Question 1

Debentures can be issued only
A)at par
B)at discount
C)premium
D)any of the above

Accepted Answer

Debentures can be issued at par (face value), at a discount (below face value), or at a premium (above face value), depending on the strategy and financial health of the issuing company.

Question 2

If the minimum subscription is not received by the company, then the refund of application money should be made within ______ days.
A)7
B)9
C)10
D)22

Accepted Answer

The refund of application money must be made within 10 days if the minimum subscription amount is not received by the company. Failure to do so allows applicants to claim their money back with interest.

Question 3

Cancelation of shares mean
A)reissue of shares
B)valuation of shares
C)forfeiture of shares
D)allotment of shares

Accepted Answer

Cancellation of shares typically refers to the forfeiture of shares, which occurs when a shareholder fails to meet certain requirements or obligations, leading to the company taking back the shares.

Question 4

To issue shares on premium mean
A)issue on face value of shares
B)issue on more than face value of shares
C)issue on less than face value of shares
D)initial public offer

Accepted Answer

Issuing shares at a premium means the shares are sold for more than their face value.

Question 5

To issue shares on Par mean
A)issue on face value of shares
B)issue on more than face value of shares
C)issue on less than face value of shares
D)initial public offer

Accepted Answer

Issuing shares at par means issuing them at their face value, neither at a premium (more than face value) nor at a discount (less than face value).

Question 6

To issue shares on Discount mean
A)issue on face value of shares
B)issue on more than face value of shares
C)issue on less than face value of shares
D)initial public offer

Accepted Answer

Issuing shares at a discount means selling them for less than their face value.

Question 7

Forfeited shares to become ________
A)property of the government
B)property of the company
C)property of the shareholders
D)property of all the shareholders

Accepted Answer

Forfeited shares become the property of the company. When shares are forfeited, it means that the shareholder has failed to meet the obligations under which the shares were issued, and thus, the company takes back the ownership of those shares.

Question 8

Debentures represent the _________
A)manager's share in a business
B)investment by shareholders in a business
C)long term borrowing of a business
D)none of the above

Accepted Answer

Debentures represent the long-term borrowing of a business, where the company borrows money from the public or institutions and agrees to pay back the principal sum along with interest after a specified period.

Question 9

Discount on issue of debentures is shown under the heading in a company's Balance Sheet _______
A)fixed assets
B)loans and advances
C)investment
D)miscellaneous expenditure

Accepted Answer

Discount on issue of debentures is shown under the heading of "miscellaneous expenditure" in a company's Balance Sheet. This is because it is an expense that does not fit neatly into the other categories and is not a physical asset, loan, or investment.

Question 10

The excess price received over the par value of shares, should be credited __________.
A)calls-in-advance account
B)share capital account
C)securities premium account
D)discount on issue of shares account

Accepted Answer

The excess price received over the par value of shares is credited to the securities premium account, as it represents the additional amount investors are willing to pay above the nominal value of the shares.

Question 11

The Securities Premium amount may be utilized by a company for __________.
A)writing off any loss on sale of fixed asset
B)writing off any loss of revenue nature
C)writing off the expenses/discount on the issue of debentures
D)none of these

Accepted Answer

Securities Premium amount can be utilized for writing off the expenses or discount on the issue of debentures among other specific purposes as per the Companies Act.

Question 12

When shares are forfeited, the share capital account is debited with ________ and the share forfeiture account is credited with __________.
A)paid-up capital of shares forfeited; called up capital of shares forfeited
B)called up capital of shares forfeited; calls in arrear of shares forfeited
C)called up capital of shares forfeited; amount received on shares forfeited
D)none of these

Accepted Answer

When shares are forfeited, the share capital account is debited with the called-up capital of shares forfeited, and the share forfeiture account is credited with the amount received on shares forfeited.

Question 13

As per the SEBI guidelines, on issue of shares, the application money should not be less than
A)2.5% of the nominal value of shares
B)2.5% of the issue price of shares
C)25% of the issue price of shares
D)25% of the nominal value of shares

Accepted Answer

According to SEBI guidelines, on the issue of shares, the application money should not be less than 25% of the issue price of shares.

Quiz 10: Issuing and Cancelling Shares and Debentures in a Company

Debentures can be issued only

If the minimum subscription is not received by the company, then the refund of application money should be made within ______ days.

Cancelation of shares mean

To issue shares on premium mean

To issue shares on Par mean

To issue shares on Discount mean

Forfeited shares to become ________

Debentures represent the _________

Discount on issue of debentures is shown under the heading in a company's Balance Sheet _______

The excess price received over the par value of shares, should be credited __________.

The Securities Premium amount may be utilized by a company for __________.

When shares are forfeited, the share capital account is debited with and the share forfeiture account is credited with __.

As per the SEBI guidelines, on issue of shares, the application money should not be less than