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7. Section -----------of companies act 1956 deals with the scheme of stock invest
A. 69 to 70
B. 69 to 71
C. 69 to 72
D. 69 to 73
ANSWER: D
11. After getting minimum subscription of shares, the company has to allot shares with in---------------days.
A. 90
B. 100
C. 110
D. 120
ANSWER: D
12. 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
13. In case of public limited company, after getting the-----------the company can start the business
A. Memorandum of Association
B. Table A
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15. 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
16. When the shares are issued to purchase the fixed asset, -------------should be credited.
A. asset a/c
B. share premium a/c
C. share capital a/c
D. share allotment a/c
ANSWER: C
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ANSWER: A
24. When shares are forfeited, the share capital account is debited by--------------.
A. paid up capital
B. called-up capital
C. calls in arrears
D. issue price of shares
ANSWER: B
27. If a share of Rs. 10, on which Rs. 8 has been called and Rs. 5 has been received is forfeited share
capital account 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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31. A call money on shares should not exceed -------------of the face value of shares.
A. 1/9
B. 1/7
C. 1/5
D. 1/4
ANSWER: D
34. When shares are issued to promoters for their services,-----------is to be debited.
A. bank account
B. promoter account
C. goodwill account
D. discount account
ANSWER: C
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39. Which section of the companies Act 1956 provides for the issue and redemption of preference shares?
A. Section 76
B. Section 75
C. Section 77
D. Section 78
ANSWER: D
40. The company intends to issue one right share for every four shares. Market price of the share is Rs.
120. Right issue price is Rs. 95. Value of right is ---------------.
A. Rs. 20
B. Rs. 25
C. Rs. 30
D. Rs. 40
ANSWER: B
41. The amount on shares paid by share holders before it is actually due is-------------------.
A. calls in arrears.
B. calls in advance
C. reserve capital
D. Subscribed capital
ANSWER: B
42. The amount on shares not paid by share holders after it has been called by the company is--------------.
A. calls in arrears
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B. calls in advance
C. reserve capital
D. subscribed capital
ANSWER: A
44. When shares are forfeited, the amount already received is----------------.
A. refunded
B. treated as revenue profit
C. retained by company
D. distributed as dividend
ANSWER: C
46. If proposed dividend is 18% of the paid up capital, the percentage of profit transferred to reserve
is-----------.
A. 2.5%
B. 5%
C. 7.5%
D. 10%
ANSWER: D
47. 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
49. 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-------------.
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A. absorption
B. amalgamation
C. internal reconstruction
D. external reconstruction
ANSWER: C
50. 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
51. 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
54. Company can issue redeemable preference shares which are redeemable within--------------.
A. 10 years from the date of issue.
B. 5 years from the date of issue
C. 7 years from the date of issue
D. 2 years from the date of issue.
ANSWER: B
55. In what form is the profits of the company are distributed amongst the shareholders?
A. shares
B. premium from issue of share
C. reserves
D. dividend
ANSWER: D
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B. final dividend
C. semi dividend
D. half-yearly dividend
ANSWER: A
57. The total remuneration payable to the managerial personnel should not exceed----------net profits.
A. 5%
B. 10%
C. 11%
D. 15%
ANSWER: C
61. Realisation expenses met by the purchasing company should be debited to-------------.
A. realisation account
B. goodwill account
C. vendor account
D. capital reserve account
ANSWER: C
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67. Gross profit is to be apportioned between pre and post incorporation periods in-----------------.
A. Time ratio
B. adjusted time ratio
C. sales 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 sales 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. Sales ratio
D. adjusted time ratio
ANSWER: A
70. The salary paid to manager, for a period before acquisition of business, should be---------.
A. divided time ratio
B. posted in pre - incorporation period
C. posted in post- incorporation period
D. divided in adjusted time ratio.
ANSWER: B
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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. Discount received from creditors and carriage inwards should be divided between pre and post
incorporation periods in----------------.
A. Sales ratio
B. purchase ratio
C. adjusted time ratio
D. None of the above.
ANSWER: A
73. 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 the asset side of the company's balance sheet, fictitious asset like Discount on issue of debentures are
shown under the heading
A. fixed assets
B. investments
C. current assets
D. miscellaneous expenditure
ANSWER: D
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78. Debentures are shown in the balance sheet under the heading
A. unsecured loans
B. current liabilities
C. secured loans
D. share capital
ANSWER: C
81. 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% of the annual profit
B. 3% of the annual profits
C. 5% of the annual profits
D. 10% of the annual profits
ANSWER: C
83. Own debentures account (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
84. The balance of sinking fund investment account after the realization of investment is transferred to
--------------.
A. P&L account
B. Debentures account
C. sinking fund account
D. general reserve account
ANSWER: C
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85. When debentures 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 account is --------------.
A. Rs. 5
B. Rs. 10
C. Rs. 95
D. Rs. 100
ANSWER: A
86. A company has issued capital of Rs. 40,000 equity shares of Rs. 10 each fully paid. It decides to
convert its capital into 80,000 equity shares of Rs. 5 each. It is case of--------------.
A. Decrease in unissued capital
B. sub-division of share capital
C. Consolidation of share capital
D. None of the above
ANSWER: B
88. 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
89. Purchase consideration AS-14, should include cash and securities agreed to be given by the transferee
company to transferor company's ---------------.
A. shareholders
B. shareholders & debenture holders
C. creditors, debenture holders and shareholders.
D. None of the above
ANSWER: A
91. 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. 8 years
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C. 20 years
D. 5 years
ANSWER: D
92. 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
93. 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
94. When shares or debentures are issued at a premium ------------account should be credited with the
amount of the premium.
A. Share premium
B. securities premium
C. premium
D. profit on issue of shares
ANSWER: B
96. Rent is divided in the ratio while calculating pre- incorporated profit.
A. time ratio
B. sales ratio
C. adjusted time ratio
D. purchase ratio
ANSWER: A
97. Loss prior top incorporation is to be shown in the assets side of the balance sheet under the
heading----------------.
A. fixed assets
B. loans and advances
C. current assets
D. Miscellaneous expenses
ANSWER: D
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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 account is shown under the head--------------------.
A. share capital
B. Reserves and surplus
C. current liabilities
D. current provision.
ANSWER: B
101. -----------section of the companies Act provides the power of issuing debentures.
A. 293
B. 292(1)
C. 295
D. 287
ANSWER: B
103. Discount and loss on issue of debentures are shown under ---------------.
A. Current liabilities
B. fixed assets
C. reserves and surplus
D. miscellaneous expenses
ANSWER: D
104. 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
105. If the quoted price includes the interest on the debenture form 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: B
106. If the quoted price does not include the interest on 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: A
111. Increases in the value of fixed assets at the time of reconstruction will be credited to ------------------.
A. Capital reserve account
B. Share capital account
C. General Reserve account
D. Capital reduction account
ANSWER: A
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C. capital reserve
D. preference share capital
ANSWER: B
113. At the time of reorganisation the amount of shares surrounded by shareholder is transferred
to---------------.
A. Capital reserve account
B. capital reduction account
C. general reserve account
D. surrendered share account
ANSWER: D
114. For writing off the accumulated losses under the scheme of capital reduction we
debit--------------------.
A. share capital account
B. capital reserve account
C. general reserve account
D. Accumulated loss account
ANSWER: A
115. In case of consolidation of share capital the total number of shares of the company-------------.
A. Decreases
B. Increases
C. Equal
D. None of the above
ANSWER: C
116. When uncalled amount of share capital is to be reduced then the amount of paid up capital of the
company is called--------------.
A. stock
B. Does not change
C. advances
D. arrears
ANSWER: D
118. If the creditors are willing, their claim against the company-------------be reduced.
A. Income
B. capital
C. cannot
D. interest
ANSWER: D
119. Reserves of the company -----------------be utilised in meeting the accumulated losses at the time of
internal reconstruction.
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A. can
B. cannot
C. may be
D. none of the above
ANSWER: A
120. The various losses can be written with the help of capital reduction account at the time of--------------
reconstruction.
A. External
B. outsources
C. Internal
D. Surplus
ANSWER: A
123. The capital reduction scheme can be implemented only after getting permission from-------------.
A. Central government
B. controller of capital issues
C. share holders
D. the competent court.
ANSWER: C
124. Any decreases in the value of assets at the time of internal reconstruction, will be changed
to-------------.
A. Goodwill a/c
B. capital reduction a/c
C. Revaluation a/c
D. share capital a/c
ANSWER: B
126. A company can convert fully paid ---------------into stock and also reconvert ----------------back into
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shares
A. securities
B. Debentures
C. Deposits
D. share,stock
ANSWER: D
127. Any debit balance in P&L a/c represents ------------and such losses will be written off as part of capital
reorganization.
A. Gains
B. resources
C. accumulated losses
D. Incomes
ANSWER: C
128. In the scheme of capital reduction, any new liability to be provided for, such as arrears of preference
dividend, must be met out of-----------account.
A. income reduction
B. trading
C. capital reduction
D. debtors
ANSWER: C
129. Inter company 'owing' should be -------------while preparing the balance sheet of the transferee
company after completion of amalgamation.
A. eliminated
B. not eliminated
C. appointed
D. none of the above.
ANSWER: A
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142. For final payment to the equity share holders ----------------is debited.
A. Debenture holders account
B. Bank account
C. preliminary expenses account
D. None of the above
ANSWER: B
143. When two or more companies liquidate to form a new company is is called-----------------.
A. Amalgamation
B. Absorption
C. Reconstruction
D. None of the above
ANSWER: A
144. 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
145. Liquidation expenses paid by the purchasing company are to be debited to ------------------.
A. Preliminary expenses account
B. Business purchase account
C. Recreation expenses
D. None of the above.
ANSWER: D
147. A Ltd takes over the net assets of B Ltd valued at Rs. 8,00,000 and agrees to pay Rs. 5,00,000 to
equity share holders Rs. 2,00,000 to preference share holders and balance to the debenture holders. The
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148. X Ltd acquires the business of Y Ltd whose net assets as per the balance sheet work out to Rs.
5,00,000. X Ltd agrees to pay Rs. 3,50,000 to equity shareholders, Rs. 2,50,000 to preference share holders
and Rs. 2,00,000 to debenture holders. The purchase consideration agreed to be paid is-------------------.
A. Rs. 8,00,000
B. Rs. 6,00,000
C. Rs. 5,00,000
D. Rs. 7,00,000
ANSWER: A
149. A Ltd takes over B Ltd and agrees to allot its shares. The intrinsic values of shares of A Ltd and B Ltd
are Rs. 10,00,000 and Rs. 100 respectively. The basis of exchange on intrinsic value between A Ltd and B
Ltd should be-------------------.
A. One share of A Ltd for one share of B Ltd
B. Two shares of A Ltd for Three shares of B Ltd
C. Three shares of A Ltd for Two shares of B Ltd
D. None of the above
ANSWER: B
150. When a company converts its equity shares into capital stock then the account to be credited
is--------------.
A. Equity share capital account
B. Preference share capital account.
C. Equity share stock account.
D. No entry is required.
ANSWER: C
Staff Name
Bhuvaneswari V .
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