Question 1

Balance of forfeited share is &#8230;&#8230;.&#10;A)Revenue Reserve&#10;B)Capital Reserve&#10;C)Secret Reserve&#10;D)Security Premium

Accepted Answer

The balance of forfeited shares is considered a Capital Reserve because it arises from the transactions that are not part of the normal business operations, such as the forfeiture of shares for non-payment of allotment or call money.

Question 2

The shares of a company only can be forfeited after giving a &#8230;&#8230;&#8230;days notice&#10;A)21&#10;B)14&#10;C)7&#10;D)30

Accepted Answer

The shares of a company can only be forfeited after giving a 14 days notice. This is a standard procedure to ensure that the shareholder has sufficient time to rectify the situation that has led to the potential forfeiture of their shares.

Question 3

The forfeited shares can be reissued at &#8230;&#8230;&#8230;&#8230;&#10;A)Par&#10;B)Premium&#10;C)Discount&#10;D)All of these

Accepted Answer

Forfeited shares can be reissued at par, at a premium, or at a discount, depending on the company's decision and the prevailing market conditions.

Question 4

Preference shares cannot be redeemed at &#8230;&#8230;&#8230;..&#10;A)Par&#10;B)Premium&#10;C)Discount&#10;D)All of these

Accepted Answer

Preference shares cannot be redeemed at a discount because redemption at a discount would mean paying back less than the nominal value of the shares, which is not allowed under most jurisdictions' corporate laws. Redemption at par or a premium is generally permissible.

Question 5

Which of the following is an example for capital profit?&#10;A)Capital Reserves&#10;B)Security premium&#10;C)Forfeited shares&#10;D)All of these.

Accepted Answer

Capital profit refers to the profit that is not earned through the normal operations of the business but rather through ancillary activities or adjustments. A) Capital Reserves are often created from capital profits and are not distributed as dividends. B) Security premium arises when shares are issued at a price higher than their nominal value, which is a form of capital profit. C) Forfeited shares, which occur when shareholders fail to pay for their shares and the shares are forfeited, can also result in capital profit if those shares are reissued at a higher price. Therefore, all of these options are examples of capital profit.

Question 6

The allotment of shares in case of oversubscription is called&#8230;..&#10;A)Pro?rata allotment&#10;B)Private Placement&#10;C)Offer for sale&#10;D)None of these

Accepted Answer

Pro-rata allotment is the method used to allocate shares among applicants when an issue is oversubscribed. This ensures that shares are distributed in proportion to the amount of application money received from each applicant.

Question 7

Security premium account can be utilized for &#8230;&#8230;&#8230;&#8230;.&#10;A)Issuing fully paid bonus shares&#10;B)Write off preliminary expenses&#10;C)Write off underwriting commission&#10;D)All of these

Accepted Answer

The security premium account can be utilized for issuing fully paid bonus shares, writing off preliminary expenses, and writing off underwriting commission, as per the provisions of the Companies Act.

Question 8

. &#8230;&#8230;&#8230;&#8230;..is that portion of issued capital which is applied for by the public.&#10;A)Issued capital&#10;B)Subscribed capital&#10;C)Nominal Capital&#10;D)Paid up capital

Accepted Answer

Subscribed capital is the portion of the issued capital that the public has applied for and agreed to subscribe to. It represents the actual amount of capital that investors are willing to invest in the company.

Question 9

. &#8230;&#8230;&#8230;&#8230;&#8230;is an instrument of acknowledgment of debt.&#10;A)Equity share&#10;B)Preference Share&#10;C)Debenture&#10;D)All of these

Accepted Answer

Debentures are specifically designed as instruments for acknowledging debt. They represent a loan taken by the company and are a common method for raising long-term funds, where the company agrees to pay interest and repay the principal at a later date. Equity and preference shares, on the other hand, represent ownership in the company, not debt.

Question 10

Debenture represents &#8230;&#8230;&#8230;. Of a company&#10;A)Borrowed capital&#10;B)Owned capital&#10;C)Hybrid capital&#10;D)None of these

Accepted Answer

Debentures represent borrowed capital for a company, as they are a form of long-term debt instrument issued by companies to borrow money from the public.

Question 11

Debenture holders will get &#8230;&#8230;..&#10;A)Dividend&#10;B)Interest&#10;C)Profit&#10;D)All of these

Accepted Answer

The answer of Debenture holders will get &#8230;&#8230;..&#10;A)Dividend&#10;B)Interest&#10;C)Profit&#10;D)All of these...

Question 12

Debenture holders are the &#8230;&#8230;&#8230;.of a company&#10;A)Debtors&#10;B)Owners&#10;C)Creditors&#10;D)Borrowers

Accepted Answer

The answer of Debenture holders are the &#8230;&#8230;&#8230;.of a company&#10;A)Debtors&#10;B)Owners&#10;C)Creditors&#10;D)Borrowers...

Question 13

A charge created not on specific assets but generally on all assets is known as&#8230;&#8230;&#8230;&#8230;.&#10;A)Fixed charge&#10;B)Floating charge&#10;C)Mortgage&#10;D)None of these

Accepted Answer

The answer of A charge created not on specific assets...

Question 14

. &#8230;&#8230;&#8230;&#8230;..debentures can be transferred only with the knowledge of the company.&#10;A)Naked&#10;B)Mortgage&#10;C)Registered&#10;D)Bearer

Accepted Answer

The answer of . &#8230;&#8230;&#8230;&#8230;..debentures can be transferred only with...

Question 15

. &#8230;&#8230;&#8230;..debentures are transferable by mere delivery&#10;A)Naked&#10;B)Mortgage&#10;C)Registered&#10;D)Bearer

Accepted Answer

The answer of . &#8230;&#8230;&#8230;..debentures are transferable by mere delivery&#10;A)Naked&#10;B)Mortgage&#10;C)Registered&#10;D)Bearer...

Question 16

. &#8230;&#8230;&#8230;&#8230;debentures are secured by the assets of the company&#10;A)Naked&#10;B)Mortgage&#10;C)Registered&#10;D)Bearer

Accepted Answer

The answer of . &#8230;&#8230;&#8230;&#8230;debentures are secured by the assets...

Question 17

FCD stands for &#8230;&#8230;&#8230;&#8230;&#8230;&#10;A)Fixed Charge Debentures&#10;B)Floating Charge Debentures&#10;C)Fully Convertible Debentures&#10;D)None of these

Accepted Answer

The answer of FCD stands for &#8230;&#8230;&#8230;&#8230;&#8230;&#10;A)Fixed Charge Debentures&#10;B)Floating Charge...

Question 18

Discount or loss on issue of debenture is a &#8230;&#8230;&#8230;&#8230;.&#10;A)Capital Profit&#10;B)Revenue Receipt&#10;C)Capital Loss&#10;D)Revenue Expense

Accepted Answer

The answer of Discount or loss on issue of debenture...

Question 19

Debentures can be redeemed out of &#8230;&#8230;&#8230;.&#10;A)Fresh issue&#10;B)Capital&#10;C)Profit&#10;D)All of these

Accepted Answer

The answer of Debentures can be redeemed out of &#8230;&#8230;&#8230;.&#10;A)Fresh...

Question 20

Interest on debenture is &#8230;&#8230;&#8230;.&#10;A)Adjustment of profit&#10;B)Appropriation of Profit.&#10;C)Charge on profit&#10;D)None of these

Accepted Answer

The answer of Interest on debenture is &#8230;&#8230;&#8230;.&#10;A)Adjustment of profit&#10;B)Appropriation...

Question 21

Debentures are shown in the balance sheet under the head &#8230;&#8230;&#8230;..&#10;A)Secured loans&#10;B)Unsecured loans&#10;C)Provisions&#10;D)Current liabilities

Accepted Answer

The answer of Debentures are shown in the balance sheet...

Question 22

After realizing all the investments, the balance in the sinking fund account is transferred to &#8230;&#8230;&#8230;&#8230;&#10;A)Profit and Loss A/c&#10;B)Debenture Account&#10;C)Sinking fund A/c&#10;D)Capital reserve

Accepted Answer

The answer of After realizing all the investments, the balance...

Question 23

When own debentures are cancelled, any profit on cancellation is transferred to &#8230;&#8230;..&#10;A)General Reserve&#10;B)Capital Reserve&#10;C)Profit and Loss A/c&#10;D)Debenture A/c

Accepted Answer

The answer of When own debentures are cancelled, any profit...

Deck 16: Share Forfeiture, Debentures, and Sinking Fund