Accounting for Share Capital Flashcards
The liability of the shareholders is limited to _____ share
Face value of a share
A company cannot issue irredeemable debentures because ____
It is repaid only at the time of winding up
X ltd forfeited 160 shares of Rs 10 each on which the holder has paid Rs 2 per share. Out of these 40 shares were reissued as fully paid for Rs 9. The gain on the reissue is _________
Amount forfeited = 160 *2= 320
Amount of Reissue= 40 *9=360
Gain on Reissue= 360-320= 40
5-Application, 7- Allotment, 8- Final Call. Find calls-in -Arrears if a shareholder holding 250 shares and 150 shares did not pay allotment and Final call money respectively
The shareholder who has not paid allotment money would not have paid final call money as well.
Calls-in-Arrears
(250 15)+ (1508)=4950
X ltd forfeited 40 shares of 10 each issued at a premium of 40% to Raj who had applied for 48 shares
Application (4 +2)- Paid, Allotment (1+1)- Not Paid, First call (2+1)- Not paid. Find the amount in forfeited shares account
Amount paid on applied shares(48)= 288, Amount actually required(40) = 240 (160 +80). Since premium paid-only 160 considered. Further 40*1 for allotment taken from excess money received. So 160 + 40=200
A Company is created by : (A) Special act of the Parliament (B) Companies Act (C) Investors (D) Members
B- Companies Act
An artificial person created by Law is called : (A) Sole Traders (B) Partnership Firm (C) Company (D) All of the Above
C- company
Unless otherwise stated, a preference share is always deemed to be :
(A) Cumulative, participating and non-convertible
(B) Non-cumulative, non-participating and non-convertible
(C) Cumulative, non-participating and non-convertible
(D) Non-cumulative, participating and non-convertible
C- Cumulative, non-participating and non-convertible
Which of the following statements is true? (A) Authorised Capital = Issued Capital (B) Authorised Capital > Issued Capital (C) Paid-up Capital > Issued Capital (D) None of the above
(B) Authorised Capital > Issued Capital
In the case of a private placement of shares, the lock-in period is : (A) 1 Year (B) 2 Years (C) 3 Years (D) None of the above
C- 3 years
Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are called : (A) Right Equity Shares (B) Private Equity Shares (C) Sweat Equity Shares (D) Bonus Equity Shares
C- Sweat Equity Shares
Minimum subscription amount of 90% is related to which share capital : (A) Authorised Capital (B) Issued Capital (C) Paid-up Capital (D) Reserve Capital
B- Issued Capital
Share Application Account is in the nature of: (A) Real Account (B) Personal Account (C) Nominal Account (D) None of the above
B- Personal Account
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
C- Security Premium Reserve Account
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
D- Compensation received on termination of a contract
Maximum limit of Premium on shares is: (A) 5% (B) 10% (C) No Limit (D) 100%
C- No Limit
A company purchased machinery for ₹1,80,000 and in consideration issued shares at 20% premium. What will be the face value of shares issued : (A) ₹1,50,000 (B) ₹1,44,000 (C) ₹1,80,000 (D) ₹2,16,000
Face value= 100/120*1,80,000= 1,50,000
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
Forfeited Shares
Voluntary return of shares for cancellation by the shareholders is called (A) Cancellation of shares (B) Forfeiture (C) Surrender of shares (D) None of these
C- Surrender of Shares
Balance of share forfeiture account is shown in the balance sheet under the head …………… (A) Share Capital Account (B) Reserve and Surplus (C) Current Liabilities and Provisions (D) Unsecured Loans
A- Share Capital Account
If a share of ₹10 issued at a premium of n on which ₹9 (including premium) have been called and ₹7 including premium is paid is forfeited, the capital account should be debited by : (A) ₹10 (B) ₹7 (C) ₹8 (D) ₹9
C- Rs 8
700 shares of ₹10 each were reissued as ₹9 paid up for ₹7 per share. Entry for reissue will be :
Bank- 4900
Shares Forefieted- 1400
To Share Capital- 6300
The repayment of the amount of preference shares is called _____
Redemption
Share allotment A/c is a _____account
Asset account
Balance in forfeited shares is shown under the head of __ in the balance sheet
Share capital
Can SPR be used as working capital?
No, it can be utilised only for purposes as per 52(2) of Companies Act 2013
