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Sunday, May 17, 2015

Corporate Accounting Multiple Choice Questions for Upcoming Exam

Corporate Accounting multiple choice questions
Fill in the Blanks:
a)      Share application account is a personal Account.
b)      Dividend declared between two annual general meetings is known as Interim Dividend.
c)       Reduction of capital is unlawful except when sanctioned by the court under sec.61.
d)      Pre-acquisition Profits are treated as capital Profit.
e)      The minimum Share Application money is 5% of the face value of shares.
f)       Accounting for Amalgamation is done as per Accounting Standard 14.
g)      Consolidated Financial Statements are prepared as per Accounting Standard 21.
h)      The portion of the authorized capital which can be called up only on the liquidation of the company is called Reserve capital.
i)        A debenture holder is the creditor of a company.
j)        Section 2(87) of the Companies Act, 2013 defines a subsidiary company.
k)      Public Ltd. Companies cannot issue deferred shares. (Equity/Preference/Deferred).
l)        Preference Shares can be redeemed if they are fully paid up.
m)    In case of holding company shares held by outsiders are known as Minority Interest.
n)      Internal reconstruction means reduction of a share capital of a company which is to be reconstructed.

o)      If shares are forfeited, share capital account is debited with the amount of called up value of shares.

State the following statements whether ‘true’ or ‘false’
a)      External Reconstruction means reduction of share capital of a company which is to be reconstructed.  False
b)      Consolidated Financial Statements are prepared as per Accounting Standard 21.                       True
c)       Out of the face value of the share at the least 10% is payable with application.                           False
d)      Debenture holders with be entitled on their debentures interest even if there is loss to a company.     True
e)      Minority interest= Paid-up value of shares held by outsider.                               False
f)       The director of the company must be a shareholder.                              False as per Companies Act, 2013
g)      Capital reserve is utilised to meet capital losses.                        True
h)      Pre-acquisition profits are treated as revenue profit.                              False
i)        Preference share cannot be redeemed unless they are fully paid up.                              True
j)        Profits made by subsidiary company after the date of acquisition of shares by the holding company are treated as revenue profits.                                          True
k)      A debenture holder is an owner of the company.                     False
l)        Under net payment method purchase consideration is calculated by adding the various payments made by the purchasing company.                     False
m)    Loss on issue of Debenture Account or debenture discount is a capital loss, not asset.            True
n)      Reduction of Capital is an unlawful except when sanctioned by the Court.                    True

Choose the correct answer to the following questions from the given alternatives:
1.       Share allotment Account is
a)      Personal
b)      Real
c)       Nominal
2.       Public Ltd companies cannot issue
a)      Sweet Equity Shares
b)      Deferred Shares
c)       Preference shares
3.       Capital Redemption Reserve is used
a)      For writing of Capital losses
b)      For issuing partly paid bonus share
c)       For issuing fully paid bonus share
4.       Debenture Holders are the
a)      Owner of the company
b)      Members of the company
c)       Creditors of the company
5.       Call-in-arrear is shown
a)      Under the head current liabilities
b)      By deducting from the called up capital
c)       Under the head current liabilities
6.       Internal reconstruction means
a)      Amalgamation in nature of merger
b)      Absorption
c)       Capital Reduction
7.       Post-acquisition Profit is
a)      Capital Profit
b)      Revenue Profit
c)       Super Profit
8.       Pre-acquisition profit is
a)      Capital Profit
b)      Revenue Profit
c)       Super Profit
9.       The maximum allowable discount on Equity shares is
a)      10%
b)      8%
c)       5%
10.   Dividend is usually paid on
a)      Called-up-capital
b)      Nominal capital
c)       Paid-up-capital
11.   As per the SEBI’s guidelines the minimum application money shall not be less than
a)      25% of issue price
b)      10% of the issue price
c)       6% of the issue price
12.   Consolidated Financial Statements are prepared as per Accounting Standard
a)      19
b)      21
c)       23
13.   Capital Redemption Reserve Account can be Utilized for
a)      Writing off past losses
b)      Writing off capital losses
c)       Issuing fully paid bonus shares
14.   A company ________ its own debentures
a)      Can re-buy
b)      Cannot re-buy
c)       Can partly buy
15.   Under sections 61 of the Companies Act, 2013, company shall given notice of the alteration of its share capital to the financial health of business.
a)      15
b)      2
c)       30
16.   No call on the share shall exceed
a)      1/4th of the nominal value
b)      1/5th of the nominal value
c)       None of the above
17.   Debentures which are transferable by mere delivery are
a)      Registered Debentures
b)      Naked Debentures
c)       None of the above
18.   Investment in Subsidiary Company should be accounted for in accordance with
a)      As-13
b)      As-21
c)       None of these
19.   Goodwill arising on amalgamation is to be amortised:
a)      Within 5 years
b)      Within 5 years unless a longer period is justified
c)       None of these
20.   The credit balance of profit & Loss appropriation account in case of company is to be transferred to
a)      Capital Account
b)      Current Account
c)       None of these
21.   Called up capital includes
a)      Discount of issue of shares
b)      Securities premium
c)       None of these
22.   Redeemable preference shares are redeemable
a)      Within 20 years
b)      Within 7 years
c)       None of above
23.   Dividend declared in General Meeting
a)      Can exceed the amount recommended by the board
b)      Cannot exceed the amount recommended by the board
c)       None of the above
24.   Dividend declared in General Meeting
a)      Can be less than the amount recommended by the board
b)      Cannot be less than the amount recommended by the board
c)       None of the above
25.   Sinking Funds is shown in the Balance Sheet under the heading
a)      Reserve and surplus
b)      Securities Loan
c)       None of the above
26.   As per Income tax Act, Preliminary Expenses may be written off
a)      Over 5 years
b)      Over 10 years
c)       None of the above
27.   The provision for minimum subscription of 90% will not apply when shares are
a)      Offered to public
b)      Sold through private placement
c)       Issue as right share
28.   Pricing of public issue is determine by
a)      The SEBI
b)      The company consultation with stock exchange and SEBI
c)       The company consultation with legal manager
29.   Proceeds in connection with issue of shares at discount would mean
a)      Only the net amount received
b)      Face value of share issued
c)       None of the above
30.   Proceeds in connection with issue of shares at a premium would mean
a)      Only the net amount received
b)      Face value of share issued
c)       None of the above
31.   A trust shall be executed by the issuer company in favour of the debenture trustees within
a)      Six month of the closure of the issue
b)      Twelve month of the closure of the issue
c)       Six month from the date of issue
32.   Under polling of interest method, all cost associated with amalgamation are:
a)      Capitalised
b)      Expenses as incurred
c)       None of the above
33.   The company must pass
a)      A member’s resolution to reduce the share capital
b)      An ordinary resolution to reduce the share capital  
c)       A special resolution to reduce the share capital
34.   Corporate Dividend Tax will be shown in the P/L account as
a)      A charge against profit
b)      An appropriation of profit
c)       None of the above
35.   Premium on redemption of debenture account is:
a)      A real Account
b)      A nominal Account
c)       A personal Account
36.   When Share are issued to promoters for the services offered by them, it is debited to
a)      Preliminary Exp. Account
b)      Goodwill account
c)       Share Capital Account
37.   The excess price received over the Par Value of Shares should be credited to
a)      Call-in Advance Account
b)      Reserve Capital account
c)       Securities premium Account
38.   A fixed charge generally covers all the
a)      Fixed assets of the company including future one
b)      Current assets of the company including future one
c)       Specific assets of the company
39.   A floating charge generally covers all the
a)      Fixed assets of the company including future one
b)      Current assets of the company including future one
c)       All  assets of the company including future one
40.   The different between Purchase consideration and Share Capital of the transferor company is adjusted again:
a)      Realisation Account
b)      Reserve Account
c)       Goodwill account
41.   The ‘financial year’ of the Company may be less or more than a Calendar year but it shall not exceed:
a)      Twelve months
b)      Eighteen months
c)       Fifteen months
42.   A share represents
a)      An interest in the company
b)      Assets of the company
c)       Liabilities of the company
43.   Minority interest is calculated at the date of
a)      Consolidated Balance Sheet
b)      Taking control of Subsidiary Company
c)       Closure of accounting year
44.   Interest on calls in arrear should not exceed
a)      10%
b)      6%
c)       7%
d)      9%
45.   A company can issue shares at a discount under Section
a)      77
b)      78
c)       53
46.   A company can issue shares at a discount under Section
a)      77
b)      52
c)       79
47.   Profit on re-issue of forfeited shares is transferred to:
a)      Revenue reserve
b)      General reserve
c)       Capital Reserve
48.   Account for amalgamation is associated with Accounting standard:
a)      14
b)      15
c)       16
49.   Preference shareholder are
a)      Creditors of a company
b)      owner of the company
c)       customers of the company
50.   Debentures and shares are show in the Balance sheet at
a)      Face value
b)      Discount
c)       Premium
51.   Accumulated losses to the vendor company should be transferred to the
a)      Profit and Loss Account
b)      Profit and Loss Appropriation Account
c)       Equity shareholder Account
52.   Consolidated Financial Statements are prepared as per Accounting Standard
a)      19
b)      21
c)       23
53.   Under Section 61 of the Companies Act, 1956 a company shall give notice of the alteration of its share capital to the Registrar within _____ days of doing so.
a)      15
b)      25
c)       30
54.   Share Forfeited Account is shown on the liabilities side of the Balance Sheet.
a)      by adding to the paid-up capital
b)      under the head Reserves & Surplus
c)       Under the head Current Liabilities and Provisions
55.   Rate of interest on Calls-in advanced not exceed
a)      6% per premium
b)      5% per premium
c)       10% per premium
d)      None of above
56.   Fixed deposits are shown as on the liabilities side of the Balance Sheet
a)      Under the head current Liabilities
b)      Under the head Secured Loan
c)       Under the heads provisions
d)      Under the head unsecured loan, Non-current liabilities
57.   Goodwill is
a)      Intangible assets
b)      Fictitious assets
c)       None of the above
58.   When two or more companies are liquidated and a new company is formed, it is called (AMALGAMATION)
a)      Absorption
b)      External Re-construction
c)       Internal Re-construction
d)      None of above

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