Company Accounts Basic MCQ

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Company Accounts Basics MCQ

1. Which of the following restriction is not applicable to a Private Ltd. Company?

(a)    Invite application for public deposits

(b)    Restrict number of members to 50

(c)    Invite application for public subscription

(d)    To open overseas branch/office.

There is no exclusive restriction applicable to private company to open overseas branch / office. All the other 3 restrictions are exclusively applicable to Private Company. So, option (d) is correct.

2. A prospectus for shares or debentures can be issued only by

(a)    A Public Company

(b)    A Private Company

(c)    None of (a) & (b)

(d)    Both (a) & (b)

A prospectus for shares or debentures can be issued only by A Public Company only. So, option (a) is correct.

3. A private company must be registered with a minimum share capital of-

(a)    Rs.50,000

(b)    Rs.1 Lakhs

(c)    Rs.5 Lakhs

(d)    Rs.10 Lakhs

A private company must be registered with a minimum share capital of Rs 1 lac. So, option (b) is correct.

4. A public company must be registered with a minimum share capital of :

(a)    R.5 Lakhs

(b)    Rs.10 Lakhs

(c)    Rs.50 Lakhs

(d)    Rs.100 Lakhs

A public company must be registered with a minimum share capital of  Rs 5 Lacs. So, option (a) is correct.

5. ‘Proposed dividends’ is shown in the balance sheet of a company under the head

(a)    Provisions

(b)    Current Liabilities

(c)    Reserve and Surplus

(d)    Other Liabilities

 Proposed dividends’ is shown in the balance sheet of a company under the head Provisions. So, option (a) is correct.

6. Any reserve which is not apparent on the face of the balance sheet is known as

(a)    Secret Reserve

(b)    Unknown Reserve

(c)    Inner Reserve

(d)    Any of the above

 Any reserve which is not apparent on the face of the balance sheet is known as Secret Reserve. So, option (a) is correct.

7. Which of the following may be placed under Secured Loans :

(a)    Bills Payable

(b)    Bank Overdraft

(c)    Unclaimed dividends

(d)    Minority Interest

Bank overdraft is normally obtained from bank against some security given to bank. In that case, it is placed under Secured Loans. So, option (b) is correct.

8. Profit or Loss of a company is transferred to balance sheet under

(a)    Capital A/c

(b)    Addition to general reserve

(c)    Separate balance under reserves and surplus

(d)    Current liabilities.

In balance sheet of a company, balance of Profit or Loss is shown as separate balance under Reserves and Surplus. So, option (c) is correct.

9. Call in Arrears A/c is shown as :

(a)    Current liability

(b)    Deduction from Capital

(c)    Addition to capital

(d)    Reserve and Surplus.

Call in Arrears A/c is shown as Deduction from capital. So, option (b) is correct.

10. Under the Company Act, the “financial year”, of a company :

(a)    Must not be more than 12 months

(b)    Must not be less than 12 months

(c)    May be more or less than 12 months, but it shall not exceed 15 months

(d)    May be more or less than a calendar year, but it shall not exceed 20 months.

Under the Company Act, the “financial year”, of a companymay be more or less than 12 months , but it shall not exceed 15 months. So, option (c) is correct.

11. A provision is a

(a)    General reserve

(b)    Capital reserve

(c)    Specific Reserve

(d)    All of the above.

A provision is a type of Specific purpose Reserve. So, option (c) is correct.

12. To create a Public Ltd. Company at least ———– members are required.

(a)    2 members

(b)    5 members

(c)    7 members

(d)    10 members

At least 7 members are required for floatation of a Public Ltd. Company. So, option (c) is correct.

13. The part of share capital which can be called up only on the winding up of a company is called:

(a)    Authorized Capital

(b)    Called up Capital

(c)    Capital Reserve

(d)    Reserve Capital

Reserve Capital is the part of share capital which can be called up only on the winding up of a company.  So, option (d) is correct.

14. The amount of capital that is mentioned in capital clause is known as:

(a)Authorized Capital
(b)Registered Capital
(c)Nominal Capital
(d)All of these

Authorized Capital, Registered Capital & Nominal Capital is the same term used for the amount of Capital mentioned in the Capital Clause of the Memorandum of Association of the Company. So, option (d) is correct.

15. Equity – Rs.90,000, Liability – Rs.60,000 Profit of the year – Rs.20,000, Find Total Assets.

(a)Rs.170,000
(b)Rs.150,000
(c)Rs.110,000
(d)Rs.80,000

The total asset is equal to Equity + Liability + Profit = 90000+60000+20000 = 1,70,000. So, option (a) is correct.