Tag: share and stock

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Questions Related to share and stock

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

The ending balance of owner's equity is Rs.21,000. During the year, the owner contributed Rs.6,000 and withdrew Rs.4000. If the firm had Rs.8,000 net income for the year what was the owner's equity at the beginning?

  1. Rs.23,000

  2. Rs.21,000

  3. Rs.19,000

  4. Rs.11,000
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Owner's equity at the beginning= ending balance of owner's equity - net income + withdrawal amount - contributed amount = 21000-800+4000-6000 = 11000.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

If the stock velocity is 6, cost of goods sold is Rs.54,000 and closing stock is Rs.10,000 the opening stock is __________.

  1. Rs. 8,000

  2. Rs. 9,000

  3. Rs. 10,000

  4. Rs. 12,000

  5. Rs. 18,000
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Let the opening stock is x.
Stock velocity = cost of goods sold / average inventory
6 = 54,000/(10000+x)/2
hence x = Rs.8,000.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

X limited issued 10,000 equity shares of Rs.10 each at premium Rs.2 each. The company has incurred issue expenses of Rs.5,000. The equity shareholders expect dividend of $18\%$ then cost of capital is ____________.

  1. $18\%$

  2. $15.65\%$

  3. $16.65\%$

  4. $18.65\%$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

K$ _e$ = $\frac{D _1}{NP}$
Where NP i.(E) Net Proceed of shares = $\frac{1000 X12 - 5000}{10000}$
Dividend of a share (D$ _I$) = Rs. 1.8.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

Which of the following feature(s) of preference shares are similar to those of equity shares?

  1. Redeemability

  2. No obligation to pay dividend

  3. Voting rights

  4. Change over assets

  5. Both (B) and (C) above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Like in the case of equity shareholders there is no obligatory payment to the preference shareholders and the preference dividend is not tax deductable.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

The means of obtaining financial resources that involves the sale of part of the ownership of the business is called ______.

  1. bankruptcy

  2. equity financing

  3. commercial loans

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

Equity financing is the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.

Multiple choice organisation of commerce and management 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) and (C)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Equity share holders may receive  dividend and bonus on their investment. Dividend refers to the sum of money which are paid out of the total profits and bonus refers to the one time payment.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

In dematerialization of shares ______ passes the physical shares to company for making it into electronic form.

  1. shareholder

  2. depository participant

  3. bank

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In dematerialization of shares depository participant  passes the physical shares to company for making it into electronic form. Depository participant refers to the agent between depository and investors.

Multiple choice organisation of commerce and management sources of business finance - 2 equity shares share and stock equity and preference shares

Rematerialization of shares means __________.

  1. getting the share certificates in bank account

  2. converting them into money by selling the shares

  3. getting the share certificate in the physical form

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Rematerialization of shares means getting the share certificate in physical form. It also refers to the process of converting the shares in physical form which are held into electronic form.