Refer to MCQs for Accountancy Class 12 with Answers Chapter 1 Accounting for Share Capital designed as per the latest syllabus issued by CBSE. All Multiple choice questions have been provided with solutions and have been prepared based on the expected pattern in upcoming board exams

Question: Minimum number of members in a Public Company
(a) 7
(b) 2
(c) 5
(d) 3

Question. The profit on reissue of forfeited shares is transferred to :
(a) General Reserve
(b) Capital Redemption Reserve
(c) Capital Reserve
(d) Revenue Reserve 

Question. Arrange the following in proper sequence as types of “Share Capital”
(a) Paid up capital
(b) Issued capital
(c) Subscribed capital
(d) Called up capital

Question: Issue of share at a discount
(a) Section 79
(b) Section 78
(c) Section 76
(d) None of the options

Question: Formed by special act of the legislature or parliament Called
(a) Chartered companies
(b) Guarantee company
(c) Statutory Company
(d) None of the options

Question. When forfeited shares are re-issued the amount of discount allowed on these shares cannot exceed :
(a) 10% of called-up capital per share
(b) 6% of paid-up capital per share
(c) The amount received per share on forfeited shares
(d) The unpaid amount per share on forfeited shares.

Ques.5 Maximum limit of premium on shares is :
(a) 32%
(b) 20%
(c) No limit
(d) 100%

Question: Minimum number of directors in Pvt. Ltd company
(a) 3
(b) 2
(c) 4
(d) No limit

Question. The part of authorized capital which can be called up only on the Company being wound up is called :
(a) Issued Capital
(b) Unsubscribed Capital
(c) Reserve Capital
(d) None of these 

Question: A company is said to be Deemed Public company if its Annual Turnover exceeds
(a) 30 Crores.
(b) 20 Crore
(c) 25 Crore
(d) None of the options

Question Amount of money not received out of called up capital is :
(a) Added to share capital
(b) Subtracted from share capital
(c) Shown as current liabilities
(d) Shown as current asset

Question: The portion of the authorised capital which can be called-up only on the liquidation of the company is called
(a) Reserve capital
(b) Authorised capita
(c) Issued capital
(d) Called up capital

Question. Gama Chemicals Ltd. is a newly formed company. How much discount per share can it allow for issuing its shares to the public ?
(a) 6%
(b) 10%
(c) 5%
(d) None of the above 

Question Following amounts were payable on issue of shares by a company : Rs.3 on application , Rs.3 on allotment , Rs.2 on first call and Rs.2 on final call . X holding 500 shares paid only application and allotment money whereas Y holding 400 shares did not pay final call . Amount of calls in arrear will be:
(a) 3,800
(b) 2,800
(c) 1,800
(d) 6,200

Question: Issue of share at a discount must be authorised by a resolution passed by the company in general meeting and duly sanctioned by the
(a) None of the options
(b) State government.
(c) Local government
(d) Central government.

Question Rajan Limited issued 50,000 shares at a price lower than the nominal value of the share. The shares issued are called:
(a) Sweat equity shares
(b) Redeemable Preference shares
(c) Equity shares
(d) Bonus shares

Question. Shares can be forfeited for :
(a) For non – payment of call money
(b) For failure to attend meetings
(c) For failure to repay the loan to the bank
(d) For which shares are pledged as a security to 

Question: Capital of a Company is divided in units which is called :
(a) Debenture
(b) Share
(c) Stock
(d) Bond

Question E Ltd. had allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis, application money on another 6000 shares was refunded .The amount payable on the application was Rs.2. Sitaraman applied for 420 shares . The number of shares allotted to him will be:
(a) 60 shares
(b) 340 shares
(c) 320 shares
(d) 300 shares

Question. Premium received on issue of shares is shown on :
(a) Equity and Liabilities part of balance sheet
(b) Debit side of the statement of profit and loss
(c) Credit side of the statement of profit and loss
(d) Assets part of the balance sheet. 

Question: The following statements apply to equity/preference shareholders. Which one of them applies only to preference sharehoders?
(a) Shareholders risk the loss of investment
(b) Shareholders bear the risk of no dividends in the event of losses
(c) Shareholders usually have the right to vote
(d) Dividends are usually given at a set amount in every financial year.

Question A company issued 4,000 equity shares of rupees 10 each at par payable as under:
On application rupees 3 , on allotment rupees 2; on first call rupees 4 and on final call rupees 1 per share. Applicants were received for 16,000 share . Application for 6,000 shares were rejected and pro-rata allotment was made to the applicants for 10,000 shares . How much amount will be received in cash on first call,when excess application money is adjusted towards amount due on allotments and calls :
(A.) Rupees 6.000
(B.) nil
(C.) Rupees 16,000
(D.) Rupees 10,000

Question: A Company invited applications for 1,00,000 shares and it received applications for 1,50,000 shares. Applications for 30,000 shares were rejected and the remaining were allotted shares on prorata basis. How many shares an applicant for 3,000 shares will be allotted :
(a) 2,500 Shares
(b) 3,600 Shares
(c) 4,500 Shares
(d) 2,000 Shares

Question. A Forfeited Share can :
(a) not be re-issued at discount
(b) re-issued at a maximum discount of 10%
(c) be re-issued at a maximum discount equal to the amount forfeited
(d) None of the above. 

Question A company issued 4000 equity shares of rupees 50 each at par payable as under:
On application rupees 20%, on allotment 40% ; on first call 10% ; on final call -balance
Applications were received for 10,000 shares . Allotment was made pro-rata . How much amount will be received in cash on allotment?
(a) Rupees 6.000
(b) nil
(c) Rupees 16,000
(d) Rupees 20,000

Question: XY Limited issued 2,50,000 equity shares of Rs. 10 each at a premium of Rs.1 each payable as Rs.2.5 on application, Rs.4 on allotment and balance on the first and final call. Applications were received for 5,00,000 equity shares but the company allotted to them only 2,50,000 shares. Excess money was applied towards amount due on allotment. Last call on 500 shares was not received and shares were forfeited after due notice. This is a case of:
(a) Over subscription
(b) Pro-rata allotment
(c) Forfeiture of Shares
(d) All of the above

Question. The owners of the shares are called :
(a) Share Capital
(b) Shareholders
(c) Creditors
(d) Debtors 

Question: Premium on the issue of shares should be shown :
(a) On the Assets side of balance sheet
(b) On the Equity & Liabilities side of balance sheet
(c) In profit & loss Statement
(d) None of the Above

Question. Which one of the following is not a part of subscribed capital:
A) Equity shares issued to vendor
B) Preference shares of convertible type
C) Forfeited shares
D) Bonus shares

Question: Authorised Capital of a Company is mentioned in :
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) Statement in lieu of Prospectus

Question. The first stage of Incorporating a Company is :
(a) Registration
(b) Promotion
(c) Commencement of business
(d) None of these

Question. When nominal (face) value of a share is called up by the company but as some shareholders did not pay the money, the shares are forfeited . The share capital is shown in the balance sheet (notes) of a company under the following heading:
A) Subscribed and fully paid up
B) Subscribed but not fully paid up
C) Subscribed and called up
D) Subscribed but not called up

Question: A Company is
a) All of the options
b) Has separate legal identity
c) Has Perpetual existence
d) Has Common seal

Question. Zee Ltd issued 15,000 equity shares of Rs.20 each at a premium of Rs.5 payable Rs.5 on application,Rs.10 on allotment (including premium) and the balance on first and final call. The company received applications for 22,500 shares and allotment was made pro rata. Bittoo to whom 1,200 shares were allotted, failed to pay the amount due on allotment. All his shares were forfeited after the call was made. The forfeited shares were reissued to Dheeraj at par. Assuming that no other bank transactions took place, the bank balance of the company after the above transactions is :
A) Rs.6,85,000
B) Rs.3,60,500
C)Rs.3,78,000
D)Rs.6,34,000

Question. Those preference shares which do not carry the right to receive arrears of dividend :
(a) Non – participating Preference Shares
(b) Irredeemable Preference Shares
(c) Non – Convertible Preference Shares
(d) Non – Cumulative Preference Shares 

Question: Section 591of Act states this type of company is incorporated outside India but has established business in India, Called
a) Private company
b) Government Company
c) Foreign Company
d) Limited company

Question. 15.Zen Ltd purchased the sundry assets of M/s Surat Industries for Rs.28,60,000 payable in fully paid shares of Rs.100 each. State the number of shares issued to vendor when issued at premium of 10%.
A)28,000
B)31,778
C)28,600
D)26,000

Question: Capital raised by issue of shares is called
a) Share capital.
b) Authorised Capital
c) Called up Capital
d) None of the options

Question. Balance in Forfeited Shares Account is shown in the balance sheet under the head of :
(a) Reserves and Surplus
(b) Long-term Borrowings
(c) Share Capital
(d) Other Current Liabilities 

Question.The subscribed share capital of Mukand Ltd is Rs.1,00,00,000 of Rs.100 each. There were no calls in arrear till the final call was made. The final call made was paid on 97,500 shares. The calls in arrear amounted to Rs.87,500.The final call on share :
A)Rs.20
B)Rs.35
C)Rs.25
D)Rs.45

Question: When Second instalment paid
a) None of the options
b) On Application
c) Both
d) On allotment

Question: Balance in forfeited share account is shown in the balance sheet under the head of
a) Current liabilities
b) Reserves and surplus
c) Share capital.
d) None of the options

Question. These shares which in addition to the fixed preference dividend, carry a right to participate in the surplus profits, if any, after dividend at a stipulated rate has been paid to the equity share holders are called:
A) Participating preference shares
B) Convertible preference shares
C) Redeemable preference shares
D) Cumulative preference shares

Question. ESOP offered by company will create / retain :
(a) A sense of belongingness employees
(b) High caliber
(c) High Productivity
(d) All of these

Question: Which company has special rights under Companies Act 3 (i) section (iii)
a) Private Company
b) Limited company
c) Illegal company
d) None of the options

Question.T Ltd had allotted 20,000 shares to the applicants of 24,000 shares on pro rata basis. The amount payable on application is Rs.2. Manoranjan applied for 450 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from him is:
A) 150 shares,Rs.375
B) 375 shares,Rs.150
C) 400 shares,Rs.100
D) 300 shares,Rs.300

Question: Reserve Capital is also known by :
a) Capital Reserve
b) Called up Capital
c) Subscribed Capital
d) None of the above

Question .A company forfeited 3,000 shares of Rs.10 each(which were issued at par) held by Kishore for nonpayment of allotment money ofRs.5 per share.The called up value per share was Rs.8.On forfeiture, the amount debited to share capital:
A)Rs.30,000
B)Rs.24,000
C)Rs.15,000
D)Rs.6,000

Question. Share Allotment Account is a/an :
(a) Expense Account
(b) Liability Account
(c) Asset Account
(d) Income Account 

Question: If shares of Rs.4,00,000 are issued for purchase of assets of Rs.5,00,000, Rs. 1,00,000 will be treated as ……………. :
a) Discount
b) Premium
c) Profit
d) Loss

Question. Z limited issued shares of Rs.100 each at a premium of 10%. Mr. Q purchased 500 shares and paid Rs.20 on application but did not pay the allotment money of Rs.30. If the company forfeited his 30% shares, the forfeiture account will be credited by :
A) Rs. 4500
B)Rs. 3500
C) Rs. 1650
D) Rs. 3000

Question: Deepak Ltd. offered for subscription 5,50,000 equity shares of Rs. 10 each.The public applied for 5,00,000 shares.
The call ( Rs. 8 per share) was received except from Gopal, who holds 4,000 shares has not paid after application money of Rs. 2 per share and from Shyam who holds 1,000 shares has paid only Rs. 6 per share. Gopal’s shares were forfeited. The amount of subscribed capital to be disclosed in the Balance Sheet is
(a) Rs.39,96,000.
(b) Rs.39,74,000.
(C) Rs.49,46,000.
(d) Rs.49,74,000.

Question: A company purchased machinery for Rs. 1,80,000 and in consideration issued shares at 20% premium. What will be the face value of shares issued :
a) Rs. 1,50,000
b) Rs. 1,44,000
c) Rs. 1,80,000
d) Rs.2,16,000

Question. Daisy Limited forfeited 200 shares Rs.10 each who had applied for 500 shares, issued at a premium of 10% for nonpayment of final call of Rs.3 per share. Out of these 100 shares were issued as fully paid up for Rs.15. The profit on reissue is :
A ) Rs. 700
B) Rs. 6400
C) Rs. 300
D) Rs. 400

Question: An artificial person created by Law is called :
a) Sole Tradership
b) Partnership Firm
c) Company
d) All of the Above

Question: When shares are forfeited. Share Capital Account is debited with
(a) nominal (face) value of shares.
(b) called-up share capital.
(c) paid-up value of shares.
(d) market value of shares.

Question. Mithas Limited was formed with share capital of Rs. 50,00,000 divided into 50,000 shares of Rs.100 each. 9,000 shares were issued to the vendor as fully paid for purchase consideration of a furniture acquired. 30,000 shares were allotted in payment of cash on which Rs.70 per share was called and paid . State the amount of subscribed capital :
A) Rs. 50,00,000
B) Rs. 30,50,000
C) Rs. 30,00,000
D) Rs. 20,00,000

Question: Capital reserves are created from
a) Capital Profit
b) Average Profit
c) Share Profit
d) None of the options

Question: Which of the following statement in false
a) No bonus issue shall be made within 12 months of any public or right issue.
b) Bonus issue is made out of free reserves or securities premium collected in cash only
c) Bonus shares can be issued out revaluation profit.
d) Company can issue bonus shares in any ratio

Question. Faltu Limited invited application for 2,00,000 shares of Rs.10 each. These shares were issued at premium of Rs.11 each which was allowed at the time of allotment. All money was called and duly received except on 10,000 shares on which only application money of Rs.3 per share was received.
The company forfeited all the shares. 7000 of forfeited share where re-issued at Rs.13per share. State the amount of securities premium to be shown under the head -Reserve and surplus.
A) Rs.20,00,000
B) Rs.11,11,000
C) Rs.8,11,000
D) Rs.21,11,000

Question: Those companies whose shares are listed on a recognised stock exchange for public trading
a) Government Company
b) Listed Company
c) Private Company
d) Limited company

Question: Share capital of a company can be divided into
a) All of the options
b) Authorised Capital
c) Issued Capital
d) Subscribed Capital

Question: What type of shares can be issued at discount?
a) Preference Shares
b) Equity Shares
c) Sweat Equity Shares
d) None of the options

Question: Shares issued by a company to its employees or directors in consideration of ‘Intellectual Property Rights’ are called :
a) Right Equity Shares
b) Private Equity Shares
(c) Sweat Equity Shares
d) Bonus Equity Shares

Question: If a share of Rs. 100 on which Rs.60 has been paid, is forfeited, it can be re-issued at the minimum price of:
a) Rs. 60
b) Rs.100
c) Rs. 40
d) Rs.140

Question: If vendors are issued fully paid shares of Rs. 1,25,000 in consideration of net assets of Rs. 1,50,000, the balance of Rs.25,000 will be credited to :
a) Statement of Profit & Loss
b) Security Premium Reserve Account
c) Goodwill Account
d) Capital Reserve Account

Question: The shares on which there is no any pre-fixed rate of dividend is decided, but the rate of dividend is fluctuating every year according to the availability of profits, such share are called :
a) Equity Share
b) Non-cumulative preference share
c) Non-convertible preference share
d) Non-guaranteed preference share

Question: Which of the following will define, when appropriation of a certain number of shares is made to an applicant in response to his application?
a) Share allotment
b) Share forfeiture
c) Share trading
d) Share Purchase

Question: Shareholders are :
a) Customers of the Company
b) Owners of the Company
c) Creditors of the Company
d) None of these

Question: Maximum number of members in a private company is :
a) 7
b) 200
c) 20
d) No Limit

Question: Preference shares, in case the holders of these have a right to convert their preference shares into equity shares at their option according to the terms of issue, such shares are called :
a) Cumulative Preference Share
b) Non-cumulative Preference Share
c) Convertible Preference Share
d) Non-convertible Preference Share

Question: Reserve Capital is :
a) Subscribed Capital
b) Capital Reserve
c) Uncalled Capital
d) Part of the uncalled capital which may be called only at the time of liquidation of the Company

Question: As per SEBI Guidelines, Application money should not be less than ……………. of the issue price of each share.
a) 10%
b) 15%
c) 25%
d) 50%

Question: Which of the following will define, when appropriation of a certain number of shares is made to an applicant in response to his application?
a) Share allotment
b) Share forfeiture
c) Share trading
d) Share Purchase

Question: A Company issued 50,000 shares of ₹20 each at 5% premium. ₹10 were payable on application and balance on allotment. What will be the allotment amount?
a) ₹5,00,000
b) ₹4,75,000
c) ₹5,50,000
d) ₹5,25,000

Question: A Company offered 50,000 shares of ?10 each at par payable as to ?3 on applications, ?5 on allotment and the balance on final call. Applications were received for 60,000 shares and the allotment was made pro-rata. The excess application money was to be adjusted on allotment and call. How much amount will be transferred from Share Application A/c to Share Allotment A/c?
a) ₹1,80,000
b) ₹30,000
c) ₹1,50,000
d) ₹50,000

One Word / Sentence Answers :

Question. D Ltd. invited applications for issuing 10,00,000 equity shares of ` 10 each. The public applied for 8,55,000 shares. Can the company proceed for the allotment of shares ? Give reason in support of your answer. 

According to the below given information the final call per share is Rs.22. 
The subscribed capital of a company is Rs. 80,00,000 and the nominal value of the share is Rs.100 each. There were no calls in arrear till the final call was made . The final call made was paid on 77,500 shares only . The balance in the calls in arrear amounted to Rs.55,000.

Question. At what interest on Calls-in-Arrear can be charged by a Company according to Table F of the Companies Act, 2013?

Question. The repayment of the amount of preference share is called _________ 

Question. State any three purposes other than ‘buy back of share’ for which securities premium can be utilized. 

Question. Give any one purpose for which the amount received as securities premium may be utilised ? 

Question. What is meant by ‘Issue of shares at premium’ ? State any two purposes for which securities premium amount can be utilised as per the Companies Act, 2013. 

Question True/ False :
Securities premium received on issue of shares cannot be used for the purpose of buy back of shares.

Question. The maximum capital that the company can issue during its lifetime is ______ 

Question. What rate of interest the company pays on calls-inadvance, if it has not prepared its own Articles of Association ?  OR At what rate of interest on Calls-in-Advance may be paid by a company according to Table F of Schedule I of the Companies Act, 2013?

Question True/False-Share application amount is in the nature of Real account

Question. Subscription of shares should not be less than _________ % of the issued shares. 

Question. Can Securities Premium Reserve be used as working capital? Give reason in support of your answer. 

Question. The part of issued capital which is not subscribed by the general public is called _________