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 company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Debenture interest -

  1. is payable only is case of profits

  2. accumulates in case of losses or inadequate profits

  3. is payable after the payment of preference dividend but before the payment of equity dividend

  4. is payable before the payment of any dividend on shares
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Debenture interest is a fixed charge against profits, meaning it must be paid regardless of whether the company makes a profit or loss, and it takes precedence over dividend payments.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Premium on redemption of debenture is generally provided at the time of __________.

  1. issue of debentures

  2. redemption of debentures

  3. every year

  4. after 10 years
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to the principle of prudence, if a company knows it will have to pay a premium upon redemption, it must provide for that loss at the time of issuing the debentures.

Multiple choice book keeping and accountancy company accounts part - 2 (accounting for debentures) discount/loss on issue of debenture written off issue of debentures procedure for issue of debentures

Which of the following statement is true?

  1. Debentures bear fixed interest

  2. Interest on debenture is an appropriation of profit

  3. Debenture holders have voting right

  4. Debentures cannot be issued for consideration other than cash
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Debentures are debt instruments, and the interest rate is fixed at the time of issue. They do not carry voting rights, and interest is a charge, not an appropriation.

Multiple choice

What is the minimum share capital required to form a public company?

  1. ₹1 lakh

  2. ₹5 lakh

  3. ₹10 lakh

  4. ₹15 lakh
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per Section 48(1) of the Companies Act, 2013, the minimum share capital required to form a public company is ₹5 lakh.

Multiple choice

What is the impact of a stock split on the value of a stock?

  1. The value of each share decreases

  2. The value of each share increases

  3. The value of each share remains the same

  4. The value of each share is unpredictable
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A stock split is a corporate action in which a company divides its existing shares into a larger number of shares. This results in a decrease in the value of each share.

Multiple choice

Which of the following is a type of bond that allows the holder to convert it into a specified number of shares of the issuing company's stock?

  1. Callable bond

  2. Convertible bond

  3. Floating rate note

  4. Zero-coupon bond
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Convertible bonds are a type of hybrid security that allows the holder to convert the bond into a specified number of shares of the issuing company's stock at a predetermined price.

Multiple choice

What is the minimum paid-up share capital required to incorporate a public limited company in India?

  1. ₹1 lakh

  2. ₹5 lakh

  3. ₹10 lakh

  4. ₹15 lakh
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per the Indian Companies Act, the minimum paid-up share capital required to incorporate a public limited company in India is ₹5 lakh.

Multiple choice

What is the rate of stamp duty for a transfer of shares?

  1. 0.25%

  2. 0.5%

  3. 0.75%

  4. 1%
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The rate of stamp duty for a transfer of shares is 0.5% of the consideration value.

Multiple choice

What is the minimum paid-up share capital required for a public company?

  1. ₹1 lakh

  2. ₹5 lakh

  3. ₹10 lakh

  4. ₹15 lakh
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

As per Section 48(1) of the Companies Act, 2013, the minimum paid-up share capital for a public company is ₹5 lakh.

Multiple choice

What is the significance of earnings per share (EPS) in stock valuation?

  1. EPS represents a company's profit allocated to each outstanding share

  2. EPS is used to calculate the dividend payout ratio

  3. EPS is a key factor in determining a company's intrinsic value

  4. EPS is not relevant for companies that do not pay dividends
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Earnings per share (EPS) is a financial metric that measures a company's profit allocated to each outstanding share of common stock. It is calculated by dividing the company's net income by the number of outstanding shares.

Multiple choice

What is the rate of Stamp Duty on Share Certificates in India?

  1. 0.25%

  2. 0.50%

  3. 0.75%

  4. 1.00%
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The rate of Stamp Duty on Share Certificates in India is 0.25% of the face value of the shares.

Multiple choice

Who is responsible for paying the Stamp Duty on Share Certificates?

  1. The buyer of the shares.

  2. The seller of the shares.

  3. The company issuing the shares.

  4. The stockbroker facilitating the transaction.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The buyer of the shares is generally responsible for paying the Stamp Duty on Share Certificates.

Multiple choice

When is the Stamp Duty on Share Certificates payable?

  1. At the time of the transfer of shares.

  2. Within 15 days from the date of the transfer of shares.

  3. Within 30 days from the date of the transfer of shares.

  4. Within 60 days from the date of the transfer of shares.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Stamp Duty on Share Certificates is payable at the time of the transfer of shares.

Multiple choice

What are the consequences of not paying the Stamp Duty on Share Certificates?

  1. The transfer of shares may be declared void.

  2. The buyer of the shares may be liable to pay a penalty.

  3. The company issuing the shares may be liable to pay a penalty.

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

Not paying the Stamp Duty on Share Certificates can result in the transfer of shares being declared void, the buyer of the shares being liable to pay a penalty, and the company issuing the shares being liable to pay a penalty.

Multiple choice

Are there any exemptions from the Stamp Duty on Share Certificates?

  1. Yes, for shares listed on a recognized stock exchange.

  2. Yes, for shares issued by a company to its employees.

  3. Yes, for shares issued by a company to its promoters.

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

There are exemptions from the Stamp Duty on Share Certificates for shares listed on a recognized stock exchange, shares issued by a company to its employees, and shares issued by a company to its promoters.