CBSE Class 12 Accountancy Accounting for Share Capital VBQs Set 02

Accounting for Share Capital

Question. Choose the correct answer from the given options:
A company purchased machinery for Rs. 6,00,000, out of which Rs. 1,00,000 was paid immediately and the balance amount was discharged by issue of equity shares of Rs. 10 each at 25% premium. How many shares will be issued by the company to the vendor?
(a) 50,000 shares
(b) 40,000 shares
(c) 60,000 shares
(d) 48,000 shares
Answer: (b) 40,000 shares

Question. Reserve Capital is not a part of:
(a) Authorised Capital
(b) Subscribed Capital
(c) Unsubscribed Capital
(d) Issued Share Capital
Answer: (c) Unsubscribed capital.

Question. A company forfeited 4,000 shares of Rs. 10 each on which application money of Rs. 3 has been paid. Out of these 2,000 shares were reissued as fully paid up and Rs. 4,000 has been transferred to capital reserve. Calculate the rate at which these shares were reissued.
(a) Rs. 10 Per share
(b) Rs. 9 Per share
(c) Rs. 11 Per share
(d) Rs. 8 Per share
Answer: (b) Rs. 9 Per share

Question. Shares for which amount is paid by public are called ______ shares.
(a) Authorised
(b) Paid up
(c) Bonus shares
(d) All of the options
Answer: (b) Paid up

Question. Vinod Ltd. forfeited a share of Rs. 50 issued at a premium of 20% for non-payment of first call of Rs. 15 per share and final call of Rs. 5 per share. At what minimum price it can be reissued?
(a) Rs. 50
(b) Rs. 30
(c) Rs. 40
(d) Rs. 20
Answer: (d) Rs. 20 i.e., 50 – 30 = Rs. 20

Question. The Directors of Vinod Ltd. forfeited 70,000 Equity Shares of Rs. 10 each, Rs. 10 called up, for non-payment of final call of Rs. 1 per share. Half of the forfeited shares were reissued at Rs. 20 per share fully paid up. On reissue of forfeited shares, the following amount will be transferred to the Capital Reserve Account:
(a) Rs. 70,000
(b) Rs. 1,40,000
(c) Rs. 4,20,000
(d) Rs. 3,15,000
Answer: (d) Rs. 3,15,000

Question. Money received in advance from shareholders before it is actually called-up by the directors is:
(a) Debited to calls in advance account
(b) Credited to calls in advance account
(c) Debited to calls account
(d) None of the options
Answer: (b) Credited to calls in advance account.

Question. Which of the following capital is not shown in company’s Balance Sheet:
(a) Authorised capital
(b) Issued and subscribed capital
(c) Called and paid up capital
(d) Reserve Capital
Answer: (d) Reserve Capital

Question. Vinod Ltd. forfeited 150 Equity Shares of Rs. 10 each issued at a premium of Rs. 5 per share, for non-payment of allotment money of Rs. 8 per share (including premium 5) the first call of Rs. 2 and final call of Rs. 3 per share. Out of these 100 shares were reissued at 14 per share. The capital reserve will be:
(a) Rs. 750
(b) Rs. 300
(c) Rs. 400
(d) Rs. 200
Answer: (d) Rs. 200

Question. When shares are forfeited, the share capital account is debited with ______ and the share forfeiture account is credited with:
(a) Paid-up capital of shares forfeited; Called up capital of shares forfeited.
(b) Called up capital of shares forfeited; Calls in arrear of shares forfeited.
(c) Called up capital of shares forfeited; Amount received on shares forfeited.
(d) Calls in arrears of shares forfeited; Amount received on shares forfeited.
Answer: (c) Debited with the called up capital of the shares forfeited and credited with the amount received on the shares forfeited.

Question. A Company invited applications for 1,00,000 shares and it received applications for 1,50,000 shares. Applications for 30,000 shares were rejected and the remaining shares were allotted on prorata basis. How many shares an applicant for 3,000 shares will be allotted:
(a) 2,500 Shares
(b) 3,600 Shares
(c) 4,500 Shares
(d) 2,000 Shares
Answer: (a) 2,500 Shares

Question. When a company has not called up the total nominal (face) value of the share, it is known as:
(a) Issued Capital
(b) Unissued Capital
(c) Subscribed and Fully paid up
(d) Subscribed but not fully paid up
Answer: (d) Subscribed but not fully paid up

Question. On Equity Shares dividend is proposed by the Board of Directors every year but rate of dividend is fixed on:
(a) Debentures
(b) Equity Shares
(c) Loan to outsiders
(d) Preference Shares
Answer: (d) Preference Shares

Question. Vinod Ltd. is registered with 50,000 shares @ Rs. 10 each. It issued 40,000 shares to the public @ Rs. 10 each. Applications were received on for 38,000 shares and allotment was made to all the applicants. The Authorised Capital of the company is:
(a) Rs. 3,80,000
(b) Rs. 4,00,000
(c) Rs. 2,80,000
(d) Rs. 5,00,000
Answer: (d) Rs. 5,00,000

Question. Maximum limit of premium on shares is:
(a) 5%
(b) 10%
(c) No limit
(d) Not more than 100%
Answer: (c) No Limit

Question. Voluntary return of shares for cancellation by the shareholders is called:
(a) Cancellation of shares
(b) Forfeiture
(c) Surrender of shares
(d) None of the options
Answer: (c) Surrender of shares

Question. A Ltd. forfeited 100 shares of Rs. 100 each issued at a premium of 50% to be paid at time allotment on which first call of Rs. 30 per equity share was not received, final call of, 20 are yet to be made. These shares were reissued at Rs. 70 per share at Rs. 80 paid up Calculate Gain on reissue:
(a) None of the options
(b) 3,000
(c) 4,000
(d) 2,000
Answer: (a) None of the options

Question. If a share of Rs. 10 issued at a premium of Rs. 3 on which the full amount has been called is forfeited the capital account should be debited with:
(a) Rs. 5
(b) Rs. 8
(c) Rs. 10
(d) Rs. 13
Answer: (c) Rs. 10

Question. When a company issue its share through IPO, it means shares are issued to:
(a) Promoters
(b) Creditors
(c) Vendors
(d) General Public
Answer: (d) General Public

Question. Vinod Ltd. was formed with a Nominal Share Capital of Rs. 40,00,000 divided into 4,00,000 shares of Rs. 10 each. The Company offers 1,30,000 shares to the public payable Rs. 3 per share on Application, Rs. 3 per share on Allotment and the balance on First and Final Call. Applications were received for 1,20,000 shares. All money payable on Allotment was duly received, except on 200 shares held by Y. First and Final Call was not made by the Company. Call in arrears will be of:
(a) Rs. 6,000
(b) Rs. 4,000
(c) Rs. 5,000
(d) Rs. 7,000
Answer: (a) Rs. 6,000

Question. ABC Ltd. purchased Furniture of Rs. 10,00,000 from KK Ltd. and paid 20% of the amount by accepting a bill of exchange in favour of KK Ltd. The remaining amount was paid by issuing Equity Shares of Rs. 100 each at a premium of 25% to KK Ltd. No. of Equity Shares to be issued?
(a) 6,000
(b) 6,400
(c) 10,000
(d) 7,000
Answer: (b) 6,400

Question. Issue of shares at discount is not allowed under which section of the Companies Act, 2013?
(a) Section 52
(b) Section 53
(c) Section 54
(d) Section 55
Answer: (b) Section 53

Question. S.K Ltd. invited application for 10,000 Equity Shares of Rs. 10 each. Applications were received for 15,000 shares and prorata allotment was made to all the applicants. If Mohan (one shareholder) was allotted 80 shares, find the shares applied by him.
(a) 80
(b) 100
(c) 150
(d) 120
Answer: (d) 120

Question. Company formed by special acts is called.
(a) Chartered company
(b) Statutory company
(c) Registered company
(d) None of the options
Answer: (b) Statutory Company

Question. Own shares purchased by a company with a view to reduce its capital is called:
(a) Sale
(b) Purchase
(c) Buy-back
(d) Private placement
Answer: (c) Buy-back

Question. Shares which have preferential rights are called?
(a) Equity share
(b) Preference share
(c) Debenture
(d) Bond
Answer: (b) Preference Share

Question. Capital which is called only at the time of Winding-Up of the Company is called?
(a) Capital reserve
(b) Reserve capital
(c) Secure capital
(d) Authorised capital
Answer: (b) Reserve Capital

Question. Which kind of Preference Share entitles its holders to receive arrear of dividends of previour years?
(a) Cumulative preference share
(b) Non-cumulative preference share
(c) Convertible preference share
(d) Non-convertible dividend share
Answer: (a) Cumulative Preference Share

Question. Which document is an invitation offer to public to subscribe for company’s share?
(a) Red herring prospectus
(b) Prospectus
(c) In lieu of prospectus
(d) None of the options
Answer: (b) Prospectus

Question. The balance of Share Forfeiture Account can be used to:
(a) provide for discount given at the time of re-issue
(b) write-off preliminary expenses
(c) write-off bad debts
(d) none of the options
Answer: (a) provide for discount given at the time of re-issue.

Question. If company wants to calculate amount forfeited on re-issued shares, then which amongst the given formula will be used?
(a) \( \frac{\text{Total Amount Forfeited}}{\text{Number of Share Forfeited}} \)
(b) \( \frac{\text{Total Amount Forfeited}}{\text{Number of Shares}} \)
(c) \( \frac{\text{Number of Share Forfeited}}{\text{Total Amount Forfeited}} \times \text{Share re-issue} \)
(d) \( \frac{\text{Total Amount Forfeited}}{\text{Number of Share Forfeited}} \times \text{Number of Share re-issued} \)
Answer: (d) \( \frac{\text{Total Amount Forfeited}}{\text{Number of Share Forfeited}} \times \text{Number of Share re-issued} \)

Question. Singh who was allotted 200 equity share of Rs. 20 each by a company, failed to pay Rs. 8 each on final call. Shares were re-issued to Kumar at Rs. 20 each. What will be the journal entry on re-issue?
(a) Bank A/c Dr. 4,000
To Equity Share Capital A/c 4,000
(b) Equity Share Capital A/c Dr. 4,000
To Bank A/c 4,000
(c) Bank A/c Dr. 4,000
To Share Forfeiture A/c 4,000
(d) Share Forfeiture A/c Dr. 4,000
To Bank A/c 4,000
Answer: (a) Bank A/c Dr. 4,000 To Equity Share Capital A/c 4,000

Question. A company issued 25,000 shares and received applications for 35,000 shares. Company wants to allot shares to everyone who hs applied. What will be the ratio for allotment?
(a) 6 : 7
(b) 7 : 5
(c) 5 : 7
(d) 7 : 6
Answer: (b) 7 : 5 (35,000 – 25,000) = 7 : 5

Question. A company issued 10,000 shares of Rs. 10 each. Amount is payable as Rs. 2 on Application, Rs. 5 on Allotment and Rs. 3 on First and Final call. A shareholder who had 1,000 shares failed to pay allotment and first call amount on due date. After a month, he paid the due amount. What will be the amount received by company against issue of shares?
(a) Rs. 92,000
(b) Rs. 90,000
(c) Rs. 1,00,000
(d) Rs. 8,000
Answer: (c) Rs. 1,00,000

Question. Equity Shareholders are:
(a) creditors
(b) owners
(c) customers of the company
(d) none of the options
Answer: (b) owners

Question. Money received in advance from shareholders before it is actually called-up by the directors is:
(a) debited to calls in advance account
(b) credited to calls in advance account
(c) debited to calls account
(d) None of the options
Answer: (b) credited to calls in advance account

Question. Shares can be forfeited:
(a) for non-payment of call money
(b) for failure to attend meetings
(c) for failure to repay the loan to the bank
(d) for which shares are pledged
Answer: (a) for non-payment of call money

Question. The profit on re-issue of forfeited shares is transferred to:
(a) general reserve
(b) capital redemption reserve
(c) capital reserve
(d) revenue reserve
Answer: (c) capital reserve

Question. Balance of share forfeiture account is shown in the balance sheet under the item:
(a) Current liabilities and provisions
(b) Reserves and surpluses
(c) Share Capital
(d) Unsecured loans
Answer: (c) share capital