Study Financial Accounting and Analysis MCQ MBA 5th Set and memorize for your exam. These multiple choice question from Financial Accounting and Analysis books and exam and most important for coming exam. Must attempt Finance MCQ Quiz and assess your knowledge.
Important Finance MCQ Set 5th Set
Q1. 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
Q2. 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
Q3. 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
Q4. 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
Q5. 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
Q6. 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)
Q7. 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%
Q8. 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
Q9. 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.
Q10. 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
Q11. 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
Q12. 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
Q13. 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
Q14. 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
Q15. 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
Q16. 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
Q17. 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
Q18. 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
Q19. 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
Q20. 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
Q21. 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
Q22. 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.
Q23. 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
Q24. 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
Q25. Bonus shares are issued by —– free reserves
A. Generalizing
B. Capitalizing
C. Equalizing
D. None of these
Answer
B. Capitalizing
Q26. Bonus shares are issued out of —–
A. capital reserve
B. free reserve
C. share premium
D. none of these
Answer
B. free reserve
Q27. Right shares are issued to —– shareholders
A. previous
B. existing
C. future
D. None of these
Answer
B. existing
Q28. 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
Q29. 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
Q30. 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
Q31. 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
Q32. Shareholders get:
A. interest
B. dividend
C. bonus
D. commission
Answer
B. dividend
Q33. Debenture holders have right to receive —– even if there is no profit
A. interest
B. commission
C. dividend
D. bonus
Answer
A. interest
Q34. Debenture holders are the —– of the company
A. owners
B. customers
C. creditors
D. partners
Answer
C. creditors
Q35. 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
Q36. Debentures can be issued only
A. at par
B. at discount
C. premium
D. any of the above
Answer
D. any of the above
Q37. 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
Q38. 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
Q39. 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
Q40. 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
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