Final Account MCQs PDF
Final Account MCQs PDF
6. Section ______ of Companies Act 1956 deals with the scheme of Stock-invest.
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A. 69-70
B. 69-71
C. 69-72
D. 69-73
ANSWER: D
7. When shares are issued at premium which of the following account is credited?
A. Share premium a/c.
B. Share first call a/c.
C. Share allotment a/c.
D. Share forfeited a/c.
ANSWER: A
8. After getting minimum subscription of shares, the company has to allot shares within ____ days.
A. 90
B. 100
C. 110
D. 120
ANSWER: D
9. If the minimum subscription is not received by the company, then the refund of application money
should be made within ______ days.
A. 7
B. 9
C. 10
D. 22
ANSWER: C
10. In case of public company, only after getting the _______ the company can start the business.
A. memorandum of Association.
B. table A.
C. certificate of commencement of business.
D. articles of association.
ANSWER: C
12. The difference between called-up capital and paid-up capital is ________.
A. issued capital
B. unpaid capital
C. reserve capital
D. uncalled capital
ANSWER: B
13. When the shares are issued at premium to purchase the fixed asset, ______ should be credited.
A. asset a/c.
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B. share a/c.
C. share capital a/c.
D. share allotment a/c.
ANSWER: C
14. According to Companies act _____ percentage of interest is to be paid on calls in arrears.
A. 3
B. 4
C. 5
D. 6
ANSWER: C
18. The rate of discount on shares cannot exceed ___ percent of the face value.
A. 5
B. 10
C. 12
D. 18
ANSWER: B
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D. direct expenses.
ANSWER: B
21. When shares are forfeited, the share capital a/c is debited by ____.
A. paid-up capital.
B. called-up capital.
C. calls in arrears.
D. issue price of shares
ANSWER: B
24. If a share of Rs. 10, on which Rs.8 has been called and Rs.5 has been received is forfeited share capital
a/c in this case will be debited with _______.
A. Rs. 2
B. Rs. 5
C. Rs. 8
D. Rs. 10
ANSWER: C
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ANSWER: C
30. When shares are issued to promoters for their services, _____ is to be debited.
A. bank a/c.
B. promoter a/c
C. goodwill a/c.
D. discount a/c.
ANSWER: C
32. Which section of the companies act 1956 provides for the issue and redemption of preference shares?
A. Section 75.
B. Section 76.
C. Section 77.
D. Section 80.
ANSWER: D
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35. The amount on shares paid by share holders before it is actually due is __________.
A. calls in advance.
B. reserve capital.
C. subscribed capital.
D. calls in arrear.
ANSWER: A
37. When shares are forfeited, the amount which is already received is ____.
A. refunded.
B. treated as revenue profit.
C. retained by company.
D. distributed as dividend.
ANSWER: C
38. When the company takes over the running business, the difference between the assets and liabilities is
transferred to ____.
A. goodwill a/c.
B. capital reserve.
C. either a or b
D. neither a nor b
ANSWER: C
41. When two or more companies going to liquidation and new company is formed then it is known as
____.
A. absorption.
B. amalgamation.
C. internal Reconstruction.
D. external Reconstruction.
ANSWER: B
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42. When a new company is formed with the same name in order to take over the business of the existing
company it is called as _____.
A. absorption.
B. amalgamation.
C. internal Reconstruction.
D. external Reconstruction.
ANSWER: C
43. When an existing company takes over the business of one or more existing Companies, it is called
_______.
A. amalgamation.
B. absorption.
C. reconstruction.
D. none of the above.
ANSWER: B
44. The cost of liquidation of the vendor company agreed to be paid by the purchasing company is debited
to __________ in the books of the later company.
A. goodwill account.
B. capital reserve account.
C. goodwill and Capital account.
D. none of the above.
ANSWER: C
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49. In what form, the profits of the company are distributed amongst the shareholders?
A. shares.
B. premium from issue of share.
C. reserves
D. dividend.
ANSWER: D
51. The total remuneration payable to the managerial personnel should not exceed___ percent of the net
profit.
A. 5
B. 10
C. 11
D. 15
ANSWER: C
55. Underwriting commission on shares shall not exceed ____ percent of issue price.
A. 2
B. 2.5
C. 3
D. 5
ANSWER: D
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56. The dividend declared should be paid or the warrant in respect thereof should be posted within _____
of declaration of dividend.
A. 21 days.
B. 30days.
C. 42 days.
D. 50 days.
ANSWER: C
57. After obtaining the certificate to commence the business, the company may be wound up if it does not
commence business within ________.
A. 6 months.
B. one year.
C. two years.
D. three years.
ANSWER: D
58. When an arrangement has been proposed for the purpose of reconstruction of a company, the scheme
shall be approved by the holders of the ___________in the value of the shares concerned.
A. one third.
B. half.
C. three fourth.
D. one fourth.
ANSWER: C
62. On sale of business , if the partners wish to receive the dividends in future in profit sharing ratio, the
equity shares received from the company must be distributed in the ratio of _______.
A. profit sharing.
B. capitals.
C. final claim.
D. no. of shares subscribed by memorandum of association.
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ANSWER: B
67. Gross profit is to be apportioned between pre and post incorporation periods in ______.
A. time ratio.
B. adjusted time ratio.
C. sale ratio.
D. none of the above.
ANSWER: C
68. Bad debts recovered which was written off before purchase of business should be ______.
A. divided in time ratio.
B. divided in sale ratio.
C. posted in pre-incorporation period
D. posted in post- incorporation period.
ANSWER: C
69. Audit fees should be divided between pre and post incorporation periods in ______.
A. time ratio.
B. time ratio or posted only in post-incorporation period.
C. sale ratio
D. adjusted time ratio.
ANSWER: B
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70. The salary paid to manager , for a period before acquisition of business , should be _______.
A. divided in time ratio .
B. posted in pre-incorporation period .
C. posted in post-incorporation period .
D. divided in adjusted time ratio.
ANSWER: B
71. Interest-paid to Vendor should be divided between pre and post incorporation periods in _________.
A. adjusted time ratio.
B. time ratio.
C. sales ratio.
D. none of the above.
ANSWER: A
72. In the balance sheet of a limited company , assets are arranged in the order of _____.
A. liquidity .
B. permanence.
C. neither of the two .
D. either liquidity or permanence .
ANSWER: B
75. In the liabilities side of the company's balance sheet , calls in arrears are shown _____.
A. under the heading Reserves and surplus.
B. under the heading current liabilities.
C. under the heading Secured loans .
D. by subtracting the amount from the called up capital .
ANSWER: D
76. In balance sheet of a company, fictitious asset like Discount on issue of debenture are shown under the
heading __________.
A. fixed assets .
B. investments.
C. current assets.
D. miscellaneous expenditure.
ANSWER: D
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A. fixed assets.
B. current asset
C. fictitious asset.
D. investment.
ANSWER: C
79. In the liabilities side of the balance sheet, unclaimed dividend is shown under the heading _______.
A. share capital.
B. current liabilities and provisions.
C. secured loans.
D. unsecured loans.
ANSWER: B
81. Debentures are shown in the balance sheet under the heading ____________.
A. unsecured loans.
B. current liabilities.
C. secured loans.
D. share capital.
ANSWER: C
82. The maximum remuneration payable to a part time director (without managing director(s) or whole time
director(s), or manager) should not exceed ____________.
A. 1 percent of the annual profit.
B. 3 percent of the annual profits.
C. 5 percent of the annual profits.
D. 10 percent of the annual profits .
ANSWER: C
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B. fixed in nature.
C. optional.
D. appropriation.
ANSWER: B
87. Own debentures a/c (at the time of purchase of own debentures) is always debited with ____.
A. the fair value.
B. the cum-interest price.
C. the ex-interest price.
D. face value.
ANSWER: C
88. The balance of sinking fund investment a/c after the realization of investment is transferred to
A. P&L a/c.
B. debenture a/c.
C. sinking fund a/c.
D. general reserve a/c.
ANSWER: C
89. After the redemption of all debentures, the balance in sinking fund is transferred to
A. SF investment a/c
B. general reserve a/c
C. capital reserve a/c
D. redemption reserve a/c
ANSWER: B
90. When debenture of Rs.100 is issued for Rs. 95 and it is redeemable at Rs. 5 premium, the amount
which should be debited to loss on redemption of debenture a/c is ____.
A. Rs.5.
B. Rs.10.
C. Rs.95.
D. Rs.100.
ANSWER: A
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C. AS-14.
D. AS -3.
ANSWER: C
92. Pooling of interests method is used to account for amalgamation in the nature of ____.
A. Purchase.
B. Sale.
C. Merger.
D. None of the above.
ANSWER: A
93. Purchase consideration, as per AS-14, should include cash and securities agreed to be given by the
transferee company to ___________ of transferor company.
A. Shareholders.
B. Shareholders & Debenture holders.
C. Creditors, Debenture holders and Shareholders.
D. None of the above.
ANSWER: A
94. Excess purchase consideration paid to the transferor company and debited to goodwill account under
the purchase method of accounting for amalgamation should be written off within a period of _________.
A. 2 years .
B. 20 years .
C. 5 years .
D. 8 years .
ANSWER: C
95. The price payable by a company for business acquired is known as _______.
A. purchase consideration.
B. net worth.
C. net asset.
D. lump sum.
ANSWER: A
96. If the net tangible assets exceeds the purchase consideration , the difference will be treated as .
A. goodwill.
B. capital reserve.
C. acquisition cost
D. capital redemption reserve.
ANSWER: B
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99. Loose tools is shown in the balance sheet under the head __________.
A. fixed assets.
B. loans and advances.
C. current assets.
D. Miscellaneous assets.
ANSWER: A
100. The surplus found in P&L appropriation a/c is shown under the head _________.
A. share capital.
B. reserve and surpluses.
C. current liabilities.
D. current provision.
ANSWER: B
101. _____ section of the companies act provides the power of issuing debentures.
A. 293
B. 295
C. 291(1)
D. 284
ANSWER: C
103. When debentures are redeemed out of profits, the profit equivalent to the debenture is transferred to
_______.
A. sinking fund.
B. debenture redemption fund.
C. debenture.
D. debenture holders.
ANSWER: B
104. If the quoted price includes the interest on the debenture from the previous interest to till the date of
sale, the price is_________.
A. ex-interest price.
B. cum-interest price.
C. interest free price.
D. whole sale price.
ANSWER: B
105. If the quoted price does not include the interest on the debenture from the previous interest to till the
date of sale, the price is_________.
A. ex-interest price.
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B. cum-interest price.
C. interest free price
D. whole sale price.
ANSWER: A
109. Company can alter the share capital provided it is authorized by __________.
A. board of directors.
B. share holders.
C. memorandum of association.
D. articles of association..
ANSWER: C
110. The company can implement the capital reduction scheme only after getting permission from
___________.
A. central government.
B. share holders.
C. competent court.
D. controller of capital issue.
ANSWER: C
112. Increases in the value of fixed assets at the time of reconstruction will be credited to
A. Capital reserve account.
B. Share capital account.
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113. To carry out the scheme of capital reduction ------- approval is necessary.
A. Court.
B. central government.
C. Company law board.
D. registers of company.
ANSWER: C
114. Audit fees should be divided between pre and post incorporation periods in ______.
A. time ratio.
B. time ratio or posted only in post-incorporation period.
C. sale ratio
D. adjusted time ratio.
ANSWER: B
115. In the liabilities side of the balance sheet, unclaimed dividend is shown under the heading _______.
A. share capital.
B. current liabilities and provisions.
C. secured loans.
D. unsecured loans.
ANSWER: B
116. The balance in the capital reduction account after writing of all accumulated losses and others is
transferred to
A. Capital reserve account.
B. Goodwill account.
C. General reserve account.
D. share capital account.
ANSWER: C
118. Premium received on the issue of share can be utilised for ___.
A. issue of fully paid bonus shares
B. writing of preliminary expenses
C. providing premium payable on redemption of preference shares
D. all the above
ANSWER: D
119. When the shares are issued for acquiring the assets, then _____ is debited to take the assets.
A. Assets a/c
B. vendor a/c
C. share capital a/c
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D. cash a/c
ANSWER: A
120. when the shares are issued to existing shareholders without receiving cash, it is known as __________.
A. right issue
B. bonus issue
C. initial issue
D. further issue
ANSWER: B
121. when the shares are issued to existing shareholders on receipt of cash, it is known as __________.
A. right issue
B. bonus issue
C. initial issue
D. further issue
ANSWER: A
124. According to companies (amendment) act 1999, the premium on issue of debentures should be
credited to ____.
A. share premium a/c.
B. debenture premium a/c.
C. securities premium a/c.
D. premium a/c.
ANSWER: C
125. When the entire issue is underwritten by one person, his liability will be equal to _______.
A. No. of shares underwritten
B. no. of shares underwritten - no. of shares applied by the public
C. no. of shares applied by the public
D. none of the above
ANSWER: B
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ANSWER: A
127. The underwriting commission on debentures should not exceed _______ percent of issue price.
A. 5
B. 3
C. 2.5
D. 1
ANSWER: C
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135. At the time of debenture purchase ,the price paid for interest due is ____.
A. capital charge
B. revenue charge
C. discount
D. none of the above
ANSWER: B
136. Sec. 100 to 105 of the companies act deals with _________.
A. amalgamation
B. absorption
C. reconstruction
D. capital reduction
ANSWER: D
137. Which section deals with issue and redemption of preference shares?
A. 70
B. 77
C. 78
D. 74B
ANSWER: A
140. For any sacrifice made by debenture holders or creditors _________ is credited.
A. Capital reduction A/c.
B. Bank A/c.
C. Capital reserve A/c.
D. Asset A/c.
ANSWER: A
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B. Bank A/c.
C. Assets A/c.
D. Creditors A/c.
ANSWER: B
145. In case of amalgamation in the nature of merger. Under pooling of interests method, for purchase
consideration payable __________ is credited
A. Liquidator of transferor company
B. Reserves A/c.
C. surplus.
D. None of the above.
ANSWER: A
147. A ltd takes over B ltd , with a exception of creditors and agrees to pay Rs.500000 to the share holders
of B ltd .Creditors stood at Rs.100000.the purchase consideration is to be taken as -----------.
A. Rs.500000.
B. Rs.600000.
C. Rs.400000.
D. Rs.700000.
ANSWER: C
148. A ltd takes over b ltd and agrees to discharge debenture holders of B ltd at the premium of 5 % the
premium should be debited in the books the vendor company to -------------.
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A. Realisation A\c.
B. Share holders A\c.
C. Profit and loss A\c.
D. Bank A\c.
ANSWER: B
149. When the purchasing company allots shares at market price the calculation of purchase consideration
is based on --------------------.
A. Market price.
B. Paid up value.
C. Average of the above two.
D. None of the above.
ANSWER: A
150. X ltd acquires the business of Y ltd whose net assets as per the balance sheet work out to Rs.500000.X
ltd agrees to pay Rs.350000 to equity shareholders , Rs.250000 to preference share holders and Rs. 200000
to debenture holders the purchase consideration agreed to be paid is ___________.
A. Rs.800000.
B. Rs.600000.
C. Rs.500000.
D. Rs.700000.
ANSWER: A
Staff Name
Chitrakala I .
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