Shares MCQ Quiz in मल्याळम - Objective Question with Answer for Shares - സൗജന്യ PDF ഡൗൺലോഡ് ചെയ്യുക

The correct answer is Capital Redemption Reserve Account

Where a company purchases its own shares out of reserves or securities premium account, a sum equal to the nominal value of the shares so purchased is transferred to the Capital Redemption Reserve Account and details of such transfer are disclosed in the balanced sheet.

Key Points

• A share buyback is when a company buys back previously issued shares. It's a business activity in which a company makes a public announcement about a buyback offer to acquire existing shareholders' shares within a set period of time.
• A company's free reserves, the securities premium account, or the proceeds of the issuing of any shares or other specified securities may be used to acquire its own shares or other specified securities.

Important Points

Steps for Buy Back of Shares:

• Articles of Association should allow the company to buy back its own stock.
• Maximum Limit: The buyback shall not exceed 25% of the company's paid-up share capital and free reserves (in the case of equity shares, only 25% of the paid-up equity share capital).
• The debt equity ratio after the buyback should not exceed 2 : 1.
• Pass board resolution if buy back is 10% of the total paid-up Equity capital and free reserves, or special resolution  If buy back is up to 25% of the total paid-up capital and free reserves.
• An amount equivalent to the nominal value of the acquired shares is deposited in the capital redemption reserve account.

The correct answer is Reserve Capital.

Key PointsReserve Capital:

• A company may set aside a portion of its uncalled capital to be called only if the company is wound up.
•  The company's uncalled sum is referred to as 'Reserve Capital.'
• It is only available to creditors in the event of a company's liquidation.

Important Points Reserve Capital: According to Section 99 of the Companies Act 2013, Reserve Capital refers to that portion of uncalled share capital which shall not be called up, except in the event of winding up. It is not shown in the balance sheet of company and there's no compulsion to create reserve capital, a special resolution is required for creating reserve capital.

The correct answer is Both (A) and (R) are false.

Key PointsReissue of shares -Forfeited shares may be issued again as fully paid at a par, premium,  discount. It should be noted that the discount permitted on reissue of forfeited shares cannot exceed the amount received on forfeited shares at the time of first issue, and that the discount allowed on reissue of forfeited shares shall be deducted to the 'Forfeited Share Account.'

Important PointsAssertion (A) : After reissue of all the forfeited shares, balance left in Forfeited Shares Account is transferred to General Reserve Account.

• Assertion is false because after reissue of all the forfeited shares, balance left in Forfeited Shares Account is transferred to Capital Reserve Account.
   

Reason (R) : Gain on reissue of forfeited shares is of revenue nature that is why it is transferred to General Reserve A/c.

• Reason is false because gain on reissue of forfeited shares is of capital nature that is why it is transferred to Capital Reserve A/c.

Thus, Both Assertion & Reason are false.

The correct answer is All of the above are correct.

Key Points

• Issuance of shares to a vendor for consideration other than cash:
  • Can occur at par, at a discount, or at a premium depending on the agreed terms and negotiations between the company and the vendor.
  • At par: Shares issued at their nominal value.
  • At a discount: Shares issued below their nominal value, permissible under specific conditions and regulatory frameworks.
  • At a premium: Shares issued above their nominal value, often reflecting the added value of the asset or confidence in the company's future potential.

The correct answer is 5%.

Key PointsShares- A part or portion of a larger amount which is divided among a number of people, or to which a number of people contribute. The person who hold shares are called shareholders.

Important Points

When offering the share capital for public subscription, the following considerations should be made:

1. The application fee must equal at least 5% of the share's face value.

2. Calls must be placed in accordance with the articles of association.

3. The following provisions of Table A shall apply in the absence of its own articles of association:

(a) A minimum of 14 days' notice is given to the shareholders to pay the amount;

(b) The amount of the call should not be more than 25% of the face value of the share; and

(c) A period of one month must pass between two calls.

(d) All calls on shares belonging to the same class must be made uniformly.

Thus, According to the provisions of Companies Act, 2013, the amount of minimum application money to apply for shares should be at least 5 % of the face value of the share. 

The correct answer is 300 shares; Rs. 240

Key Points

• E Ltd. had allotted 10,000 shares to the application of 14,000 shares, this is the case of Over Subscription of Shares
• In this Case, the excess money received on Application is used towards the allotment money

Important Points Solution

Calculation of Shares allotted to F

 The number of shares allotted to F can be Calculated by using unitary method

 The number of shares allotted to F = (10000 x 420) / 14000 

  The number of shares allotted to F = 300 shares

Calculation of Amount of excess money received on
Share application from F transferred to Share Allotment Account

Hence, The correct answer is 300 shares; Rs. 240

Key Points

The incorrect statement is "In the public issue, there is no question of any over-subscription and in the rights issue, the shares may be undersubscribed or oversubscribed leading to pro rata allotment."

Important PointsA: In the public issue, applications for shares are invited from the general public, and in the rights issue, the shares are offered to existing shareholders.

This statement is true as 

• Public Issue: When an issue/offer of shares or convertible securities is made to new investors for becoming part of the shareholders’ family of the issuer (The entity making an issue is referred to as “Issuer”) it is called a public issue.
• Right Issue: When an issue of shares or convertible securities is made by an issuer to its existing shareholders on a particular date fixed by the issuer (i.e. record date), it is called a right's issue. The rights are offered in a particular ratio to the number of shares or convertible securities held as on the record date

B: In the public issue, there is no question of any over-subscription and in rights issues, the shares may be undersubscribed or over-subscribed leading to pro rata allotment.

This statement is false as 

• Public issue is made to the general public and there are high chances of over-subscription or under-subscription, but right shares are allotted in proportion to existing shareholdings. So, there is no scope for oversubscription.

C: The price of the public issue is generally less than the market price and in the rights issue, the price is deliberately made less than the market price.

This statement is true as 

• The price of the public issue is generally less than the market price.
• In the rights issue, the price is deliberately made less than the market price by the directors.

D: In a public issue, the communication of the issue is through a prospectus or advertisements, and in a rights issue the communication is between the company and the existing members of the company.

This statement is true:

• Public issue is made through a prospectus that contains each and every detail of the issue whereas the right issue is made through communication between the company and the existing members of the company.

The correct answer is Credited to securities premium Reserve A/C.

Key Points 

• When debentures are issued at a premium, it means that the issue price of the debentures is higher than their face value or par value. For example, if a company issues debentures with a face value of Rs. 1,000 at a premium of 10%, the issue price would be Rs. 1,100.
• When these debentures are redeemed at par, it means that the company will pay back the debenture holders the face value of the debentures, which in this example is Rs. 1,000.
• The amount of premium received at the time of issue is credited to a separate account called "Securities Premium Account". This account is a part of the company's reserves and is created to account for the excess amount received over the face value of the debentures.
• The premium received on the issue of debentures cannot be treated as revenue and cannot be distributed as dividends to the shareholders. Instead, it is treated as a reserve and can only be used for specific purposes, such as writing off expenses related to the issue of debentures or writing off losses incurred by the company.
• In conclusion, the amount of premium received at the time of issue of debentures will be credited to the Securities Premium Account and will be available for use in the future for specific purposes.

Hence, the correct answer is Credited to securities premium Reserve A/C.

The correct answer is Capital Reserve Account.

 Key Points

• The corporation has shares that have been forfeited for sale. The corporation is required to dispose of the forfeited shares following their forfeiture.
• To reissue forfeited shares, the firm needs to pass a resolution at its board meeting. Reissuing forfeited shares amounts to the corporation merely selling its stock. These shares are not distributed by the corporation.

Important PointsJournal Entries for reissue of forfeited shares

Hence, the  balance of share forfeiture account is transferred to Capital Reserve Account.

The correct answer is 80.

Key PointsPro-rata Allotment : Pro-rata allotment refers to the distribution of shares in proportion to the number of shares applied for. When a company makes a pro-rata allotment, it first applies the excess money received at the time of application to the allotment and then to call. Pro-rata allotment is done in case of oversubscription of shares.

Formula to calculate Allotted shares = Shares applied x Allotted shares/ Applied shares 

Important PointsRatio of pro rata allotment = 15,000:10,000 = 3:2

Hence, an applicant for 3 shares will receive 2 shares.

Mr. Kumar had applied for 120 shares, shares allotted to Mr. Kumar = 120 x 10,000/15,000 = 80 shares.