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Q1. Which of the following statement is false:
A. A company is a legal entity quite distinct from its members
B. A company can buy its own share
C. A shareholder is the agent of the company
D. Same person can agent and creditor of the company
Answer
C. A shareholder is the agent of the company
Q2. Which of the following are the characteristics of a company
A. Liability of the members is limited up to the face value of shares held by them
B. It is a voluntary association of persons
C. A company is a separate body can sue and be sued in its own name
D. Perpetual succession
Answer
C. A company is a separate body can sue and be sued in its own name
Q3. Share application and allotment account is a:
A. Personal account
B. Real account
C. Nominal account
D. None of the above
Answer
A. Personal account
Q4. Securities premium account is shown on the liabilities side of the balance sheet under the head:
A. Share capital
B. Reserves and surplus
C. Current liabilities
D. Non-Current liabilities
Answer
B. Reserves and surplus
Q5. As per section 78 of the companies act, amount collected as premium on securities cannot be utilized for:
A. Issuing fully paid bonus shares to the members
B. Purchase of fixed assets
C. Writing off preliminary expenses
D. Buy back of it’s own shares
Answer
B. Purchase of fixed assets
Q6. The portion of the authorised capital which can be called-up only on the liquidation of the company is called
A. Authorised capital
B. Reserve capital
C. Issued capital
D. Called up capital
Answer
B. Reserve capital
Q7. Which of the following statement is false:
A. Buy back must be authorised by articles of company
B. A special resolution must be passed for buy back
C. Shares can be partly paid up
D. The ratio of debt owed by the company is not more than twice the capital and its free reserves after such buy back
Answer
C. Shares can be partly paid up
Q8. If shares are bought back out of free reserves then a sum equal to nominal value of the shares so bought back is transferred to:
A. Capital reserve account
B. Capital redemption reserve account (CRR)
C. General reserve account
D. Statutory reserve account
Answer
B. Capital redemption reserve account (CRR)
Q9. Maximum buy back limit in any year is —– of total paid up equity capital and free reserves.
A. 25%
B. 10%
C. 20%
D. No limit
Answer
A. 25%
Q10. Which of the following statement in false:
A. Bonus issue is made out of free reserves or securities premium collected in cash only
B. Bonus shares can be issued out revaluation profit
C. No bonus issue shall be made within 12 months of any public or right issue
D. Company can issue bonus shares in any ratio.
Answer
B. Bonus shares can be issued out revaluation profit
Q11. Right share are not offered to the existing equity shareholders if:
A. The company in general meeting has so decided by a special resolution
B. Decided by an ordinary resolution and same has been approved by the central government
C. Right shares are offered to existing shareholders only
D. Both a and b.
Answer
D. Both a and b.
Q12. Which of the following reserves which can be utilised to make partly paid shares into fully paid up:
A. Securities premium
B. Capital redemption reserve
C. Surplus arising from a change in the method of charging depreciation
D. Capital reserve from sale of fixed assets in cash
Answer
D. Capital reserve from sale of fixed assets in cash
Q13. Which of the following statement is false:
A. Bonus issue is made in lieu of dividend
B. Bonus issue is not made unless the partly paid shares are made fully paid up
C. Bonus issue must be implemented within six months from the date of approval
D. Bonus is simply capitalisation of free reserve
Answer
A. Bonus issue is made in lieu of dividend
Q14. Redeemable Preference shares can be redeemed out of —– —–
A. The sale proceeds of Investments
B. The proceeds of a fresh issue of shares
C. Share premium
D. The proceeds of issue of debentures
Answer
B. The proceeds of a fresh issue of shares
Q15. When Redeemable Preference shares are due for redemption, the entry passed is
A. Debit redeemable Preference Share capital a/c; Credit cash a/c
B. Debit Redeemable Preference share capital a/c; credit Preference shareholders a/c
C. Debit preference shareholders a/c; credit cash a/c
D. Debit preference shareholders a/c; credit capital reduction a/c
Answer
B. Debit Redeemable Preference share capital a/c; credit Preference shareholders a/c
Q16. Which of the following can be utilized for the redemption of preference shares of a company out of profit:
A. Shares forfeited account
B. Development rebate reserve account
C. Capital redemption reserve account
D. Dividend equalization reserve
Answer
D. Dividend equalization reserve
Q17. Which of the following cannot be utilized for the redemption of preference shares of a company
A. Securities premium on fresh issue of shares
B. General Reserve
C. Profit and Loss Account
D. Dividend equalization reserve
Answer
A. Securities premium on fresh issue of shares
Q18. A company cannot issue redeemable preference shares for a period exceeding —– —–.
A. 6 years
B. 7 years
C. 8 years
D. 20 years
Answer
D. 20 years
Q19. Which of the following cannot be used for the purpose of creation of capital redemption reserve account?
A. Profit and loss account (credit balance)
B. General reserve account
C. Dividend equalization reserve account
D. Unclaimed dividends account
Answer
D. Unclaimed dividends account
Q20. The Capital Redemption reserve is created for the following reasons:
A. To Maintain the capital intact
B. To safeguard the interest company’s creditors
C. Both of the above
D. None of the above
Answer
C. Both of the above
Q21. Which of the following accounts can be transferred to capital redemption reserve account?
A. General reserve account
B. Forfeited shares account
C. Profit prior to incorporation
D. Securities premium account
Answer
A. General reserve account
Q22. According to sec. 100(1)(c) of the companies act, a company can pay back share capital which is in excess of need if:
A. Authorized by articles
B. Confirmation of the court
C. Special resolution is passed to that effect
D. All of the above
Answer
D. All of the above
Q23. Which of the following is not a statistical book of a company?
A. Share application and allotment book
B. Register of share warrants
C. Register of shares and debentures transferred
D. Register of debenture holders
Answer
D. Register of debenture holders
Q24. Share capital suspense account is opened when:
A. Balance sheet is not tallied
B. When dividend is declared but not paid
C. When shares are forfeited
D. When application money is received but balance sheet is prepared before allotment of shares.
Answer
D. When application money is received but balance sheet is prepared before allotment of shares.
Q25. A company can issue share at a discount if
A. One year have been elapsed since the date at which the company was allowed to commence business
B. Shares issued at a discount must belong to a class of shares already issued
C. Issue must take place within two must after the date of sanction by the court or within extended time.
D. All of the above
Answer
D. All of the above
Q26. When bonus share are received the average cost of the existing shares are —–
A. Reduced
B. Increased
C. equal
D. none of these
Answer
A. Reduced
Q27. Bonus shares are issued by —– free reserves
A. Generalizing
B. Capitalizing
C. Equalizing
D. None of these
Answer
B. Capitalizing
Q28. Bonus shares are issued out of —–
A. capital reserve
B. free reserve
C. share premium
D. none of these
Answer
B. free reserve
Q29. Right shares are issued to —– shareholders
A. previous
B. existing
C. future
D. None of these
Answer
B. existing
Q30. Sale of right is a —– receipt in case of right issue
A. Revenue
B. capital
C. deferred revenue
D. none of these
Answer
B. capital
Q31. Forfeiture of shares results in compulsory termination of —– due to non-payment of allotment/call money
A. allotment
B. membership
C. subscription
D. issue
Answer
B. membership
Q32. Securities premium account can be used for
A. Paying tax liability
B. paying dividend on shares
C. allowing discount in reissue of forfeited shares
D. to write off preliminary expenses
Answer
D. to write off preliminary expenses
Q33. After the issue of forfeited shares, balance of forfeited shares account Is transferred to
A. capital reserves A/c
B. share capital
C. general reserves
D. profit & loss A/c
Answer
A. capital reserves A/c
Q34. Preference shares have priority over equity shares for
A. payment of dividend and repayment of capital
B. voting in annual general meeting
C. subscribe for new issue of shares and debentures
D. interest on money invested in company
Answer
A. payment of dividend and repayment of capital
Q35. Shareholders get:
A. interest
B. dividend
C. bonus
D. commission
Answer
B. dividend
Q36. Debenture holders have right to receive —– even if there is no profit
A. interest
B. commission
C. dividend
D. bonus
Answer
A. interest
Q37. Debenture holders are the —– of the company
A. owners
B. customers
C. creditors
D. partners
Answer
C. creditors
Q38. Dividends are usually paid as a percentage of
A. authorized capital
B. net profit
C. paid up capital
D. called up capital
Answer
C. paid up capital
Q39. Debentures can be issued only
A. at par
B. at discount
C. premium
D. any of the above
Answer
D. any of the above
Q40. 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
Answer
C. 10
Q41. Cancelation of shares mean
A. Reissue of shares
B. Valuation of shares
C. Forfeiture of shares
D. Allotment of shares
Answer
C. Forfeiture of shares
Q42. 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
Answer
B. Issue on more than face value of shares
Q43. 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
Answer
A. Issue on face value of shares
Q44. 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
Answer
C. Issue on less than face value of shares
Q45. 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
Answer
B. property of the company
Q46. 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
Answer
C. long term borrowing of a business
Q47. 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
Answer
D. Miscellaneous expenditure
Q48. 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
Answer
C. Securities premium account
Q49. 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
Answer
C. Writing off the expenses/discount on the issue of debentures
Q50. 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
Answer
C. Called up capital of shares forfeited; Amount received on shares forfeited
Q51. 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
Answer
C. 25% of the issue price of shares
Q52. The group of users of accounting information charged with achieving the goals of the business is its —–
a. Auditors
b. Investors
c. Managers
d. Creditors
Answer
c. Managers
Q53. Salary paid, Interest paid, Commission received, Advertisement exp. etc fall in which category
a. Real accounts
b. Personal accounts
c. Nominal accounts
d. None of these
Answer
c. Nominal accounts
Q54. The assets that can be easily converted into cash within a short period, i.e., 1 year or less are known as
a. Fixed assets
b. Investments
c. Current assets
d. Intangible assets
Answer
c. Current assets
Q55. Short term solvency focuses on the —– Of the business:
a. Profit.
b. Shares.
c. Inventory.
d. liquidity position.
Answer
d. liquidity position.
Q56. Which of the following ratio is considered to assess the likely growth prospectus of the company and whether the company is a low risk investment?
a. Earnings per share.
b. diluted earnings per share.
c. Price earnings ratio.
d. dividend yield.
Answer
. Price earnings ratio
Q57. The difference between hire purchase price and the cash price is called —–
A. Hire charges
B. Cost of the asset
C. Installment price
D. Cash price
Answer
A. Hire charges
Q58. In order to deal with the re possession the hire vendor operates an account called —–
A. Asset account
B. Goods account
C. Goods repossessed account
D. None of these
Answer
C. Goods repossessed account
Q59. Hire Purchase price =
A. Cash price + Down payment
B. Cash price + Total interest
C. Cash price
D. Sum of total instalments
Answer
B. Cash price + Total interest
Q60. Cash Price =
A. Hire purchase price – total interest
B. Down payment in cash
C. Down payment + Interest
D. None of the above
Answer
A. Hire purchase price – total interest
Q61. If no provision is made in agreement regarding the duration of the partnership:
A. Limited partnership
B. Partnership at will
C. None
D. Particular partnership
Answer
B. Partnership at will
Q62. A person who declares by word of mouth as partner of the firm is called:
A. Active partner
B. Estople partner
C. Dormant partner
D. Nominal partner
Answer
B. Estople partner
Q63. A person who receives a share of profits from one of the regular partner is called:
A. Secret partner
B. Quasi
C. Partner in profit only
D. Sub – partner
Answer
D. Sub – partner
Q64. The agreement among partners which set out the terms on which they had agreed to form a partnership is called:
A. Partnership deed
B. Partnership at will
C. None of these
D. Arbitration clause
Answer
A. Partnership deed
Essentials of Financial Accounting BBA MCQs
- Essentials of Financial Accounting BBA MCQs Set 1
- Essentials of Financial Accounting BBA MCQs Set 2
- Essentials of Financial Accounting BBA MCQs Set 3
- Essentials of Financial Accounting BBA MCQs Set 4
- Essentials of Financial Accounting BBA MCQs Set 5
- Essentials of Financial Accounting BBA MCQs Set 6
- Essentials of Financial Accounting BBA MCQs Set 7
