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Isssue of Shares and Debentures MCQ
Isssue of Shares and Debentures MCQ
of the book :
(i) Meaning and Characteristics of a Company
1. A company has ……………
(A) Separate Legal Entity
(B) Perpetual Existence
(C) Limited Liability
(D) All of the Above
Answer
Answer: D
2. Shareholders are :
(A) Customers of the Company
(B) Owners of the Company
(C) Creditors of the Company
(D) None of these
Answer
Answer: B
Answer
Answer: C
4. A Company is created by :
(A) Special act of the Parliament
(B) Companies Act
(C) Investors
(D) Members
Answer
Answer: B
Answer
Answer: C
Answer
Answer: A
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
Answer
Answer: D
Answer
Answer: C
Answer
Answer: A
14. To whom dividend is given at a fixed rate in a company?
(A) To equity shareholders
(B) To preference shareholders
(C) To debenture holders
(D) To promoters
Answer
Answer: B
Answer
Answer: D
16. The shares on which there is 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-guaranteed preference share
Answer
Answer: A
17. 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 Share
(C) Convertible Preference Share
(D) Non-convertible Preference Share
Answer
Answer: C
18. 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
Answer
Answer: B
19. Which shareholders have a right to receive the arrears of dividend from future
profits :
(A) Redeemable Preference Shares
(B) Participating Preference Shares
(C) Cumulative Preference Shares
(D) Non-Cumulative Preference Shares
Answer
Answer: C
20. Which shareholders are returned their capital after some specified time :
(A) Redeemable Preference Shares
(B) Irredeemable Preference Shares
(C) Cumulative Preference Shares
(D) Participating Preference Shares
Answer
Answer: A
Answer
Answer: D
Answer
Answer: C
(iii) Meaning, Nature and Types of Share Capital
23. 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
Answer
Answer: D
24. The portion of the capital which can be called-up only on the winding up of
the Company is called (CPT Dec. 2012)
(A) Authorised Capital
(B) Called up Capital
(C) Uncalled Capital
(D) Reserve Capital
Answer
Answer: D
Answer
Answer: B
26 is transferred to Capital Reserve.
(A) Profit from sale of fixed assets
(B) Premium on issue of shares
(C) Profit on forfeiture of shares
(D) All of the Above
Answer
Answer: D
Answer
Answer: D
Answer
Answer: D
29. 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
Answer
Answer: B
30. 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
Answer
Answer: C
Answer
Answer: D
32. Which of the following statements is true? (C.S. Foundation, Dec. 2012)
(A) Authorised Capital = Issued Capital
(B) Authorised Capital > Issued Capital
(C) Paid up Capital > Issued Capital
(D) None of the above
Answer
Answer: B
Answer
Answer: A
Answer
Answer: C
35. In case of private placement 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) Prepares the Asset side of Balance Sheet
Answer
Answer: A
36. In case of private placement of shares, to raise the amount of capital a
company :
(A) invites the public through prospectus
(B) does not invite the public
(C) invites the public through advertisement
(D) invites the public through memorandum of association
Answer
Answer: B
Answer
Answer: C
Answer
Answer: D
39. Public subscription of shares include :
(A) To Issue Prospectus
(B) To Receive Applications
(C) To Make Allotment
(D) All of the Above
Answer
Answer: D
40. Which of the following will define, when appropriation of a certain number of
shares is made to an applicant in response to his application? (C.S. Foundation,
Dec. 2012)
(A) Share allotment
(B) Share forfeiture
(C) Share trading
(D) Share Purchase
Answer
Answer: A
41. 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
Answer
Answer: C
Answer
Answer: C
Answer
Answer: B
Answer
Answer: C
Answer
Answer: B
47. As per SEBI Guidelines, Application money should not be less than
……………. of the issue price of each share.
(A) 10%
(B) 15%
(C) 25%
(D) 50%
Answer
Answer: C
48. 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 Reserve Account
(D) Cash Account
Answer
Answer: B
49. 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
Answer
Answer: C
50. 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
Answer
Answer: B
Answer
Answer: D
52. 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
Answer
Answer: D
Answer
Answer: C
Answer
Answer: D
Answer
Answer: D
56. For whal purpose securities premium reserve account cannot be utilized?
(CPT; Dec. 2010)
(A) Amortization of preliminary expenses
(B) Distribution of dividend
(C) Issue of fully paid bonus shares
(D) Buy Back of own shares
Answer
Answer: B
Answer
Answer: B
58. A Company issued 50,000 shares of ₹20 each at 5% premium. ₹10 were
payable on application and balance on allotment. What will be the allotment
amount?
(A) ₹5,00,000
(B) ₹4,75,000
(C) ₹5,50,000
(D) ₹5,25,000
Answer
Answer: C
Answer
Answer: B
Answer
Answer: B
61. 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.
Answer
Answer: A
Answer
Answer: D
Answer
Answer: B
64. 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
Answer
Answer: D
65. 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
Answer
Answer: D
66. 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
Answer
Answer: D
Answer
Answer: B
68. Authorised capital of a Company is div ided 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
Answer
Answer: A
Answer
Answer: A
70. E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-
rata basis. The amount payable on 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 : (C.F. Foundation, June 2013)
(A) 60 shares; ₹120
(B) 340 shares; ₹160
(C) 320 shares, ₹200
(D) 300 shares; ₹240
Answer
Answer: D
71. If applicants for 80,000 shares were allotted 60,000 shares on prorata 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
Answer
Answer: C
Answer
Answer: B
73. 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 first call? Excess application
money is adjusted towards amount due on allotment and calls.
(A) ₹6,000
(B) Nil
(C) ₹16,000
(D) ₹10,000
Answer
Answer: A
74. 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 allotment?
(A) ₹8,000
(B) ₹12,000
(C) Nil
(D) None
Answer
Answer: C
75. A company issued 5.000 equity shares of ₹100 each at par payable as to :
₹40 on application; ?50 on allotment and ₹10 on call.
Applications were received for 8,000 shares. 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
Answer
Answer: C
Answer
Answer: C
Answer
Answer: B
78. 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
Answer
Answer: B
79. 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
Answer
Answer: B
Answer
Answer: A
(v) Forfeiture of Shares
81. Forfeiture of shares results in the reduction of:
(A) Subscribed Capital
(B) Authorised Capital
(C) Reserve Capital
(D) Fixed Assets
Answer
Answer: A
82. 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
Answer
Answer: C
83. At the time of forfeiture of shares the share capital account is debited with
(CPT, June 2011)
(A) Face value
(B) Called up value
(C) Paid up value
(D) Issued value
Answer
Answer: B
Answer
Answer: C
85. If the Premium on the forfeited shares has already been received, then
Securities Premium A/c should be : (CPT, June 2011)
(A) Credited
(B) Debited
(C) No treatment
(D) None of these
Answer
Answer: C
86. Balance of share forfeiture account is shown in the balance sheet under the
head …………… (CPT, Dec. 2010)
(A) Share Capital Account
(B) Reserve and Surplus
(C) Current Liabilities and Provisions
(D) Unsecured Loans
Answer
Answer: A
87. 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
Answer
Answer: B
88. If a share of ₹10 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
Answer
Answer: C
Answer
Answer: C
90. 600 shares of ₹10 each were forfeited for non-payment of ₹2 per share on
first call and ₹5 per share on final call. Share Forfeiture Account will be credited
with:
(A) ₹1,200
(B) ₹1,800
(C) ₹3,000
(D) ₹4,200
Answer
Answer: B
91. 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 73 per
share. Share Forfeiture Account will be credited with :
(A) ₹1,600
(B) ₹2,400
(C) ₹3,200
(D) ₹4,800
Answer
Answer: C
92. 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 72 per share on
final call. Share Forfeiture Account will be credited with :
(A) ₹2,400
(B) ₹4,800
(C) ₹3,200
(D) ₹7,200
Answer
Answer: B
93. A Company forfeited 300 shares of ₹10 each, ₹8 per share called up, on
which A 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
Answer
Answer: B
94. 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
Answer
Answer: C
95. If 400 shares of ₹10 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
Answer
Answer: B
96. If 500 shares of ₹10 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
Answer
Answer: A
Answer
Answer: C
98. 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 X2
per share. Entry on forfeiture will be :
Answer
Answer: D
Answer
Answer: C
Answer
Answer: B
101. The balance of the forfeited shares account after re-issue of forfeited shares
is transferred to :
(A) Statement of Profit & Loss
(B) Share Capital A/c
(C) Capital Reserve A/c
(D) General Reserve A/c
Answer
Answer: C
102. A 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
Answer
Answer: D
103. L 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
Answer
Answer: B
104.400 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
Answer
Answer: A
105. 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
Answer
Answer: D
106. 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 to amount to be transferred to capital
Reserve?
(A) ₹2,400
(B) ₹1,800
(C) ₹3,000
(D) ₹3,600
Answer
Answer: A
107. If a share of 7 100 on which 760 has been paid, is forfeited, it can be re-
issued at the minimum price of:
(A) ₹60
(B) ₹100
(C) ₹40
(D) ₹140
Answer
Answer: C
108. A Company forfeited 1,000 shares of ₹10 each fully called, on which ₹6,000
has been paid. Out of these 800 shares were reissued upon payment of ₹6,600.
What is the amount to be transferred to Capital Reserve?
(A) ₹4,800
(B) ₹6,000
(C) ₹4,600
(D) ₹3,400
Answer
Answer: D
109. A company forfeited 700 shares of 710 each, on which only 75 per share
was paid. Of these, 200 shares were reissued at 79 per share. Amount from
Share Forfeiture Account to Capital Reserve Account will be transferred :
(A) ₹800
(B) ₹200
(C) ₹3,500
(D) ₹2,500
Answer
Answer: A
110. 300 equity shares of ₹10 each were issued at ₹5 per share premium. Only
₹4 per share on application has been paid on these shares. These shares were
forfeited. Later on out of these, 200 shares were reissued at ₹12 per share as
fully paid. What will be amount of Capital Reserve?
(A) ₹500
(B) ₹1,200
(C) ₹200
(D) ₹800
Answer
Answer: D
111. 700 shares of ₹10 each were reissued as ₹9 paid up for ₹7 per share. Entry
for reissue will be :
Answer
Answer: C
112. 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₹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
Answer
Answer: D
113. Using information given in Q. 112 what is the net balance in Share
Forfeiture Account:
(A) ₹9,600
(B) ₹6,400
(C) ₹16,000
(D) ₹2,800
Answer
Answer: B
114. 6 Ltd. forfeited 300 shares of ₹100 each, ₹70 called up, for non-payment of
first call of ₹20 per share. Out of these, 200 shares were reissued for 760 per
share as ₹70 paid up. What is the amount to be transferred to Capital Reserve
Account?
(A) ₹13,000
(B) ₹8,000
(C) ₹2,000
(D) ₹7,000
Answer
Answer: B
115. 2,000 shares of ₹10, on which ₹7 has been called and ₹5 has been paid,
are forfeited. Out of these, 1,500 shares are re-issued for ₹9 as fully paid. What
is the amount to be transferred to Capital Reserve Account?
(A) ₹6,000
(B) ₹7,500
(C) ₹10,000
(D) ₹8,500
Answer
Answer: A
116. X Ltd. forfeited 400 shares of ₹20 each ₹15 called up on which application
and allotment money of ₹11 per share has been received. Of these, 100 shares
were re-issued as fully paid-up for ₹24 per share. What is the amount to be
transferred to Capital Reserve?
(A) ₹1,500
(B) ₹4,400
(C) ₹1,100
(D) ₹3,500
Answer
Answer: C
117. z Ltd. forfeited 300 shares of ₹10 each issued at 20% premium (₹9 called
up) on which ₹4 of allotment (including premium) and first 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
Answer
Answer: A
118. Using information given in Q. 117, what is the net balance left in Share
Forfeiture Account:
(A) ₹1,400
(B) ₹1,500
(C) ₹900
(D) ₹1,000
Answer
Answer: D
119. P Ltd. forfeited 150 shares of ₹10 each, issued at a premium of ₹2, for non-
payment of the final call of ₹3. Out of these, 100 shares were re-issued at ₹11
per share. How much amount would be transferred to capital reserve? (C.S.
Foundation, Dec. 2012)
(A) ₹700
(B) ₹500
(C) ₹1,200
(D) ₹300
Answer
Answer: A
120. XY Limited issued 2,50,000 equity shares of ₹10 each at a premium of ₹10
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: (C.S. Foundation, June 2013)
(A) Over subscription
(B) Pro-rata allotment
(C) Forfeiture of Shares
(D) All of the above
Answer
Answer: D
121. Metacaf Ltd. issued 50,000 shares of ₹100 each payable ₹20 on application
(on 1st May 2012); ₹30 on allotment (on 1st January 2013); ₹20 on first call (on
1st July 2013) and the balance on final call (on 1st February 2014). Shankar, a
shareholder holding 5,000 shares did not pay the first call on the due date. The
second call was made and Shankar paid the first call amount along with the
second call. All sums due were received.
Total amount received on 1st February was : (C.B.S.E. Sample Paper, 2015)
(A) ₹15,00,000
(B) ₹16,00,000
(C) ₹10,00,000
(D) ₹11,00,000
Answer
Answer: B