Commerce Accountancy · Economics

Equity Shares and Capital

424 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 book keeping and accountancy accounting equation and business transactions introduction to final accounts meaning, objectives and importance of final accounts meaning, objectives, importance and preparation of final accounts

When shares are forfeited, the share capital account is debited by ________________.

  1. Paid-up amount

  2. Called-up amount

  3. Nominal value of the shares

  4. Market value of the shares
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When shares are forfeited, the share capital account must be debited by the amount that was actually called up on those shares, regardless of whether it was paid or unpaid.

Multiple choice elements of business ownership structures - joint stock company meaning and objectives of public sector enterprises introduction to public sector organisations types of companies - private & public

Minimum paid up share capital in case of a public company is _______.

  1. 1 Lakh

  2. 3 Lakhs

  3. 5 Lakhs

  4. 7 Lakhs
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to the provisions of the Indian Companies Act, 2013, minimum paid up share capital in case of a public company is Rs. 5 lakhs.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company
The applicants who are allotted shares will be sent ___________ letter.

  1. regret

  2. allotment

  3. enquiry

  4. request
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Share allotment letter is a document that details and confirms the amount or number of securities allotted to an applicant for a new issue or a rights issue.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company
Share Certificate must be issued within ______ months from the date of allotment of shares.

  1. two

  2. six

  3. nine

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

According to the Companies Act, a company is required to issue share certificates to allottees within two months from the date of allotment.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

A company may allot fully paid shares to promoters or any other party for the services rendered by them, share capital account is credited and ___________ debited.

  1. Preliminary expenses account

  2. Goodwill account

  3. Capital reserve account

  4. Suspense account
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When a company issues shares to promoters for services rendered, the value of those services is typically capitalized as goodwill. Therefore, the Goodwill account is debited to record the asset, and the Share Capital account is credited.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

If a company makes default in holding AGM, then fine imposed on the company & every officer of the company who is in default is upto ___________.

  1. 25,000

  2. 50,000

  3. 5,000

  4. 1,00,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If a company makes default in holding an annual general meeting.

Fine which may extend to Rs. 1,00,000 on the company and every officer of the company who is in default may be levied and for continuing default, with a further fine of Rs. 2500 per day during which the default continues may be levied.

Multiple choice business organisation and correspondence joint stock company 3 - promotion and formation of a company formation and promotion of a company promoter promotion and formation of a company

Select the correct option given below :

Remuneration paid to the Managing Director shall not exceed ___ of the net profit.

  1. 5 %

  2. 10 %

  3. 11 %

  4. 15%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Managerial Persons covered are Managing Director, Whole-time  Director, Part time Directors and managers who shall be paid remuneration subject to and in accordance with provisions of Section 197 of the Companies Act, 2013. As compared to various sections and chapters viz section 198, 309, etc of Companies Act, 1956 which deals with Managerial remunerations separately, the new Act has solved this issue by consolidating all provisions under a single provision of 197. According to  Companies Act, 2013 remuneration paid to the managing director shall not be exceed 5% of the net profit. 

Multiple choice commercial studies company final accounts forms of statements of profit and loss operating profit (ebit) meaning, need and format of profit and loss account

According to the Companies Act, $2013$, a company may issue fully paid up bonus shares to its members, out of ___________.

  1. Free reserves

  2. Security premium account

  3. Capital redemption reserve account

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

Bonus shares are issued by the company to the existing shareholders when the company is having short of cash but the shareholders are expecting a regular income. Issue of bonus shares does not involve any cash outflow.

The Companies Act 2013 has specifically introduced section 63 to deal with bonus shares. The company can issue fully paid bonus shares from the following sources:
Free reserves of the company
  • Share premium account
  • Capital redemption reserve account

Multiple choice commercial applications bases of accounting cash and mercantile system basis of accounting basis of accounting system

Consider the following statements:
1. The bonus shares shall not be issued in lieu of dividend,
2. A company may issue fully paid up bonus shares to its members out of its 'Capital Redemption Reserve Account'
3. A company may not issue bonus shares out of its 'Securities Premium Account'
Which of the above statement/s is are not correct?

  1. 1,2, and 3

  2. Only 1

  3. Only 2

  4. Only 3
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bonus shares can be issued out of the Securities Premium Account as per the Companies Act. Therefore, statement 3 is incorrect, making it the correct answer to the question asking which is not correct.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

As per the Rule 8 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company and every other public company having a paid-up share capital of ______or more shall have whole-time key managerial personnel.

  1. Rs. 5 Crore

  2. Rs. 8 Crore

  3. Rs. 2 Crore

  4. Rs. 10 Crore
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Rule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 mandates that every listed company and every other public company having a paid-up share capital of Rs. 10 Crore or more must appoint whole-time key managerial personnel.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Preference shares are those which carry the preferential rights as to____.

  1. The payment of dividend at a fixed rate

  2. The return of capital on winding up of the company

  3. Both (A) & (B)

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

Preference shares carry preferential rights regarding both the payment of a fixed dividend and the repayment of capital in the event of the company being wound up.

Multiple choice business organisation and correspondence companies act, 2013 - introduction and characteristics introduction to companies companies act, 2013 company

Statement A: A company dies with the death of its shareholders.
Statement B: In the case of a private company, every member owing fully paid up shares can freely transfer shares held by him.
Select the correct the answer from the options given below:

  1. Statement A is correct but Statement B is incorrect

  2. Statement B is correct but Statement A is incorrect

  3. Statement A is correct and Statement B is correct explanation of Statement A

  4. Statement A and Statement B both are incorrect
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

A company has perpetual succession, meaning it does not die with its shareholders. Furthermore, private companies have restrictions on the transfer of shares, so they are not freely transferable.

Multiple choice organisation of commerce and management concept of market and marketer marketing environment meaning and definition of marketer role of marketing

Price earning ratio is 83.33% and E.P.S. is Rs. 30. The market price of equity share will be _____________.

  1. Rs. 33.33

  2. Rs. 66.67

  3. Rs. 20

  4. Rs. 25
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The market price of an equity share can be calculated by multiplying the Earnings Per Share (EPS) by the Price-Earnings (P/E) ratio. Here, 30 * 83.33% (or 5/6) equals Rs. 25.

Multiple choice

Earnings distributed to stockholders are called

  1. Income statement

  2. Capital stock

  3. Retained earnings

  4. Dividends
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Dividends are the distribution of a portion of a company's earnings to its shareholders, as decided by the board of directors.