Last Updated on: 5th July 2024, 01:45 pm
Now a days, most of the Competitive Exams, Entrance Exams are conducted on MCQ. Click HERE to understand the Forms, Structure, Rules of MCQ, techniques of understanding, analysing and selection correct answer of MCQ
For MCQ of Accounting Concepts, Accounting Principles & Policies, visit
Play the Video explaining some interesting aspects of selection of correct answer of MCQ
Complete resources on Company Accounts
Share Capital Accounts MCQ
1. The minimum share application money is
(a) Rs.2 per share
(b) 5% of the nominal value of shares
(c) 50% of the nominal value of shares
(d) 20% of the nominal value of shares.
The minimum share application money is 5% of the nominal value of shares issued. So option (b) is correct
2. Discount on issue of shares in a /1
(a) Capital Loss
(b) Revenue Loss
(c) Trading Loss
(d) Speculative Loss.
Discount on issue of shares is a Capital Loss. So option (a) is correct.
3. Discount allowed on re-issue of forfeited share is :
(a) Debited to discount A/c
(b) Debited to share forfeited A/c
(c) Debited to Profit and Loss A/c
(d) Debited to share premium A/c.
Discount allowed on re-issue of forfeited share is debited to share forfeited A/c. So, option (b) is correct.
4. Share Forfeited A/c is shown in the Balance Sheet under :
(a) Current Liabilities
(b) Reserve and Surplus
(c) Addition to Capital A/c
(d) Deduction to Capital A/c.
Share Forfeited A/c is shown in the Balance Sheet under Capital A/c as addition to Capital. So, option (c) is correct.
5. Share Premium A/c is shown in the Balance Sheet under :
(a) Capital head
(b) Reserve and Surplus
(c) Current Liabilities
(d) Current Assets.
Share Premium A/c is shown in the Balance Sheet under Reserve and Surplus. So, option (b) is correct.
6. Balance in share forfeiture account is shown in the balance sheet under the item:
(a) Current Liabilities and Provisions
(b) Reserve and Surplus
(c) Share Capital A/c
(d) Unsecured Loans.
Balance in share forfeiture account is shown in the balance sheet under the item Share Capital A/c. So option (c) is correct.
7. When Shares are forfeited, Capital A/c is debited by
(a) Nominal value of shares
(b) Paid up amount on shares
(c) Called up amount on shares
(d) Forfeited amount.
When Shares are forfeited, Capital A/c is debited by Called up amount on shares. So, option (c) is correct.
8. A Company can pay dividends out of :
(a) Money provided by the government for such purpose
(b) Profits on re-issue of forfeited share
(c) Capital redemption reserve Account
(d) Share Premium Account.
A Company can pay dividends out of the money provided by government for such purpose. So, option (a) is correct.
9. Pro rata allotment of shares means /2
(a) Allotment of shares equally amongst the applicants
(b) Allotment of shares at the discretion of the Directors.
(c) Allotment of shares to all the applicants in proportion to the shares applied for
(d) Allotment of shares to only a few selected applicants.
Pro rata allotment of shares meansAllotment of shares to all the applicants in proportion to the shares applied for. So, option (c) is correct.
10. Any balance remaining in the Share forfeiture A/c after all the forfeited shares are reissued should be /2
(a) Transferred to Goodwill A/c
(b) Transferred to Capital Reserve A/c
(c) Added to the paid-up Capital
(d) Retained as Share Forfeiture A/c in the Balance Sheet.
Any balance remaining in the Share forfeiture A/c after all the forfeited shares are reissued should be Transferred to Capital Reserve A/c. So, option (b) is correct.
11. A Company forfeited 2,000 shares of Rs.10 each (which were issued at par) held by A for non payment of allotment money of Rs.4 per share. The called up value per share was Rs.9. On forfeiture, the amount debited to share capital is:
(a) Rs.10,000
(b) Rs.8,000
(c) Rs.2,000
(d) Rs.18,000
On forfeiture, the called up amount of 2000×9 = Rs.18000 would be debited to share capital a/c. So, option (d) is correct.
12. The directors of a company forfeited 1000 shares of Rs.10 each, Rs.7,50 paid up, for non payment of final call money of Rs.2.50 per share. 700 of these shares are re-issued @ Rs.7 per share. The amount transferred to capital reserve A/c would be:
(a) Rs.2,500
(b) Rs.3,150
(c) Rs.3,500
(d) Rs.5,400
On 700 shares forfeited shares 700 x (7-2.50) = 700 x 4.50 = 3150 would be transferred to capital reserve a/c. So, option (b) is correct.
13. A Ltd. acquired assets worth Rs.15,00,000 form H Ltd. issuing shares of
Rs.100 @ premium of 25%. The number of shares issued to settle the purchase consideration will be:
(a) 12,000 shares
(b) 15,000 shares
(c) 18,750 shares
(d) 11,250 shares
On Rs 100 shares issued, the amount received is 125. So, Rs 15,00,000 is received on issue of shares of face value of [15,00,000 x (100 / 125)] = 12,00,000., i.e 12,00,000 / 100 = 12000 shares. So, option (a) is correct.
14. The excess price received over the par value of shares, should be credited to:
(a) Call-in-advance account
(b) Share Capital account
(c) Capital reserve account
(d) Securities premium account
The excess price received over the par value of shares, should be credited to Securities premium account. So, option (d) is correct.
15. ABC Ltd forfeited 20 shares of Rs.10 each, Rs.8 called up, on which X paid application and allotment money of Rs.2 and Rs.3 respectively. These shares were re-issued to Y at Rs.6 fully paid. What was the balance in share forfeiture account before shares were re-issued?
(a) Rs.40
(b) Rs.60
(c) Rs.100
(d) Rs.160
The balance in share forfeiture a/c before re-issue was 20x 5 =100. So, option (c) is correct.
16. E Ltd. has allotted 10,000 shares to the applicants of 14,000 shares on pro-rata basis. The amount payable on application is Rs.2. F applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment due from F:
(a) 60 shares; Rs.120
(b) 340 shares; Rs.160
(c) 320 shares; Rs.200
(d) 300 shares; Rs.240
Shares allotted to F=420 x (10000 / 14000) = 300. Amount carried forward for adjustment on allotment = Amount paid on application – amount payable of shares allotted = (420×2) – (300×2) = 240. So, option (d) is correct.
17. J Ltd. reissued 2,000 shares (Rs 10 face value) which were forfeited by crediting share forfeiture account by Rs.3,000. These shares were reissued at Rs.9 per share. The amount transferred to Capital Reserve will be:
(a) Rs.3,000
(b) Rs.2,000
(c) Rs.1,000
(d) NIL
The amount credited to capital reserve = Total amount received – Nominal value = (9000 x 2 + 3000) – 20000 = 21000 – 20000= 1000. So, option (c) is correct.
18. G Ltd. Acquired assets worth Rs.75,000 from H Ltd. Issue of share of Rs.10 at a premium of Rs.5. The number of shares to be issued by G Ltd. To settle the purchase consideration:
(a) 6,000 shares
(b) 7,500 shares
(c) 9,375 shares
(d) 5,000 shares
Amount received per share =10+5=15. Hence to receive Rs 75000, shares to be issued = 75000 / 15 = 5000. So, option (d) is correct.
19. Dividends are usually paid on:
(a) Authorised Capital
(b) Issued Capital
(c) Called-up-Capital
(d) Paid-up-Capital
Dividends are usually paid on paid up capital. So, option (d) is correct.
20. A company invited application for subscription of 5000 shares, The applications were received for 6000 shares, The shares were allotted on pro-rata bases. If Shyam applied for 180 shares, how many shares would be allotted to him?
(a) 180
(b) 200
(c) 150
(d) 175
Shyam would be allotted = 180 x (5000/6000) = 150 shares. So, option (c) is correct.
21. If vendors are issued fully paid shares of Rs.1,00,000 in consideration of net assets of Rs.1,20,000, the balance of Rs.20,000 will be credited to:
(a) Goodwill account
(b) Capital Reserve account
(c) Vendor’s account
(d) Profit and Loss account
The balance of Rs.20,000 will be credited to Capital Reserve A/c. So, option (b) is correct.
22. When shares are issued to promoters which account should be debited: /1
(a) Share Capital A/c
(b) Assets A/c
(c) Promoters A/c
(d) Goodwill A/c
When shares are issued to promoters, Goodwill A/c should be debited. So, option (d) is correct.
23. The following information pertains to X Ltd.: Equity share capital called up – 5,00,000, Calls in Arrear- 40,000, Calls in advance – 25,000, Proposed dividend – 15%. The amount of dividend payable is:
(a) Rs.75,000
(b) Rs.72,750
(c) Rs.71,250
(d) Rs.69,000
Paid up share capital = 500000 – 40000 = 460000. Dividend = 15% of 4,60,000 = 69,000. So, option (d) is correct.
24. Securities Premium A/c cannot be used for the purpose of:
(a) Issues of fully paid bonus shares
(b) Writing off of losses of the company
(c) Writing off preliminary expenses
(d) Writing off commission or discount on issues of shares
Securities Premium A/c cannot be used for the purpose of writing off of losses of the company. So, option (b) is correct.
25. To A, 100 shares of Rs.10 each were allotted at par, paid Rs.3 on allotment and Rs.3 on application but A could not pay the first and final call money of Rs.4. His shares were forfeited by directors. The amount to be credited to share forfeited account will be: /3
(a) Rs.500
(b) Rs.400
(c) Rs.600
(d) Rs.1,000
The amount received on forfeited shares = 100 x (3+3) = 600 is to be credited to share forfeited a/c. Hence Option (c) is correct.
26. 10,000 equity shares of Rs10 each were issued to public at a premium of Rs.2 per share. Applications were received for 12,000 shares, Amount of securities premium account will be: /3
(a) Rs.20,000
(b) Rs.24,000
(c) Rs.4,000
(d) Rs.1,600
Securities premium account will be Share Premium money on 10000 shares. i.e 10000 x 2= 20,000. Hence Option (a) is correct.
27. Asha Ltd. Issued shares of Rs.100 each at a premium of 25%. Mamta who has Rs.2,000 shares of Asha Ltd, failed to pay first and final call totaling Rs.5. Premium was taken at the time of allotment by the company. On forfeiture of Mamta’s shares, the amount to be debited to share Premium account will be:
(a) Rs.5000
(b) Rs.10,000
(c) Rs.15,000
(d) Nil
Shares premium amount once adjusted cannot be reversed on forfeiture of shares. Hence, share premium a/c cannot be debited. So, Option (d) is correct.
28. If a company is not able to refund the excess amount of share within reasonable time. the Company will pay Interest @:
(a) 15% p.a.
(b) 5% p.a.
(c) 7% p.a.
(d) 10% p.a.
Company will pay Interest @ 15% per annum if it fails to repay the excess amount refundable to applicants within time. Hence Option (a) is correct.
29. A Company makes an issue of 10,000 equity shares of Rs.100 each, payable as : On application and allotment – 50, On first call – 25, On second and final call – Rs.25 Members holding 400 shares did not pay the second call and the shares were duly forfeited of which 300 are reissued as fully paid at Rs,80 per share. Amount transferred to Capital reserve will be:
(a) 16,500
(b) 15,000
(c) 10,000
(d) None
The amount credited to Capital reserve will be amount forfeited (@ 75 per share on 300 shares) – discount allowed (20 per share on 300 shares)= (300 x 75) – (300 x 20) = 16500. Hence Option (a) is correct.
30.Voluntary return of shares for cancellation by the shareholders in called:
(a) Surrender of shares
(b) Forfeiture of shares
(c) Cancellation of shares
(d) Distribution of shares
Voluntary return of shares for cancellation by the shareholders in called surrender of shares. Hence Option (a) is correct.
31. Following are the information related to G Ltd:
Equity share capital paid up – 2,85,000, Calls in advance – 10,000, Calls in arrear – 15,000, Proposed Dividend – 20%. The amount of dividend payable:
(a) Rs.57,000
(b) Rs.54,000
(c) Rs.56,000
(d) Rs.60,000
The dividend is paid on paid up capital, i.e @20% on 2,85,000 = 57,000. Hence Option (a) is correct.
32. A purchased a Machinery for Rs.1,80,000 for which he is paying shares of Rs.100 each at 10% discount. How many shares will he give as consideration?
(a) 2,500
(b) 2,000
(c) 1,800
(d) 3,000
The net proceeds of each share is 100 – 10 = Rs.90. For a consideration of R 1,80,000, the number of shares to be issued is 1,80,000 / 90= 2000 shares. Hence Option (b) is correct.
33. The following figures are extracted from Company Accounts:
Equity Share Capital of Rs.10 each 5, 00,000
Profit & Loss account 10,000
General Reserve 15,000
Misc. Expenses 5,000
Compute the maximum no. of shares and the amount to be bought back.
- 12,500 shares, Rs.1,42,500.
- 14,250 shares, Rs.1,42,500.
- 14,250 shares, Rs.1,32,500.
- 14,500 shares, Rs.1,45,000.
As per provision Buy Back shall not exceed 25% of equity shares and paid up capital in any financial year.
Maximum no. of shares to be bought back=25% of 50,000 shares =12,500 shares.
Maximum amount to be bought back=5,00,000+10,000+15,000+50,000-5,000 =Rs.5,70,000*(25%) =1,42,500. So, option (a) is correct
