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Issue of Share-WPS Office
Issue of Share-WPS Office
3. An issue of shares that is not a public issue but offered to a selected group of persons is
called _______.
4. When shares are forfeited, the share capital account is debited with ______.
7. Balance of forfeited shares account after the reissue of forfeited shares is transferred to
_______.
8. Under the provisions of the Companies Act, the company can issue_______.
10. Premium on the issue of shares is shown on which side of the balance sheet?
(a) Assets
(b) Liabilities
(C) To debentureholders
(D) To promoters
(C) Preferential right as to repayment of capital at the time of liquidation of the company
(D) Preferential right as to dividend and repayment of capital at the time of liquidation of the
company.
Q. 14. 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
Q. 15. 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:
Q16. A preference share which does not carry the right of sharing in surplus profits is called
Q. 17. Which shareholders have a right to receive the arrears of dividend from future
profits:
Q. 18. Which shareholders are returned their capital after some specified time:
Q. 21. The following statements apply to equity/preference shareholders. Which one of them
applies only to preference shareholders? (A) Shareholders risk the loss of investment (B)
Shareholders bear the risk of no dividends in the event of losses
(D) Dividends are usually given at a set amount in every financial year.
Q22-The portion of the capital which can be called-up only on the winding the Company is
called............
(C) Uncalled Capital (D) Part of the uncalled capital which may be called only at the time of
liquidation of the Company.
0.27. Which of the following statements does not relate to 'Reserve Capital":
Q. 28-. In the Balance Sheet of a company, under the heading share capital, at the last is shown:
Q. 29. Which of the following is not shown under the heading 'Share Capital' in a Balance Sheet:
Q. 33. Which of the following will define, when appropriation of a certain number of shares is
made to an applicant in response to his application?
Q. 34. Issue of shares at a price lower than its face value is called
Q. 35. According to SEBI Guidelines, Minimum Subscription has been fixed at ..............of the
issued amount
(A) Shareholders
(B) Directors
(C) Promoters
(D) Auditors
Q 40. 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%
Q. 41. 4,000 Equity Shares of ₹10 each were issued at 8% premium to the promoters of a
company for their services. Which account will be debited?
Q. 42. Excess value of net assets over purchase consideration at the time of purchase of
business is
Q. 43. If vendors are issued fully paid shares of ₹1,25,000 in consideration of net assets of
₹1,50,000, the balance of₹ 25,000 will be credited to
Q44- Issue of shares at a price higher than its face value is called
(A) Profit
(B) Income
Q46-As per Section 52 of Companies Act 2013, Securities Premium cannot be utilised for:
(B) Goodwill
(A) 6% pa
(C) 5% p.a.
(B) 5% p.a.
(D) 6% p.a
Q51-Balance of share forfeiture account is shownin the balance sheet under the head........
(A) Share Capital Account
Q. 52. On an equity share of ₹10 the company has called up ₹8 but ₹6 have been received by the
company is forfeited , the capital account should be debited by:
Q.53. If a share of ₹10 issued at a premium of ₹3 on which the full amount has been called and₹
8 (including premium) paid is forfeited the capital account should be debited with
(A) ₹5
(B)₹ 8
(C)₹ 10
(D) ₹13
Q.54. If a share of₹ 10 issued at a premium of ₹1 on which₹ 9 (including premium) have been
called and₹ 7 including premium is paid is forfeited the capital account should be debited by
(A)₹ 10. (B) ₹7 (C)₹ 8 (D) ₹9
Q. 55. 600 shares of ₹10 each were forfeited for non-payment of ₹2 per share on first call and
₹5 per share on final call. Share Forfeiture Account will be credited with
(A) ₹1,200
(B) ₹1,800
(C) ₹3,000
(D) ₹4,200
Q. 56. 800 shares of 10 each issued at 20% premium were forfeited for non-payment of
allotment money of ₹5 (including premium) and first & final of ₹3 per share. Share Forfeiture
Account will be credited with:
Q. 57. 800 shares of 10 each issued at 30% premium (to be paid on allotment) were forfeited for
non-payment of₹ 2 per share on first call and ₹2 per share on final call. Share Forfeiture Account
will be credited with
(A) ₹2,400 (B)₹4,800 (C)₹ 3,200 (D) ₹7,200
Ruby limited invited applications for 1,00,000 shares of ₹10 each at a premium of 30% payable
as follows
On Application ₹4
On Allotment ₹5
On First Call₹2
The public subscribed for two times the shares that were offered by the company. The directors
decided to allot the shares to all the applicants on a pro-rata basis. Santosh who had applied for
6,000 shares, did not pay anything after the Application. Her shares were forfeited after the final
call. 50% of the forfeited shares were reissued to Ashok as fully paid in such a manner that
₹1,500 were transferred to Capital Reserve A/c
(A) 12,000
(B) 6,000
(C) 3,000
(D) 2,000
Q59. What amount will be received by Ruby Ltd at the time of Allotment?
(A) ₹7,70,000.
(B) ₹4,85,000
(C) ₹97,000
(D)₹ 85,000
Q.60. When Santosh's share were forfeited, what amount was transferred to "Share
Forfeited A/c"?
(A) ₹24,000
(B) ₹21,000
(C) ₹20,000
(D) ₹18,000
(A) 3,000
(B) 2,000
(C) 1,500
(D) 1,000
Assertion-Reason Questions
1. Assertion (A):
Q63-A company is a legal entity separate and distinct from its members.
Reason (R):
A company can enter into a contract. It can sue and be sued in its own name.
In the context of the above two statements, which of the following is correct?
Codes: (A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation of (A).
Reason (R):
Insolvency or death of a shareholder will not affect its existence.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation of (A).
Issued Share Capital and Subscribed Share Capital are always different.
Reason (R):
Subscribed Share Capital is a part of Issued Share Capital. Thus, it will always be different from
Issued Share Capital.
In the context of the above two statements, which of the following is correct?
Codes:
(A) (A) and (R) both are correct and (R) correctly explains (A).
(B) Both (A) and (R) are correct but (R) does not correctly explain (A).
Reason (R):
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation of (A).
(C) Both (A) and (R) are false
In the context of the above statements, which one of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(B) Both (A) and (R) are true and (R) is a correct explanation of (A).
Reason (R):
Shares of a company are transferable in the manner provided in the articles of the company
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is a correct explanation of (A).
A public company must have atleast 7 members and there is no limit as to the maximum
number of members.
Reason (R):
A private company must have atleast 2 members and maximum 200 excluding its present or
past employees.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
Reason (R):
Securities Premium may be used for issue of partly-paid or fully paid bonus shares.
In the context of the above two statements, which of the following is correct?
Codes:
Reason (R):
Amount of discount on reissue of forfeited shares cannot exceed the amount forfeited on
reissued shares.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(C) Only (R) is correct.
Asian Cables Ltd. issued for subscription 2,00,000 equity shares of₹ 10 each payable₹ 3 on
application. It received₹ 5,40,000 as application money. Full allotment was made to each
applicant.
Reason (R):
In this case, there is undersubscription of shares. However, since minimum subscription of 90%
has been received, full allotment will be made to each applicant.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation of (A).
XLtd. issued 50,000 Equity shares of ₹100 each. It received the full amount on shares except
first and final of ₹25 on 200 shares. These 200 shares will be shown as 'Subscribed but not fully
paid Capital".
Reason (R):
The shares on which calls are in arrears are not fully paid. Hence, they will be shown as
'Subscribed but not fully paid Capital'.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
Calls in Arrears are deducted from Subscribed but not fully paid capital.
Reason (R):
Calls in Advance are added to Subscribed but not fully paid Capital.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
If 1,00,000 shares of₹ 10 each of X Ltd. are fully called, Share Forfeiture amount of ₹6,000 on
1,000 forfeited shares will be added to Subscribed and Fully Paid Capital of ₹9,90,000.
Reason (R):
If 1,00,000 shares of ₹10 each are₹ 7 Called, Share Forfeiture amount of ₹8,000 on 2,000
forfeited shares will be added to Subscribed but Not Fully Paid Capital of ₹6,86,000.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A)
(B) Both (A) and (R) are true and (R) is a correct explanation of (A).
Reason (R):
As per SEBI Guidelines minimum subscription has been fixed at 90% of the issued amount. In
the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
Q77.Assertion (A):
Securities Premium can be used for issue of fully paid bonus shares and for distribution of
dividend in cash.
Reason (R):
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct explanation of (A).
(B) Both (A) and (R) are correct but (R) is not the correct explanation of (A)
Equity Shares bear the maximum risk and also get the maximum reward.
Reason (R):
Dividend on equity shares will be paid only when profits are left after payment of fixed rate of
dividend on preference shares. As such, dividend may not be paid every year but in some years
they may be paid large dividend and they may be issued bonus shares also. Market value of
equity shares may also increase to a great extent.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are correct and (R) is the correct reason of (A).
(B) Both (A) and (R) are correct but (R) is not the correct reason of (A).
(C) Only (R) is correct.
Reason (R):
Reserve Capital is a part of Subscribed Capital which the Company may decide to call at the
time of winding up of the Company.
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is the correct explanation of (A).
In case of shares issued on Pro-rata basis, excess money received at the time of application in
the absence of information can be utilised till allotment only.
Reason (R):
Company has to pay interest on calls in advance for amount adjusted towards calls (if any).
In the context of the above two statements, which of the following is correct?
Codes:
(A) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(B) Both (A) and (R) are true and (R) is a correct explanation of (A).
(C) Both (A) and (R) are false. .(D) (A) is false, but (R) is true.
Q81-Tractors India Ltd. is registered with an authorized capital of ₹10,00,000 divided into
1,00,000 equity shares of₹ 10 each. The company issued 50,000 equity shares at a premium of
₹5 per share. ₹2 per share were payable with application, ₹2 per share including premium on
allotment and the balance amount on first and final call. The issue was fully subscribed and all
the amount due was received except the first and final call money on 500 shares allotted to
Balram. Present the 'Share Capital' in the Balance Sheet of "Tractors India Ltd." as per Schedule
III Part I of the Companies Act, 2013. Also prepare Notes to Accounts for the same.
Q82-On 1st April, 2021, Shakti Ltd. was formed with an authorized capital of ₹60,00,000 divided
into 3,00,000 equity shares of ₹20 each. Out of these, 50,000 shares were issued to the vendors
as fully paid up for purchase of office premises. The directors offered 1,20,000 shares to the
public and called up ₹10 per share and received the entire called up amount on these shares.
Show the share capital in the Balance Sheet of the company as per Schedule-III and also
prepare 'notes to accounts".
Q83-.X Ltd. took over the following assets and liabilities of Y Ltd.:
Land & Building ₹20,00,000; Stock₹ 5,00,000; Sundry Debtors ₹2,50,000 and Sundry Creditors
₹2,00,000. X Ltd. paid purchase consideration by issuing Bank Draft of ₹16,00,000 and 50,000
Equity Shares of₹ 20 each at 10% premium. Calculate purchase consideration and pass journal
entries in the books of X Ltd.
Q84.Madhur Ltd. took over the assets of ₹3,90,000 and Liabilities of ₹40,000 of Rasova Ltd. for
a consideration of ₹4,00,000. 20% was paid by a cheque and the balance by issue of fully paid
equity shares of₹ 100 each at a premium of 60%. Show necessary journal entries for these
transactions in the books of Madhur Ltd.
Q85-Premier Tools Ltd. invited applications for issuing 2,00,000 equity shares of ₹10 each at a
premium of 2 per share. The amount was payable as follows:
Applications were received for 2,50,000 shares. Applications for 10,000 shares were rejected
and pro-rata allotment was made to the remaining applicants Over payments received on
application were adjusted towards sums due on allotment. All calls were made and duly
received except allotment and first and final call from Naveen who applied for 7,200 shares. His
shares were forfeited. Half of the forfeited shares were reissued for ₹48,000 as fully paid Pass
the necessary journal entries for the above transactions in the books of Premier Tools Ltd. Open
calls-in-arrears account wherever required.
Q86-K Limited has been registered with an authorised capital of ₹20,00,000 divided into 20,000
shares of ₹100 each, of which 10,000 shares were offered for public subscription at a premium
of ₹5 per share, payable as under
₹ 30 On application
Applications were received for 18,000 shares, of which applications for 3,000 shares were
rejected outright, the rest of the applications were allotted 10,000 shares on pro-rata basis
Excess application money was transferred to allotment.
All the moneys were duly received except from Sundar, holder of 200 shares, who failed to pay
allotment and first call money. His shares were later forfeited, and re-issued to Shyam at ₹60
per share, ₹70 paid up. Final Call has not been made Pass necessary Cash Book and Journal
entries in the books of K Limited.
Q87.Vinod Papers Ltd. invited applications for issuing 1,00,000 shares of₹ 10 each at a
premium of ₹4 per share payable as follows:
Applications were received for 1,30,000 shares and pro-rata allotment was made to all
applicants as follows:
(i) Applicants for 80,000 shares were allotted 60,000 shares, and
X, who belonged to the first category and was allotted 900 shares failed to pay the allotment
and call money.
Y, who belonged to the second category and who applied for 1,000 shares also failed to pay the
allotment and call money. Their shares were forfeited and 1,400 of the forfeited shares were re-
issued @₹ 9 per share as fully paid .Re-issued shares included whole of Y's shares. Prepare
Cash Book, journal entries.
Q88-(4) Vishesh Ltd. forfeited 1.000 Equity Shares of ₹10 each issued at a premium of ₹2 per
share for non-payment of allotment money of ₹5 per share including premium. The final call of 2
per share was not yet called on these shares Of the forfeited shares 800 shares were reissued
at₹ 12 per share fully paid-up. The remaining shares were reissued at ₹11 per share fully paid up.
(ii) L Ltd forfeited Mr. M's shares who has applied for 600 shares and was allotted 400 shares
failed to pay allotment money of ₹4 per share including premium of ₹2 on which he had paid
application money of ₹2 only. Pass necessary journal entries for forfeiture of shares by opening
call in arrear account
Q89.Vikram Ltd. forfeited 5,000 shares of Rahul, who had applied for 6,000 shares for non-
payment of allotment money of ₹5 per share and first and final call of ₹2 per share. Only
application money of ₹3 was paid by him. Out of these, 3.000 shares were re-issued @ 12 per
share as fully paid. Pass entries for forfeiture and reissue of shares.
(ii) Ratan Ltd. forfeited 3,000 shares of ₹10 each (issued at₹ 2 premium) for non-payment of
first call of₹ 2 per share. Final call of₹ 3 per share was not yet made. Out of these, 2,000 shares
were re-issued at ₹10 per share as fully paid. Pass entries for forfeiture and reissue of shares.
Q90.a) Y Ltd. forfeited 400 shares of ₹100 each, issued at a premium of ₹5 per share (to be paid
at the time of allotment) for non-payment of a first call of ₹ 20 per share. The second and final
call of ₹20 has not yet been called. Out of these, 100 shares were re-issued as fully paid-up for
₹110 per share.
(b) Y Ltd. forfeited 700 shares of ₹100 each, issued at a premium of ₹5 per share for non-
payment of allotment money of₹ 35 per share (including premium) and first call of 20 per share.
The second and final call of₹ 20 has not yet been called 500 of these shares were re-issued as
80 paid-up for ₹92 per share.
(c)X Ltd. forfeited 700 shares of Ashok of ₹10 each ₹8 called-up, on which he had paid ₹5 per
share. Out of these, 500 shares were re-issued for ₹9 per share as fully paid
(d) Y Ltd. forfeited 400 shares of₹ 10 each, ₹6 called-up, for non-payment of first call of₹ 2 per
share Out of these, 300 shares were immediately re-issued at ₹5 per share.
(e) Z Ltd. forfeited 300 shares of₹ 100 each on which first call of₹ 20 per share was not
received, the second and final call of₹ 30 per share has not yet been called .Out of these, 200
shares were re-issued as ₹70 paid-up for ₹55 per share.