Question 1

. &#8230;&#8230;&#8230;.is the first stage in the formation of a public company&#10;A)Promotion&#10;B)Incorporation&#10;C)Capital Subscription&#10;D)Commencement

Accepted Answer

Promotion is the first stage in the formation of a public company, involving the conceptualization of the business idea and taking the initial steps to bring the company into existence.

Question 2

Authorised capital is called as&#8230;&#8230;&#8230;&#8230;&#8230;&#10;A)Reserve capital&#10;B)Nominal Capital&#10;C)Capital Reserve&#10;D)Subscribed capital

Accepted Answer

Authorised capital is also known as Nominal Capital. It is the maximum amount of share capital that a company is authorized by its constitutional documents to issue to shareholders.

Question 3

. &#8230;&#8230;&#8230;&#8230;..is that portion of capital which is called up only on winding up of the company.&#10;A)Authorised Capital&#10;B)Issued capital&#10;C)Subscribed capital&#10;D)Reserve capital

Accepted Answer

Reserve capital is specifically designated as the portion of a company's capital that is not called upon unless the company is being wound up. It serves as a financial safeguard during the liquidation process to ensure that there are funds available to meet the company's obligations.

Question 4

In case of &#8230;&#8230;&#8230;&#8230;&#8230;..preference shares, the arrears of dividend are carried forward and paid out of the profits of the subsequent years.&#10;A)Participating&#10;B)Convertible&#10;C)Cumulative&#10;D)Redeemable

Accepted Answer

Cumulative preference shares have the feature where unpaid dividends are accumulated and must be paid out before any dividends can be distributed to other types of shares. This ensures that if a company skips a dividend payment, it is not forgiven but is carried forward to future years.

Question 5

. &#8230;&#8230;&#8230;&#8230;..shares are repayable after the expiry of the fixed period or at the option of the company.&#10;A)Participating&#10;B)Convertible&#10;C)Cumulative&#10;D)Redeemable

Accepted Answer

Redeemable shares are those that can be repaid after a fixed period or at the option of the company, allowing the company to buy back the shares at a predetermined time or situation.

Question 6

A bundle of fully paid shares is called&#8230;&#8230;&#8230;&#8230;&#8230;..&#10;A)Stock&#10;B)Sweat Equity&#10;C)Warrant&#10;D)None of these

Accepted Answer

Stock represents a collection of shares owned by an investor, indicating partial ownership in a company. Fully paid shares that are owned outright by an investor are part of their stock holdings.

Question 7

IPO stands for &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#10;A)Initial Private Offer&#10;B)International Public Offer&#10;C)Initial Public Offer&#10;D)International Private Offer

Accepted Answer

IPO stands for Initial Public Offer, which is the process by which a private company goes public by selling its stocks to the general public for the first time.

Question 8

In &#8230;... the company offers the investors an opportunity to bid collectively.&#10;A)Private Placement&#10;B)Offer for sale&#10;C)Book building&#10;D)IPO

Accepted Answer

Book building is a process where investors bid collectively to determine the price of a public offering.

Question 9

As per the companies Act, the interest on calls in advance is &#8230;&#8230;&#8230;&#8230;..&#10;A)10%&#10;B)6%&#10;C)5%&#10;D)7%

Accepted Answer

According to the Companies Act, the interest on calls in advance can be paid at a rate not exceeding 12% per annum as may be agreed upon. However, in the absence of a specified rate in the question, none of the provided options directly align with the Act's stipulation. The closest standard rate often referenced in practice is 6%, but it's important to note that the actual rate should be determined based on the company's articles of association or a mutual agreement.

Question 10

The rate of interest on Calls in arrears as per Companies Act is &#8230;&#8230;&#8230;&#8230;&#10;A)10%&#10;B)6%&#10;C)5%&#10;D)7%

Accepted Answer

The answer of The rate of interest on Calls in...

Question 11

The shares of a company can be issued at &#8230;&#8230;&#8230;&#8230;..&#10;A)Par&#10;B)Premium&#10;C)Discount&#10;D)All of these

Accepted Answer

The answer of The shares of a company can be...

Question 12

Share application account is a &#8230;&#8230;&#8230;..&#10;A)Real Account&#10;B)Nominal Account&#10;C)Impersonal Account.&#10;D)Personal Account

Accepted Answer

The answer of Share application account is a &#8230;&#8230;&#8230;..&#10;A)Real Account&#10;B)Nominal...

Question 13

The rate of discount on shares cannot exceed &#8230;&#8230;&#8230;.&#10;A)10%&#10;B)5%&#10;C)6%&#10;D)7%

Accepted Answer

The answer of The rate of discount on shares cannot...

Question 14

A newly established company cannot issue shares at &#8230;&#8230;&#10;A)Par&#10;B)Premium&#10;C)Discount&#10;D)All of these

Accepted Answer

The answer of A newly established company cannot issue shares...

Question 15

. &#8230;&#8230;&#8230;..of total issued amount of capital is called minimum subscription.&#10;A)75%&#10;B)90%&#10;C)95%&#10;D)80%

Accepted Answer

The answer of . &#8230;&#8230;&#8230;..of total issued amount of capital...

Question 16

The rate of discount should not exceed &#8230;&#8230;&#8230;&#8230;&#8230;. Of nominal vale of shares.&#10;A)10%&#10;B)5%&#10;C)6%&#10;D)7%

Accepted Answer

The answer of The rate of discount should not exceed...

Question 17

The minimum application money to be paid by an applicant must not be less than &#8230;&#8230; as per Companies Act.&#10;A)10%&#10;B)5%&#10;C)15%&#10;D)20%

Accepted Answer

The answer of The minimum application money to be paid...

Question 18

The excess price received on the par value of shares should be credited to &#8230;&#8230;&#8230;&#8230;.&#10;A)Calls in advance A/c&#10;B)Reserve Capital A/c&#10;C)Security Premium A/c&#10;D)None of these

Accepted Answer

The answer of The excess price received on the par...

Question 19

The profit on reissue of forfeited shares is transferred to &#8230;&#8230;&#8230;&#10;A)General reserve&#10;B)Capital Redemption reserve&#10;C)Capital reserve&#10;D)Investment Allowance reserve

Accepted Answer

The answer of The profit on reissue of forfeited shares...

Question 20

Preference shareholders are&#8230;&#8230;&#8230;&#8230;&#10;A)Debtors of the company&#10;B)Creditors of the company&#10;C)Owners of the company&#10;D)None of these

Accepted Answer

The answer of Preference shareholders are&#8230;&#8230;&#8230;&#8230;&#10;A)Debtors of the company&#10;B)Creditors of...

Question 21

The shares firstly offered to the existing shareholders are called as &#8230;&#8230;&#8230;&#8230;.&#10;A)Right shares&#10;B)Bonus shares&#10;C)Ordinary shares&#10;D)None of these

Accepted Answer

The answer of The shares firstly offered to the existing...

Question 22

The security premium account is shown in the balance sheet under the head&#8230;&#8230;&#8230;.&#10;A)Share capital&#10;B)Reserves & Surplus&#10;C)Secured loans&#10;D)Current liabilities

Accepted Answer

The answer of The security premium account is shown in...

Question 23

&#8230;&#8230;&#8230;..should be deducted from the share capital to determine the paid up capital.&#10;A)Security premium&#10;B)Calls in advance&#10;C)Calls in arrears&#10;D)Discount on issue

Accepted Answer

The answer of &#8230;&#8230;&#8230;..should be deducted from the share capital...

Question 24

The share capital account is debited with &#8230;&#8230;&#8230;&#8230;while forfeiting shares&#10;A)Calls in arrears&#10;B)Paid up capital&#10;C)Called capital&#10;D)Issued capital

Accepted Answer

The answer of The share capital account is debited with...

Question 25

On an equity share of Rs. 20, the company has called up Rs. 16 but Rs.14 has been received by the company, the share capital account should be credited by &#8230;&#8230;&#10;A)Rs. 20&#10;B)Rs. 16&#10;C)Rs. 14&#10;D)Rs. 6

Accepted Answer

The answer of On an equity share of Rs. 20,...

Deck 15: Formation and Capital Structure of Public Companies