Test Your Understanding · Q1
Q.Choose the correct answer.
(a) Equity shareholders are:
(i) creditors
(ii) owners
(iii) customers of the company
(iv) none of the above
(b) Nominal share capital is :
(i) that part of the authorised capital which is issued by the company.
(ii) the amount of capital which is actually applied for by the prospective shareholders.
(iii) the maximum amount of share capital which a company is authorised to issue.
(iv) the amount actually paid by the shareholders.
(c) Interest on calls in arrears is charged according to “Table F” at :
(i) 10%
(ii) 6%
(iii) 8%
(iv) 11%
(d) Money received in advance from shareholders before it is actually called-up by the directors is :
(i) debited to calls in advance account
(ii) credited to calls in advance account
(iii) debited to calls account
(iv) none of the above
(e) Shares can be forfeited :
(i) for non-payment of call money
(ii) for failure to attend meetings
(iii) for failure to repay the loan to the bank
(iv) for which shares are pledged as a security
(f) The Profit on reissue of forfeited shares is transferred to :
(i) general reserve
(ii) capital redemption reserve
(iii) capital reserve
(iv) reveneue reserve
(g) Balance of share forfeiture account is shown in the balance sheet under the item :
(i) current liabilities and provisions
(ii) reserves and surpluses
(iii) share capital
(iv) unsecured loans
Sikkim CbseNCERTSubjectiveImportance★★★★★
20% · 15/74 Questions
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Start your 14-day free trial to unlock the full solution →Correct answers: (a) (ii), (b) (iii), (c) (i), (d) (ii), (e) (i), (f) (iii), (g) (iii).
Concept
This box checks whether you can tell the classes of capital apart, recall the Table F rate on calls in arrears, and place calls-in-advance, forfeiture and the profit on reissue in the right accounts.
Solution
| Q | Answer | Reason |
|---|---|---|
| (a) | (ii) owners | Equity shareholders are the real owners of the company; they bear the residual risk and share the residual reward. |
| (b) | (iii) the maximum amount a company is authorised to issue | Nominal (authorised) capital is the ceiling stated in the Memorandum of Association. |
| (c) | (i) 10% | Table F of the Companies Act prescribes interest on calls in arrears at 10% p.a. |
| (d) | (ii) credited to calls in advance account | Money received before a call is made is a liability, so it is credited to the Calls in Advance account. |
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