1/18/ /printqp.php?heading=II B.COM(INTERNATIONAL BUSINESS), ,SEMESTER - IV,CORE:CORPORATE ACCOUNTING -

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1 Dr.G.R.Damodaran College of Science (Autonomous, affiliated to the Bharathiar University, recognized by the UGC)Reaccredited at the 'A' Grade Level by the NAAC and ISO 9001:2008 Certified CRISL rated 'A' (TN) for MBA and MIB Programmes 1. Share allotment account is a A. personal account B. Real account C. Nominal account D. Impersonal account II B.COM(INTERNATIONAL BUSINESS) SEMESTER - IV CORE:CORPORATE ACCOUNTING - I - 417A Multiple Choice Questions. 2. Holders of preference shares will have a right to vote if the dividend remains in arrears for a period not less than A. 2 year B. 3 years C. 6 years D. none of these 3. 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 4. 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 5. 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 6. Premium received on issue of shares cannot be utilised for A. for the issue of bonus shares B. for writing off preliminary expenses 1/21

2 C. for providing premium payable on redemption D. for distribution of dividend 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 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 9. Minimum number of members in case of public company is A. 4 B. 5 C. 6 D Maximum number of members in public limited company is A. 10 B. 20 C. 50 D. unlimited 11. After getting minimum subscription of shares, the company has to allot shares with in days. A. 90 B. 100 C. 110 D 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 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 2/21

3 14. The amount of capital mentioned in MOA is A. authorised capital B. issued capital C. reserve capital D. subscribed capital 15. The difference between called up capital and paid up capital is A. issued capital B. unpaid capital C. reserve capital D. uncalled capital 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 17. According to companies Act % of interest is to be paid on calls in arrears. A. 3 B. 4 C. 5 D According to Companies Act % of interest is to be paid on calls in advance. A. 5 B. 6 C. 7 D Interest on calls in arrears is transferred to A. debit side of p&l a/c. B. credit side of P&L a/c C. liability side D. asset side 20. Interest on calls in advance is transferred to A. debit side of p&l a/c. B. credit side of P&L a/c C. liability side D. asset side 21. The rate of discount on shares cannot exceed A. 5% B. 10% C. 12% D. 15% 3/21

4 22. Discount on issue of shares is shown on A. asset side of the balance Sheet B. Liability side of the balance sheet C. debit side of the profit and loss account D. credit side of the profit and loss account 23. Discount of issue of shares is a A. revenue loss B. capital loss C. deferred revenue expenditure D. direct expenses 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 25. Discount on issue of forfeited shares should not exceed A. 5% od subscribed capital B. 10% of reissued capital C. the amount received so far on forfeited shares D. 25% of original issue price. 26. The profit on reissue of forfeited shares is transferred to A. general reserve B. capital redemption reserve C. capital reserve D. profit and loss account 27. The buy-back of shares may be done A. at par B. at discount C. at premium D. all of the above 28. Rights shares are those shares which are A. issued by a newly formed company B. first offered to the existing share holders. C. issued to the directors of the company D. issued to holders of convertible debentures 29. Realm owners of a company are called as A. equity shareholders B. preference shareholders 4/21

5 C. debenture holders D. bond holders 30. Preference share holders receive A. fixed rate of interest B. flexible rate of interest C. fixed rate of dividend D. flexible rate of dividend 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 32. A new company cannot issue shares at A. premium B. discount C. par D. facevalue 33. Indian companies cannot issue shares. A. equity B. preference C. sweat equity D. deferred 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 35. Redeemable preference shares can be redeemed out of A. amount realized on sale of investments B. divisible profits otherwise available for dividend C. proceed of fresh issue of shares D. both B and C 36. Only shares can be redeemed. A. fully paid preference shares B. partly paid shares C. equity shares D. irredeemable preference shares 37. Securities premium account is shown under head. 5/21

6 A. capital B. Reserves and surplus C. long term loan D. current provision can be utilized to issue bonus shares. A. P & L a/c B. General reserve C. Capital redemption reserve D. All the above 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 The allotment of shares should be completed within A. one month B. 60 days C. 90 days D. 120 days 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 42. The amount on shares not paid by share holders after it has been called by the company is A. calls in arrears B. calls in advance C. reserve capital D. subscribed capital 43. Minimum subscription decided by A. share holders B. board of directors C. debenture holders D. creditors 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 6/21

7 45. Dividend is paid on A. issue price B. market price C. face value D. paid up amount on shares 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% 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 48. Preference dividend is to be paid before A. payment of debenture interest B. payment of income tax C. distribution of equity dividend D. all the above 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 A. absorption B. amalgamation C. internal reconstruction D. external reconstruction 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 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 7/21

8 52. Accumulated losses in the vendor company should be transferred to A. Share capital account B. equity shareholders account C. capital reserve account D. profit and loss account 53. Post acquisition profits are treated as A. Revenue profit B. capital profit C. capital reserve D. revenue reserve 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. 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 56. The dividend that is declared between AGM is A. Interim dividend B. final dividend C. semi dividend D. half-yearly dividend 57. The total remuneration payable to the managerial personnel should not exceed net profits. A. 5% B. 10% C. 11% D. 15% 58. Private company has minimum A. 2 directors B. 5 directors C. 10 directors D. 20 directors 59. Forfeited shares to become A. property of the government. B. property of the company C. property of the shareholders D. property of all the shareholders 8/21

9 60. Purchase consideration is payable in A. cash B. shares C. debentures D. any one of the above or all of the above 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 62. The excess of purchase consideration over net asset is A. securities premium B. capital reserve C. goodwill D. preliminary expenses 63. Profit prior to incorporation is the profit earned A. between the date of incorporation and the date of commencement of business. B. between the date of purchase and date of incorporation C. between the date of incorporation and date of receipt of commencement of business. D. between the date of purchase of business and date of commencement of business. 64. Profit prior to incorporation belongs to A. the company B. the vendor C. both the company and the vendor D. none of the above 65. Profit prior to incorporation should be credited to A. goodwill account B. revenue reserve account C. capital reserve account D. none of the above 66. Loss prior to incorporation should be debited to A. revenue reserve B. goodwill account C. capital reserve account D. preliminary expenses account 67. Gross profit is to be apportioned between pre and post incorporation periods in A. Time ratio B. adjusted time ratio 9/21

10 C. sales ratio D. none of the above 68. Bade 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 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 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. 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 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. 73. S.211 deals A. Books of accounts B. forms and contents of balance sheet and profit and loss account C. content of trading account D. none of the above 74. Advance payment of tax is in the nature of A. capital expenses B. revenue expenses C. pre-paid expenses D. outstanding expenses 10/21

11 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. 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 77. Preliminary expenses are an example of A. fixed assets B. current assets C. fictitious asset. D. investment 78. Debentures are shown in the balance sheet under the heading A. unsecured loans B. current liabilities C. secured loans D. share capital 79. Interest on debenture is A. variable in nature B. fixed in nature C. optional D. appropriation. 80. Profit on cancellation of own debentures are transferred to A. P&L a/c B. capital reserve C. general reserve D. dividend equalization fund 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 82. Interest on debentures is calculated on A. Issue price B. Redeemable price 11/21

12 C. Face value D. Market price 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 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 85. Debentures is A. document which either creates a debt or acknowledges it B. a certificate of ownership of company C. a certificate to participate in the meetings of the company D. a certificate to be issued to the directors of the company 86. Which of the following is not a source of redemption A. redemption out of capital B. redemption out of borrowings from financial institutions C. redemption out of profits of the company D. redemption by conversion 87. Accounting standard for Amalgamation is A. AS-8 B. AS-20 C. AS-14 D. AS 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 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 12/21

13 90. Expenses of liquidation of transferor company may be shown as 'Reimbursement' in transferor company's books, if the expenses are agreed to paid by A. transferor company B. transferee company C. both the companies D. neither company 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 C. 20 years D. 5 years 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 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 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 95. The profit made on acquisition of business is credited to A. P&L account B. P&L appropriation account C. capital reserve account D. Goodwill account 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 97. Loss prior top incorporation is to be shown in the assets side of the balance sheet under the heading /21

14 A. fixed assets B. loans and advances C. current assets D. Miscellaneous expenses 98. Final accounts of a company include A. P&L account and Balance sheet B. P&L account and P&L appropriation account C. Trading, P&L account, P&L appropriation account D. Trading, P&L account, P&L appropriation account and Balance Sheet 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 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 section of the companies Act provides the power of issuing debentures. A. 293 B. 292(1) C. 295 D Dentures can be issued A. for cash consideration only B. for other than cash consideration only. C. as collateral securities D. either for cash or for other than cash or as collateral 103. Discount and loss on issue of debentures are shown under A. Current liabilities B. fixed assets C. reserves and surplus D. miscellaneous expenses 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 14/21

15 D. debenture holders 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 B. cum-interest price C. interest free price D. whole sale price 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 107. Sinking fund can be created out of A. revenue profit B. capital profit C. premium D. capital redemption reserve 108. Debentures represent the A. Manager's share in the business B. investment by shareholders in business C. long term borrowings of a business D. trade creditors 109. Debenture holders are the customers A. creditors B. owners C. borrowers D. customers 110. In case of internal reconstruction the existing company will be A. liquidated B. Amalgamated C. Absorbed D. None of the above 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 15/21

16 112. Decrease of liability at the time of internal reconstruction A. Equity share capital B. capital reduction C. capital reserve D. preference share capital 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 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 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 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 117. To carry out the scheme of capital reduction approval is necessary. A. court B. central government C. Company Law Board D. registrars of company 118. If the creditors are willing, their claim against the company be reduced. A. Income B. capital C. cannot D. interest 119. Reserves of the company be utilised in meeting the accumulated losses at the time of internal reconstruction. A. can 16/21

17 B. cannot C. may be D. none of the above 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 121. The amount of surrendered shares is credited to account A. capital reduction B. capital C. bank D. P&L 122. Alteration of share capital is effected by a company if it is authorized by the A. Memorandum of Association B. Articles of association C. shareholders D. Board of directors 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 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 125. Consolidation of shares does not affect the amount of A. Share capital B. creditors C. Debtors D. Bank overdraft 126. A company can convert fully paid into stock and also reconvert back into shares A. securities B. Debentures C. Deposits D. share,stock 17/21

18 127. 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 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 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 When surrendered shares are reissued is debited. A. surrendered shares account B. preference share capital C. Bank account D. capital reduction account 131. For refunding surplus capital is credited. A. share holders a/c B. creditors a/c C. Liabilities a/c D. share holders a/c 132. For any sacrifice made by debenture holders or creditors is credited. A. capital reduction account B. Bank account C. capital reserve account D. Asset account 133. For transferring assets to realisation a/c is debited. A. purchasing a/c B. Liabilities a/c C. Preference share capital a/c D. realisation a/c 18/21

19 134. For transferring liabilities taken over is debited. A. Assets a/c B. Realisation a/c C. Liabilities a/c D. None of the above 135. For purchase consideration receivable is debited A. Purchasing company's account B. Bank a/c C. Purchasing a/c D. Debenture a/c 136. For receiving the purchase consideration is credited A. Liability account B. Purchasing company's account C. Realisation account D. Bank account 137. For realizing assets not taken over is debited A. creditors a/c B. Bank a/c C. Debenture a/c D. share holders a/c 138. For payment of liabilities not taken over is debited. A. Purchasing company's a/c B. Debenture holders a/c C. Realization a/c D. shares in purchasing a/c 139. If expenses are to be borne by the purchasing company is debited A. Purchasing company's a/c B. P&L a/c C. preference share holders a/c D. Equity share holders a/c 140. For discharge of preference share capital is debited. A. shares in purchasing a/c B. preference share capital C. realization D. Debenture 141. For realization profit and loss account is credited. A. Equity share holders a/c B. Bank a/c C. Preference share capital D. None of the above. 19/21

20 142. When winding up takes place in a company, the shareholders are called A. Creditors B. shareholders C. Debtors D. Contributories 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 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 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 Absorption is said to be taken place when A. A Company is formed to take over the other company. B. Two or more companies are liquidated to form a new company. C. Two or more companies liquidate to be taken over by the existing company. D. None of the above 147. A person who is entrusted with the job of realizing assets and discharging liabilities in the process of liquidation is called A. Managing Director B. Agent C. Liquidator D. None of the above 148. On acquisition of business, which of the following item is not taken over by the purchasing company (in the absence of contract): A. profit and loss account (debit balance) B. cash balance C. bank balance D. none of these 20/21

21 149. The accounting treatment with respect to acquisition of business will be by using A. when new set of books is opened B. when the same set of books is continued C. a & b D. none of these 150. The first item in the order of payment to be made by the liquidator is A. Unsecured Creditors B. Secured creditors C. Liquidation expenses D. Preference Share Holder Staff Name Sivaraman S. 21/21