1. Premium received on issue of shares is shown on -----------
a) asset side of the balance sheet
b) liability side of the balance sheet
c) credit side of the P&L a/c
d) debit side of the P & L a/c
2. The minimum share Application money is -----------
a) 5% of the face value of shares
b) 10% of the issue price of shares
c) Re. 1 per share
d) 15% of the face value of shares
3. Premium on issue of shares can be used for -----------.
a) distribution of dividend
b) writing off capital losses
c) transferring to general reserve
d) paying fees to directors
4. Share allotment account is a -----------------
a) Impersonal account
b) Nominal account
c) personal account
d) Real account
5. Premium received on issue of shares cannot be utilised for
a) for the issue of bonus shares
b) for writing of preliminary expenses
c) for providing premium payable on redemption
d) for distribution of dividend
6. Holders of preference shares will have a right to vote if the dividend remains in arrears for a period not less than
a) 2 years
b) 3 years
c) 6 years
d) none of these
7. Minimum number of members in case of public company is ---------
a) 4
b) 5
c) 6
d) 7
8. Maximum number of members in public limited company is ---------------
a) 10
b) 20
c) 50
d) unlimited
9. Section ----------- of companies act 1956 deals with the scheme of stock invest
a) 69 to 70
b) 69 to 71
c) 69 to 73
d) 69 to 72
10. When shares issued at premium which of the following account is credited?
a) Share premium account
b) Share first call account
c) Share allotment account
d) Share forfeited account
11. In case of public limited company, 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
12. When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as ..................
a) Amalgamation
b) Absorption
c) Internal reconstruction
d) External reconstruction
13. If Company A purchases the majority shares of Company B, what combination would this be referred to?
a) Amalgamation
b) Takeover
c) Absorption
d) None of the above
14. When one of the existing companies take over business of another company or companies, it is known as ...........
a) Amalgamation
b) Internal reconstruction
c) Absorption
d) External reconstruction
15. After getting minimum subscription of shares, the company has to allot shares with in ------------ days.
a) 90
b) 100
c) 110
d) 120
16. 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
17. Shares received from the new company are recorded at -
a) Face value
b) Average price
c) Market value
d) None of the above
18. Which of the following statement is correct?
a) The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
b) The amount of Goodwill or Capital Reserve is found out in the books of vendor company only
c) Goodwill = Net Assets – Purchase price
d) The face value of shares of purchasing company will be taken in to account while calculating purchase consideration
19. If the two companies have different accounting policies in respect of the same item, then they make necessary changes to adopt .............. Accounting policies
a) Lifo method
b) Fifo method
c) Weighted method
d) Uniform
20. While calculating purchase price, the following values of assets are considered
a) Book value
b) New values fixed
c) Average values
d) Market values
21. The Amalgamation Adjustment Account appears in the books, it is shown under the heading of ......... in the balance sheet.
a) Reserve and Surplus
b) Fixed Assets
c) Investments
d) Miscellaneous expenditure
22. If amalgamation is in the ..............., the General Reserve or Profit and Loss A/c balance will not be shown in the balance sheet.
a) Form of Merger
b) Form of purchase
c) Net assets method
d) Consideration method
23. If the intrinsic values of shares exchanged are not equal, the difference is paid in ...........
a) Cash
b) Debenture
c) Pref. share
d) Assets
24. In case of .............., one existing company takes over the business of another company and no new company is formed.
a) Amalgamation
b) Absorption
c) Reconstruction
d) None of the Above
25. When purchasing company pays purchase consideration, it will be debited to
a) Business purchase account
b) Assets account
c) Liquidator of selling company’s account
d) None of the above
26. In amalgamation of two companies
a) Both companies lose their existence
b) Both companies continue
c) Any one company continues
d) None of the above
27. When the purchasing company bears the liquidation expenses, it will debit the expenses to
a) Vendor Company's Account
b) Bank Account
c) Goodwill Account
d) None of the above
28. When the Vendor (seller) company agrees to bear liquidation expenses, it will debit
a) Realisation Account
b) Bank Account
c) Goodwill Account
d) None of the above
29. When the purchasing company does not take over a particular liability and the vendor company pays that liability, it will debit it to
a) Realisation Account
b) Bank Account
c) Liability Account
d) None of the above
30. When the Net Assets are less than the Purchase Consideration, the difference will be
a) Debited to Goodwill A/c.
b) Debited to General Reserve
c) all of the above
d) none of these
31. While calculating purchase consideration ............... values of assets is to be considered.
a) Book value
b) Revalued price
c) Average price
d) Capital
32. Net Assets minus Capital Reserve is _________
a) Goodwill
b) Total assets
c) Purchase consideration
d) None of these
33. Hitanshi Ltd.‘s purchase consideration is Rs.12,345 and Net Assets Rs.3,568, then...........
a) Goodwill Rs. 8,777
b) Capital Reserve Rs. 8,777
c) Goodwill Rs. 15,913
d) Capital Reserve R
34. The original amount of preference share capital should be transferred to ............ account in the time of amalgamation in the books of vendor co.
a) Preference shareholders Account
b) Capital Reserve Account
c) Equity share capital Account
d) None of the Above
35. Both of the old companies will not exist in ...........
a) Internal reconstruction
b) Absorption
c) External reconstruction
d) Amalgamation
36. When company purchases the business of another company ........ comes into existence.
a) Amalgamation
b) Absorption
c) External Reconstruction
d) Internal Reconstruction
37. When liquidation expenses is paid and borne by seller company then it is debited to _______
a) Bank A/c
b) Goodwill A/c
c) Realisation A/c
d) Capital Reserve A/c
38. The shares received from the new company is recorded at
a) Face value
b) Market value
c) Average price
d) None of these
39. If the market price of the shares to be given for Purchase Consideration at the time of absorption, ............ of the share is to be determined
a) Fair Value
b) Face Value
c) Intrinsic Value
d) Yield Value
40. All direct & indirect expenses related to business are charged
a) Profit and loss account
b) Trading account
c) Trading account Profit and Loss account
d) Directly to Balance sheet