Q.1 What is the maximum amount of capital a company can raise as stated in its Memorandum of Association?
Subscribed Capital
Issued Capital
Authorized Capital
Called-up Capital
Explanation - Authorized Capital is the maximum limit of capital a company can raise as specified in its Memorandum of Association.
Correct answer is: Authorized Capital
Q.2 Which type of share provides a fixed rate of dividend before any dividend is paid on equity shares?
Equity Shares
Preference Shares
Bonus Shares
Sweat Equity Shares
Explanation - Preference Shares get priority for dividend at a fixed rate before equity shareholders receive any dividend.
Correct answer is: Preference Shares
Q.3 If a company issues shares at a price higher than their nominal value, the excess amount is credited to:
General Reserve
Securities Premium Reserve
Profit and Loss Account
Capital Reserve
Explanation - The excess amount over face value of shares is transferred to Securities Premium Reserve as per the Companies Act.
Correct answer is: Securities Premium Reserve
Q.4 What is the term for the capital which has been issued and subscribed but not called up?
Called-up Capital
Uncalled Capital
Reserve Capital
Paid-up Capital
Explanation - Uncalled Capital is part of subscribed capital which has not yet been demanded by the company.
Correct answer is: Uncalled Capital
Q.5 Which account is debited when share application money is received?
Share Capital Account
Bank Account
Share Application Account
Securities Premium Account
Explanation - When share application money is received, the Bank Account is debited and Share Application Account is credited.
Correct answer is: Bank Account
Q.6 Forfeited shares reissued at a discount must not exceed:
Face Value
Nominal Value
Amount Forfeited
Paid-up Value
Explanation - The maximum discount on reissue cannot exceed the amount forfeited on those shares.
Correct answer is: Amount Forfeited
Q.7 Which of the following is NOT a type of debenture?
Bearer Debenture
Convertible Debenture
Secured Debenture
Preference Debenture
Explanation - Preference Debenture is not a type of debenture; it confuses with Preference Shares.
Correct answer is: Preference Debenture
Q.8 What is the nature of the Securities Premium Reserve?
Revenue Reserve
Capital Reserve
Liability
Asset
Explanation - Securities Premium Reserve is a capital reserve that can be used only for specified purposes.
Correct answer is: Capital Reserve
Q.9 When debentures are issued at par and redeemable at premium, which account is debited for premium payable?
Profit and Loss Account
Securities Premium Reserve
Debenture Redemption Reserve
Loss on Issue of Debentures Account
Explanation - Premium on redemption of debentures is considered a loss and debited to Loss on Issue of Debentures A/c.
Correct answer is: Loss on Issue of Debentures Account
Q.10 Which section of the Companies Act deals with the issue of shares at a discount?
Section 53
Section 62
Section 129
Section 69
Explanation - As per the Companies Act 2013, Section 53 prohibits issue of shares at discount except in case of sweat equity shares.
Correct answer is: Section 53
Q.11 The portion of uncalled capital that cannot be called up except on winding up is called:
Uncalled Capital
Reserve Capital
Paid-up Capital
Subscribed Capital
Explanation - Reserve Capital is part of uncalled capital which a company decides to call up only at the time of winding up.
Correct answer is: Reserve Capital
Q.12 When debentures are converted into shares, it is known as:
Redemption by Purchase
Conversion Method
Redemption by Conversion
Buy-back of Shares
Explanation - Conversion of debentures into shares is known as redemption by conversion.
Correct answer is: Redemption by Conversion
Q.13 Calls-in-advance is shown on the Balance Sheet under:
Share Capital
Reserves and Surplus
Other Current Liabilities
Other Current Assets
Explanation - Calls-in-advance is a liability for the company and is shown under Other Current Liabilities in the Balance Sheet.
Correct answer is: Other Current Liabilities
Q.14 Which type of shares cannot be redeemed as per the Companies Act?
Preference Shares
Equity Shares
Bonus Shares
Sweat Equity Shares
Explanation - Equity shares are not redeemable; only preference shares can be redeemed as per the Act.
Correct answer is: Equity Shares
Q.15 If shares of ₹10 each are issued at ₹12, then ₹2 is credited to:
General Reserve
Securities Premium Reserve
Share Capital Account
Capital Redemption Reserve
Explanation - The excess amount received over face value is credited to Securities Premium Reserve.
Correct answer is: Securities Premium Reserve
Q.16 Which account is created for redemption of debentures to protect creditors?
Securities Premium Account
Debenture Redemption Reserve
Capital Redemption Reserve
General Reserve
Explanation - Companies are required to create a Debenture Redemption Reserve to safeguard creditor interests during redemption.
Correct answer is: Debenture Redemption Reserve
Q.17 What is the minimum subscription that must be received for allotment of shares?
90% of issued capital
100% of subscribed capital
90% of issued capital or as specified by SEBI
50% of authorized capital
Explanation - As per SEBI guidelines, at least 90% subscription is required for allotment of shares.
Correct answer is: 90% of issued capital or as specified by SEBI
Q.18 Which type of debenture holder is recorded in the Register of Debenture Holders?
Bearer Debenture Holder
Registered Debenture Holder
Convertible Debenture Holder
Secured Debenture Holder
Explanation - Registered Debenture Holders’ names are entered in the Register of Debenture Holders maintained by the company.
Correct answer is: Registered Debenture Holder
Q.19 Over-subscription of shares means:
Applications received are less than shares issued
Applications received equal shares issued
Applications received are more than shares issued
Shares issued without application
Explanation - When the company receives applications for more shares than issued, it is over-subscription.
Correct answer is: Applications received are more than shares issued
Q.20 The unpaid amount on shares is shown in the Balance Sheet as:
Liability
Asset
Reserve
Share Capital
Explanation - Unpaid amounts like Calls-in-arrears are shown as an asset because they are receivable from shareholders.
Correct answer is: Asset
Q.21 Which type of share can be issued to employees at a discount for their contribution?
Equity Shares
Bonus Shares
Sweat Equity Shares
Preference Shares
Explanation - Sweat Equity Shares are issued to employees at a discount or for consideration other than cash for their services.
Correct answer is: Sweat Equity Shares
Q.22 When debentures are issued at a discount and redeemable at par, the discount is treated as:
Revenue Loss
Capital Loss
Deferred Revenue Expenditure
Profit and Loss Appropriation
Explanation - Discount on issue of debentures is amortized over the period and treated as deferred revenue expenditure.
Correct answer is: Deferred Revenue Expenditure
Q.23 Which type of capital is actually invested by shareholders?
Authorized Capital
Issued Capital
Subscribed and Paid-up Capital
Reserve Capital
Explanation - Subscribed and Paid-up Capital is the actual capital contributed by shareholders.
Correct answer is: Subscribed and Paid-up Capital
Q.24 The amount received in advance against future calls is:
Calls-in-advance
Calls-in-arrears
Reserve Capital
Paid-up Capital
Explanation - Any money received from shareholders before it is called up is known as Calls-in-advance.
Correct answer is: Calls-in-advance
Q.25 If shares are forfeited, which account is credited with the amount already received?
Share Capital Account
Forfeited Shares Account
Bank Account
General Reserve Account
Explanation - On forfeiture, Share Capital is debited and Forfeited Shares Account is credited with the amount already received.
Correct answer is: Forfeited Shares Account