Chapter Exam

Chapter 6 ACCOUNTANCY : Company Accounts — Online MCQ Test

Q: Which account is credited when shares are forfeited?

Answer: B. Share Forfeited A/c — On forfeiture, the share capital account is debited, and the share forfeited account is credited with the amount received so far.

Q: If a share of Rs 10 on which Rs 8 is called up and Rs 6 is paid is forfeited, the Share Capital Account should be debited with:

Answer: C. Rs 8 — Share capital should be debited with the amount called up on the forfeited shares, which is Rs 8.

Q: If 500 shares of Rs 10 each were forfeited for non-payment of final call of Rs 3, and 300 shares were reissued at Rs 8 per share fully paid up, the amount transferred to Capital Reserve is:

Answer: B. Rs 1500 — Amount forfeited per share is Rs 7. Discount on reissue is Rs 2 per share. Profit per share is Rs 5. For 300 shares, 300 x 5 = Rs 1500.

Q: What is the accounting treatment when shares are issued for consideration other than cash (e.g., to promoters)?

Answer: A. Debit Goodwill/Assets, Credit Share Capital — When shares are issued for assets or services, the asset or service (goodwill/incorporation expenses) is debited and share capital is credited.

ACCOUNTANCY · CLASS 12 INTER II YEAR · Andhra State Board

Practice Chapter 6 ACCOUNTANCY : Company Accounts with a free chapter-wise online MCQ test for Andhra State Board CLASS 12 INTER II YEAR ACCOUNTANCY. This chapter covers: This chapter details accounting for share capital issue of shares at par premium discount calls in arrears calls in advance forfeiture and reissue of forfeited shares.. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 6 ACCOUNTANCY : Company Accounts — Important Questions & Answers (FAQ)

Frequently asked questions from Andhra State Board CLASS 12 INTER II YEAR ACCOUNTANCY — Chapter 6 ACCOUNTANCY : Company Accounts, with answers and explanations. These are sample questions; the exam has its own separate question set.

What is the maximum amount of discount allowed on the reissue of forfeited shares?

A. 10% of face value
B. Amount not exceeding the amount forfeited on the reissued shares ✓
C. 5% of paid-up value
D. Full face value

Answer: B. Amount not exceeding the amount forfeited on the reissued shares
A company can reissue forfeited shares at a discount provided the discount does not exceed the amount already received on such shares.

Which account is credited when shares are forfeited?

A. Share Capital A/c
B. Share Forfeited A/c ✓
C. Calls-in-arrears A/c
D. Bank A/c

Answer: B. Share Forfeited A/c
On forfeiture, the share capital account is debited, and the share forfeited account is credited with the amount received so far.

If a share of Rs 10 on which Rs 8 is called up and Rs 6 is paid is forfeited, the Share Capital Account should be debited with:

A. Rs 10
B. Rs 6
C. Rs 8 ✓
D. Rs 2

Answer: C. Rs 8
Share capital should be debited with the amount called up on the forfeited shares, which is Rs 8.

If 500 shares of Rs 10 each were forfeited for non-payment of final call of Rs 3, and 300 shares were reissued at Rs 8 per share fully paid up, the amount transferred to Capital Reserve is:

A. Rs 2100
B. Rs 1500 ✓
C. Rs 2400
D. Rs 1200

Answer: B. Rs 1500
Amount forfeited per share is Rs 7. Discount on reissue is Rs 2 per share. Profit per share is Rs 5. For 300 shares, 300 x 5 = Rs 1500.

What is the accounting treatment when shares are issued for consideration other than cash (e.g., to promoters)?

A. Debit Goodwill/Assets, Credit Share Capital ✓
B. Debit Share Capital, Credit Bank
C. Debit Cash, Credit Share Capital
D. No entry required

Answer: A. Debit Goodwill/Assets, Credit Share Capital
When shares are issued for assets or services, the asset or service (goodwill/incorporation expenses) is debited and share capital is credited.

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