 160
(C) 340 shares; ₹ 160
(D) 320 shares; ₹ 240
Hint:
No. of shares allotted = \(\frac{10,000}{14,000}\) × 420 = 300
Application money paid = 420 × 2 = 840.
Application money transferred to capital = 300 × 2 = 600
Excess application money adjusted for allotment = 840 – 600 = 240
Answer:
(A) 300 shares; ₹ 240

Question 24.
The following information pertains to X Ltd.
Called-up share capital = ₹ 5,00,000
Calls-in-arrear = ₹ 40,000
Calls-in-advance = ₹ 25,000
Proposed dividend =1596
The amount of dividend payable is______
(A) ₹ 75,000
(B) ₹ 72,750
(C) ₹ 71,250
(D) ₹ 69,000
Hint:
Dividend is not payable on Call-in-Advance. Dividend is payable on paid-up capital (ie. Called-up capital minus Call-in-Arrear). Hence, Dividend Payable = (5,00,000 – 40,000) × 1596 = 69,000.
Answer:
(D) ₹ 69,000

Question 25.
R Ltd. purchased the business of C Ltd. for ₹ 2,70,000 payable in fully paid shares. R Ltd. allotted equity shares of ₹ 10 each fully paid in satisfaction of the claim by C Ltd. Such shares are issued at par. The number of shares to be issued by R Ltd. to settle the purchase consideration =?
(A) 22,500
(B) 27,500
(C) 27,000
(D) 30,000
Hint:
No. of shares to be issued = \(\frac{2,70,000}{10}\) = 27,000 shares
Answer:
(C) 27,000

Question 26.
R Ltd. purchased the business of C Ltd. for ₹ 2,70,000 payable in fully paid shares. R Ltd. allotted equity shares of ₹ 10 each fully paid in satisfaction of the claim by C Ltd. Such shares are issued at a premium of 20%. A number of shares to be issued by R Ltd. to settle the purchase consideration =?
(A) 22,500 shares
(B) 27,500 shares
(C) 27,000 shares
(D) 30,000 shares
Hint:
No. of shares to be issued = \(\frac{2,70,000}{12}\) = 22 500 shares
Answer:
(A) 22,500 shares

Question 27.
X was issued 100 shares of ₹ 10 each at a premium of ₹ 1, he paid application money which in total amounted to ₹ 5 (excluding premium), and failed to balance call money of ₹ 5. Find the maximum discount that can be given at the time of re-issue of shares.
(A) ₹ 2
(B) ₹ 4
(C) ₹ 6
(D) ₹ 5
Hint:
At the time of reissue of shares maximum discount that can be given should not exceed the amount received on forfeited shares. Hence, 10 – 5 = 5.
Answer:
(D) ₹ 5

Question 28.
S Ltd. acquired fixed assets worth ₹ 15,00,000 by the issue of shares of ₹ 100 at a premium of 25%. The number of shares to be issued by S Ltd. to settle the purchase consideration =?
(A) 12,000 shares
(B) 15,000 shares
(C) 18,750 shares
(D) 11,250 shares
No. of shares to be issued = \(\frac{15,00,000}{125}\) = 12,000 shares
Answer:
(A) 12,000 shares

Question 29.
Q Ltd. had allotted ₹ 1,00,000 shares to the applicants of ₹ 1,40,000 shares on a pro-rata basis. The amount payable on the application is ₹ 2. Mr. N applied for ₹ 4,200 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from Mr. N =?
(A) 600 shares; ₹ 1,200
(B) 3,200 shares; ₹ 2,000
(C) 3,400 shares; ₹ 1,600
(D) 3,000 shares; ₹ 2,400
Hint:
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 1
Alternatively,
No. of shares allotted = \(\frac{1,40,000}{1,00,000}\) × 4,200 = 3,000 shares
Application money paid = 4,200 × 2 = 8,400.
Application money transferred to capital = 3,000 × 2 = 6,000
Excess application money adjusted for allotment = 8,400 – 6,000 = 2,400
Answer:
(D) 3,000 shares; ₹ 2,400

Question 30.
R Ltd. forfeited 300 equity shares of ₹ 10 fully called-up, held by Mr. X for non-payment of the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @72 per share and allotment money @ ₹ 3 per share. At the time of forfeiture Share Capital A/c will be credited by
(A) ₹ 1,500
(B) ₹ 3,000
(C) ₹ 600
(D) ₹ 900
Hint:
Share Capital A/c is always credited at face value = (300 × 10) = 3,000
Answer:
(B) ₹ 3,000

Question 31.
R Ltd. forfeited 300 equity shares of ₹ 10 fully called-up, held by Mr. X for non-payment of the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @ ₹ 2 per share and allotment money @ ₹ 3 per share. These shares were reissued at ₹ 10 each. Amount to be transferred to Capital Reserve Account =?
(A) ₹ 1,500
(B) ₹ 3,000
(C) ₹ 600
(D) ₹ 900
Hint:

The amount credited to Share Forfeited A/c (300 × 5) 1,500
(-) Discount on the reissue of shares Nil
The amount credited to Capital Reserve A/c 1,500

Answer:
(A) ₹ 1,500

Question 32.
R Ltd. forfeited 300 equity shares of ₹ 10 fully called-up, held by Mr. X for non-payment of the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @ ₹ 2 per share and allotment money @ ₹ 3 per share. These shares were reissued at ₹ 7 each. Amount to be transferred to Capital Reserve Account =?
(A) ₹ 1,500
(B) ₹ 3,000
(C) ₹ 600
(D) ₹ 900
Hint:

The amount credited to Share Forfeited A/c (300 × 5) 1,500
(-) Discount on the reissue of shares (300 × 3) (900)
The amount credited to Capital Reserve A/c 600

Answer:
(C) ₹ 600

Question 33.
R Ltd. forfeited 300 equity shares of ₹ 10 fully called-up, held by Mr. X. for non-payment of the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @ ₹ 2 per share and allotment money @ ₹ 3 per share. These shares were reissued at 12 each. Amount to be transferred to Capital Reserve Account =?
(A) ₹ 1,500
(B) ₹ 3,000
(C) ₹ 600 .
(D) ₹ 900
Hint:

The amount credited to Share Forfeited A/c (300 × 5) 1,500
(-) Discount on the reissue of shares Nil
The amount credited to Capital Reserve A/c 1,500

Answer:
(A) ₹ 1,500

Question 34.
T Ltd. forfeited 500 equity shares of ₹ 10 fully called-up, held by Mr. Ram for non-payment of allotment money of ₹ 5 (including ₹ 2 premium), the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @ ₹ 2 per share. These shares were reissued at ₹ 70 each.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 1,500
(B) ₹ 2,500
(C) ₹ 500
(D) ₹ 1,000
Hint:

The amount credited to Share Forfeited A/c (500 × 2) 1,000
(-) Discount on the reissue of shares Nil
The amount credited to Capital Reserve A/c 1,000

Answer:
(D) ₹ 1,000

Question 35.
T Ltd. forfeited 500 equity shares of ₹ 10 fully called-up, held by Mr. Ram for non-payment of allotment money of ₹ 5 (including ₹ 2 premium), the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @ ₹ 2 per share. These shares were reissued at ₹ 9 each.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 1,500
(B) ₹ 2,500
(C) ₹ 500
(D) ₹ 1,000
Hint:

The amount credited to Share Forfeited A/c (500 × 2) 1,000
(-) Discount on the reissue of shares (500 × 1) (500)
The amount credited to Capital Reserve A/c 500

Answer:
(C) ₹ 500

Question 36.
T Ltd. forfeited 500 equity shares of ₹ 10 fully called-up, held by Mr. Ram for non-payment of allotment money of ₹ 5 (including ₹ 2 premium), the first call of ₹ 2 and final of ₹ 3 each. However, he paid application money @ ₹ 2 per share. These shares were reissued at ₹ 13 each.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 1,500
(B) ₹ 2,500
(C) ₹ 500
(D) ₹ 1,000
Hint:

The amount credited to Share Forfeited A/c (500 × 2) 1,000
(-) Discount on the reissue of shares Nil
The amount credited to Capital Reserve A/c 1,000

Answer:
(D) ₹ 1,000

Question 37.
W Ltd. forfeited 400 equity shares of ₹ 10 fully called-up, held by Mr. P for non-payment of final of ₹ 3 each. However, he paid application money @ ₹ 2, Allotment ₹ 2, and first call ₹ 3 per share. These shares were reissued at 7 ids each.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 2,800
(B) ₹ 1,600
(C) ₹ 1,200
(D) ₹ 400
Hint:
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 2
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 3
Answer:
(A) ₹ 2,800

Question 38.
W Ltd. forfeited 400 equity shares of ₹ 10 fully called-up, held by Mr. P for non-payment of final of ₹ 3 each. However, he paid application money @ ₹ 2, Allotment ₹ 2, and first call ₹ 3 per share. These shares were reissued at ₹ 7 each.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 2,400
(B) ₹ 1,600
(C) ₹ 1,200
(D) ₹ 400
Hint:
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 2
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 3
Answer:
(B) ₹ 1,600

Question 39.
W Ltd. forfeited 400 equity shares of ₹ 10 fully called-up, held by Mr. P for non-payment of final of ₹ 3 each. However, he paid application money (5) ₹ 2, Allotment ₹ 2, and first call ₹ 3 per share. These shares were reissued at ₹ 73 each.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 2,800
(B) ₹ 1,600
(C) ₹ 1,200
(D) ₹ 400
Hint:
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 2
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 3
Answer:
(A) ₹ 2,800

Question 40.
X Ltd. forfeited 200 equity shares of ₹ 10 each, ₹ 8 called-up for non¬payment of first call money @ ₹ 2 each. Application money @ ₹ 2 per share and allotment money @74 per share has already been received by the company. Out of these 150 shares were reissued at ₹ per share as showing ₹ 8 paid up.
On reissue amount to be transferred to capital reserve account =?
(A) ₹ 1,200
(B) ₹ 1,600
(C) ₹ 1,050
(D) ₹ 750
Hint:
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 4
Accounting for Issue of Shares – Corporate and Management Accounting MCQ 5
Answer:
(D) ₹ 750

Question 41.
On 1.1.2015, X Ltd. marks an issue of ₹ 1,00,000 equity shares of ₹ 100 each payable as follows:
Application ₹ 20
Allotment ₹ 30
Final call ₹ 50 (3 months after allotment)
Applications were received for 1,20,000 shares and the directors refunded the excess application money. One shareholder, who was allotted 2,000, shares paid the first and final call with allotment money and another shareholder did not pay allotment money on his 3,000 shares but which he paid with the first and final call. Directors have decided to charge and allows interest, according to Table F of Schedule I to the Companies Act, 2013. Interest in calls-in-advance =?
(A) ₹ 3,000
(B) ₹ 2,500
(C) ₹ 1,800
(D) ₹ 1,500
Hint:
Interest on Calls-in-Advance = 2,000 × 50 × 12% × \(\frac{3}{12}\) = 3,000
Answer:
(A) ₹ 3,000

Question 42.
W Ltd. issued 2,00,000 shares of ₹ 100 each at a premium of 20% on May 1, 2015, payable as follows:
On application (including pre- 7 45 mm)
On allotment ₹ 25
On the first & final call ₹ 50
Sunil to whom 10,000 shares were allotted, has paid ₹ 5,00,000 on June 1, 2015. At the time of remitting the allotment money, he indicated that the excess money should be adjusted towards the call money. The directors of the company made the first and final call on October 31, 2015. The company has a policy of paying interest on calls-in-advance as per Table F of Schedule I to the Companies Act, 2013. The amount of interest paid to Sunil on Calls-in-Advance will be
(A) ₹ 25,000
(B) ₹ 12,500
(C) ₹ 20,833.33
(D) ₹ 18,750
Hint:
Amount due on allotment by Sunil = 10,000 × 25 = 2,50,000.
Thus, Calls-in-Advance = 5,00,000 – 2,50,000 = 2,50,000
2,50,0 × 12% × \(\frac{5}{12}\) = 12,500
Answer:
(B) ₹ 12,500

Question 43.
The Director of ZPA Ltd. made a final call of ₹ 50 per share on 1 st August 2015 indicating the last date of payment of call to be 31st August 2015. Mr. Black holding 5,000 shares paid the call money on 15 October 2015. The company has a policy of paying interest on calls-in-arrear as per Table F of Schedule I to the Companies Act, 2013. Interest on calls-in-arrear =?
(A) ₹ 3,125
(B) ₹ 1,562.50
(C) ₹ 1,875
(D) ₹ 1,500
Hint:
Interest on Calls-in-Arrear = 5,000 × 50 × 10% × \(\frac{2.5}{12}\) = 3,125
Answer:
(A) ₹ 3,125

Question 44.
The Director of NSZ Ltd. made a final call of? 50 per share on 1 st August 2015 indicating the last date of payment of call to be 31st August 2015. Mr. Black holding 8,000 shares paid the call money on 15 June 2015 along with first call-in advance. The company has a policy of paying interest on calls-in- advance as per Table F of Schedule I to the Companies Act, 2013. Interest in calls-in-advance =?
(A) ₹ 6,000
(B) ₹ 8,333.33
(C) ₹ 5,000
(D) ₹ 10,000
Hint:
Interest on Calls-in-Advance = 8,000 × 50 × 12% × \(\frac{2.5}{12}\) = 10,000
Answer:
(D) ₹ 10,000

Question 45.
The following data is available from the records of NS Ltd.
Issued capital ₹ 2,00,000
Call in arrear ₹ 10,000
P&L credit balance (1.4.2018) ₹ 67,000
Profit for the year ₹ 1,90,610
The company wants to create a debenture redemption reserve and transfer ₹ 50,000 every year.
The company declared a 10% dividend.
The balance of surplus after effecting the above transaction =?
(A) ₹ 1,06,000
(B) ₹ 1,06,810
(C) ₹ 1,68,100
(D) ₹ 1,88,610
Hint:
Dividend = (2,00,000 – 10,000) × 10% = 19,000
Surplus after dividend = 67,000 + 1,90,610 – 19,000 – 50,000 = 1,88,610.
Answer:
(D) ₹ 1,88,610

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