Commerce Accountancy · Economics

Equity Shares and Capital

505 Questions

Equity shares and capital topics deal with corporate share issuance, forfeiture rules, dividend distributions, and yield calculations. Questions require an understanding of financial instruments like preference shares and call options. These concepts are essential for accountancy and commerce examinations.

Share valuationDividend yieldPreference sharesShare forfeitureCapital structure

Equity Shares and Capital Questions

Multiple choice business organisation introduction to financial markets concept of financial market meaning and definition of financial market concepts and functions of financial markets

Paid dividends to common stockholders Rs 67, 600, 000 and common shares outstanding 55, 000, 000 then dividend per share will be _________.

  1. Rs 1.23

  2. Rs 0.81

  3. Rs 2.12

  4. Rs 2.78
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dividend per share is calculated by dividing total dividends paid by the number of common shares outstanding. Here, 67,600,000 / 55,000,000 equals approximately 1.229, which rounds to 1.23.

Multiple choice commerce business finance financial planning financing financial management

If on account of inadequacy of profits, a company wants to pay dividends out of previous year's reserves, it has to follow the rules made by

  1. Central Government

  2. State Government

  3. Articles of Association

  4. Memorandum of Association
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Under the Companies Act, if a company intends to declare dividends out of reserves due to inadequate profits, it must comply with specific rules and regulations prescribed by the Central Government.

Multiple choice commerce business finance financial planning financing financial management

Cash dividends are ordinarily paid from _______.

  1. current earnings

  2. retained earnings

  3. paid-in-surplus

  4. capital surplus
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Cash dividends are typically paid out of the current earnings of the company, reflecting its recent profitability and financial health.

Multiple choice installments banking business and commercial activities economics maths

The instalment scheme in which companies take $4$ or $5$ instalments in advance is called as:

  1. $25\%$ Finance
  2. $75\%$ Finance
  3. $100\%$ Finance
  4. $0\%$ Interest
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The installment scheme in which companies take $4$ or $5$ installment in advance is called as : $0\%$ Interest

For $0$ percent loans, you pay no interest. That means you're borrowing money from a bank but paying no fee for the privilege of doing so. Essentially, $0$ percent interest gives you the chance to pay the same amount of money as a cash buyer, even though you're spreading your payments over a longer term.
It is the total cost of the article paid as loan to the buyer.
The interest collect $3-5$ months installments in advance.

Multiple choice commercial studies budgeting distinction between funds flow and cash flow statements preparation of cash flow statement statement of changes in financial position

Cash flow per share is _________________.

  1. Required to be reported on balance sheet.

  2. Required to be reported on Income statement.

  3. Required to be reported on the statement of cash flows.

  4. Not required to be reported on any statement.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Cash flow per share can be calculated by dividing cash flow earned in a given reporting period by the total number of shares outstanding during the same term. Because the number of shares outstanding can fluctuate, a weighted average is typically used. Hence, it is not required to be reported on any statement.

Multiple choice book keeping and accountancy adjustments drawing account of partners interest on drawings interest on partner's drawings and capital

A Ltd. has allotted $20,000$ shares to the applicants of $28,000$ shares on pro-rata basis. The amount payable on application is $Rs. 2$. M applied for $420$ shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from Mr. X will be ______________.

  1. $60$ shares; $Rs. 120$
  2. $340$ shares; $Rs. 160$
  3. $300$ shares; $Rs. 200$
  4. $300$ shares; $Rs. 240$
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Ratio of allotment = 20,000/28,000 = 5/7. For 420 shares applied, allotment = 420 * (5/7) = 300 shares. Excess application money = (420 - 300) * 2 = 120 * 2 = 240. This excess is adjusted against allotment.

Multiple choice elements of accounts journal proper balancing of accounts balancing the accounts introduction to journal proper

It is easy to transmit the shares in case of D'mat form.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

This statement is 'True' because of the following reasons: 
(i)  Transmission of shares means the passing of property or title in shares by the operation of law from a member to his legal representatives. Such transmission of shares is necessary when a person dies or becomes insane or insolvent. 
(ii)  For transmission to take place, a lengthy procedure is involved. 
(iii)  The legal representative of the shareholder will make a request to the company to register him as a member of the company in place of the original one.
(iv)  The legal representative will submit an application to be a member. 
(v)  Along with the application, the legal representative will submit the original share certificate and the evidence regarding succession rights.
(vi)  The Secretary has also to ensure that the document proof has been issued by a competent court and is in proper order 
(vii)   A meeting of Board of Directors will be held wherein a resolution will be passed to effect transmission of shares. 
(viii) Then the Secretary will make necessary changes in the Register of Members and a new share certificate will be issued.
(ix)  If transmission was to be done using the D'mat form, the above procedure and formalities would riot be needed to be followed.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

The money raised by issue of equity shares is called ________ share capital.

  1. Equity

  2. Preference

  3. Bonus

  4. Right
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The money raised by issue of equity shares is called equity share capital.Equity share represent the ownership of a company  and thus thus the capital raised by equity shares are also known as ownership capital or ownership funds.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Which of the following is a merit of equity shares?

  1. Equity capital provides credit worthiness to the company.

  2. Equity shares are suitable for investors who are willing to assume risk for higher returns.

  3. Equity capital serves as permanent capital.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Equity Share capital is also known as ownership capital or owner's funds. The merits of equity shares are, They provide credit worthiness to the company. Equity shares are suitable for investors who are willing to assume risks for higher returns, Equity capital serves as permanent capital.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

The cost of equity shares is generally _______ as compared to the cost of raising funds through other sources.

  1. more

  2. less

  3. medium

  4. equal
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Equity shares is the most important source of raising long term capital by a company. Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. 

Hence the cost of equity shares is generally higher as compared to the cost of raising funds through other sources.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Equity shares represent the __________ of a company.

  1. Creditors

  2. Debtors

  3. Ownership

  4. Capital
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Equity shares is the most important source of raising long term capital by a company. 

Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds. Equity share capital is the prerequisite before creation of a company.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Equity share holders may receive ____ on their investment.

  1. interest

  2. dividend

  3. bonus

  4. (B) & (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Equity share holders are the owners of the company, equity shares are also known as owner's share capital or owner's fund. Equity share holders may receive dividend and/or bonus. The profits that the company earns after the repayment of creditors and other liabilities is received by the equity share holders.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

The Rights Shares are allotted only to the existing ________ of the company.

  1. equity shareholders

  2. debenture shareholders

  3. deposit holders

  4. (B) & (C)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Rights Shares are allotted only to the existing equity shareholders. of the company. The shareholders who existed from earlier have the right to subscribe there shares.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Which of the following section of the Companies Act, 2013 prohibits to issue of shares at discount?

  1. Section 53

  2. Section 54

  3. Section 55

  4. Section 56
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 Section 53 of the Companies Act, 2013 prohibits to issue of shares at discount. It means this section prevents the process of issuing shares at a less price than the actual price.

Multiple choice commercial studies sources of business finance - 2 equity shares share and stock equity and preference shares

Equity shareholder is _________.

  1. entitled to dividend at a fixed rate

  2. not entitled to dividend at a fixed rate

  3. entitled to dividend of preference shareholder

  4. all of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Equity shares represent the ownership of a company and thus the capital raised by issue of such shares is known as ownership capital or owner's funds. They are referred to as residual owners since they receive what is left after all other claims on the company income and assets have been settled. Therefore, equity shareholders are not entitled to dividend at a fixed rate.