Chapter 5: Accounting for Share Capital — Online MCQ Test
ACCOUNTANCY · CLASS 12 SECOND PUC · Karnataka State Board
Practice Chapter 5: Accounting for Share Capital with a free chapter-wise online MCQ test.
This chapter covers: Share Capital Equity Shares Preference Shares Issue of Shares Share Premium Oversubscription Pro Rata Allotment Calls in Arrears Share Forfeiture Reissue of Shares Capital Reserve....
AI-generated questions from basic to board-exam level, with instant results and explanations.
Chapter 5: Accounting for Share Capital — Important Questions & Answers
Which type of shares carry voting rights and receive dividend only after preference shareholders are paid?
- A. Equity shares
- B. Preference shares
- C. Debentures
- D. Reserve shares
Answer: A. Equity shares
Equity shareholders are the real owners of the company and usually carry voting rights. They receive dividend after preference shareholders.
Equity shareholders are the real owners of the company and usually carry voting rights. They receive dividend after preference shareholders.
The maximum amount of share capital that a company is authorised to issue by its Memorandum of Association is called:
- A. Issued capital
- B. Subscribed capital
- C. Authorised capital
- D. Called-up capital
Answer: C. Authorised capital
Authorised capital is the maximum capital mentioned in the Memorandum of Association. A company cannot issue shares beyond this limit unless it alters its memorandum.
Authorised capital is the maximum capital mentioned in the Memorandum of Association. A company cannot issue shares beyond this limit unless it alters its memorandum.
When shares are issued at a premium and the premium is due with allotment money, which account is credited for the premium amount?
- A. Share Capital Account
- B. Securities Premium Reserve Account
- C. Share Allotment Account
- D. Capital Reserve Account
Answer: B. Securities Premium Reserve Account
Premium received or due on issue of shares is credited to Securities Premium Reserve Account. Share Capital Account is credited only with the nominal value.
Premium received or due on issue of shares is credited to Securities Premium Reserve Account. Share Capital Account is credited only with the nominal value.
A company forfeited 1,000 shares of ₹10 each, ₹8 called-up. The shareholder had paid ₹5 per share. These shares were reissued as ₹8 paid-up for ₹7 per share. What amount will be transferred to Capital Reserve?
- A. ₹1,000
- B. ₹4,000
- C. ₹5,000
- D. ₹7,000
Answer: B. ₹4,000
Amount forfeited = 1,000 × ₹5 = ₹5,000. Discount on reissue = 1,000 × ₹1 = ₹1,000, so Capital Reserve = ₹5,000 - ₹1,000 = ₹4,000.
Amount forfeited = 1,000 × ₹5 = ₹5,000. Discount on reissue = 1,000 × ₹1 = ₹1,000, so Capital Reserve = ₹5,000 - ₹1,000 = ₹4,000.
Which statement is correct regarding share premium already received on shares that are later forfeited?
- A. It is transferred to Share Forfeiture Account
- B. It is transferred to Capital Reserve immediately
- C. It remains in Securities Premium Reserve Account
- D. It is refunded to the defaulting shareholder
Answer: C. It remains in Securities Premium Reserve Account
If premium has already been received, it is not reversed on forfeiture. It remains credited to Securities Premium Reserve Account.
If premium has already been received, it is not reversed on forfeiture. It remains credited to Securities Premium Reserve Account.