Deck 12: Depreciation, Share Capital, and Forfeiture of Shares

Question 1

Loss on sale of machinery should be written off against

A)Security premium
B)sales account
C)depreciation fund account
D)none of these

Answer 1

depreciation fund account

Question 2

Depreciation arises because of

A)Fall in market value of asset
B)wear and tear
C)recession
D)none of these.

Answer 2

wear and tear

Question 3

When provision for depreciation account is maintained, the amount of depreciation is debited to

A)Asset account
B)depreciation account
C)provision for depreciation account
D)none of these.

Answer 3

depreciation account

Question 4

If original cost of an asset is rs. 60000 and its scrap value is Rs. 10000, its depreciable cost is

A)70000
B)50000
C)60000
D)none of these.

Question 5

Under diminishing balance method,

A)The rate of depreciation falls every year
B)the amount on which deprecation is calculated falls every year
C)the rate as well as amount of depreciation falls every year.
D)the rate as well as amount of depreciation remains constant.

Question 6

The term 'depletion' applies to decrease in value of

A)Tangible asset
B)intangible asset
C)wasting asset
D)current asset.

Question 7

The term amortization applies to decrease in book value of

A)Intangible fixed asset
B)wasting assets
C)tangible fixed assets
D)current assets

Question 8

For providing depreciation on lease hold property, the appropriate method is

A)Revaluation method
B)fixed installment method
C)replacement method
D)written down value method.

Question 9

Accumulated depreciation is an example of

A)An expense
B)an unrecorded revenue
C)a liability
D)a contra account.

Question 10

Share application is classified as

A)Real account
B)personal account
C)impersonal account
D)nominal account

Question 11

A newly established company cannot issue shares at par

A)Par
B)premium
C)discount
D)none of these

Question 12

The minimum share application is

A)1% of the face value
B)5% of the face value
C)10% of the face value
D)25% of the face value.

Question 13

The difference between subscribed capital and called up capital

A)Paid up capital
B)uncalled capital
C)calls in advance
D)calls in arrears.

Question 14

The number of days required from the time of issue of the prospectus to the complete allotment should not exceed

A)30 days
B)60 days
C)90 days
D)120 days

Question 15

The excess price received on the par value of shares should be credited to

A)Calls in advance account
B)reserve capital
C)security premium account
D)none of these

Question 16

The security premium will be shown under the heading

A)Share capital
B)current liability
C)current asset
D)none of these.

Question 17

As per Table A of the companies act, the interest on calls in advance is

A)5%
B)10%
C)6%
D)none of these.

Question 18

The rate of interest a company can charge on calls in arrears according to Table A of the companies act is

A)10%
B)6%
C)5%
D)none of these

Question 19

The rate of discount on shares cannot exceed.

A)5%
B)10%
C)6%
D)none of these

Question 20

Premium on issue of shares can be used for

A)Issue of bonus shares
B)distribution of profit
C)transferring to general reserve
D)none of these.

Question 21

When shares are forfeited the share capital account is debited by

A)Paid up amount
B)called up amount
C)calls in arrears
D)nominal value of such shares

Question 22

When forfeited shares (which were originally issued at a discount ) are reused at a premium, the amount of such premium will be credited to

A)Shares forfeiture account
B)security premium account
C)capital reserve account
D)none of these.

Question 23

When an existing company offers its shares for sale to the existing shareholders, it is known as

A)Private placement
B)bonus shares
C)right issue
D)offer for sale

Question 24

Dividends are usually paid on

A)Authorized capital
B)issued capital
C)called up capital
D)paid up capital

Question 25

Which of the following should be deducted from the shares capital to find out paid up capital

A)Calls in advance
B)calls in arrears
C)shares forfeited account
D)discount on issue of shares.