McqMate
1. |
When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as .................. |
A. | amalgamation |
B. | absorption |
C. | absorption |
D. | absorption |
Answer» A. amalgamation |
2. |
When one of the existing companies take over business of another company or companies, it is known as ........... |
A. | amalgamation |
B. | absorption |
C. | internal reconstruction |
D. | internal reconstruction |
Answer» B. absorption |
3. |
While calculating purchase price, the following values of assets are considered |
A. | book value |
B. | new values fixed |
C. | average values |
D. | market values |
Answer» B. new values fixed |
4. |
Shares received from the new company are recorded at - |
A. | face value |
B. | face value |
C. | market value |
D. | face value |
Answer» C. market value |
5. |
Which of the following statement is correct? |
A. | the amount of goodwill or capital reserve is found out in the books of purchasing company only |
B. | the amount of goodwill or capital reserve is found out in the books of vendor company only. |
C. | goodwill = net assets – purchase price |
D. | the face value of shares of purchasing company will be taken in to account while calculating purchase consideration. |
Answer» A. the amount of goodwill or capital reserve is found out in the books of purchasing company only |
6. |
If the two companies have different accounting policies in respect of the same item, then they make necessary changes to adopt .............. accounting policies. |
A. | lifo method |
B. | fifo method |
C. | weighted method |
D. | uniform |
Answer» D. uniform |
7. |
The Amalgamation Adjustment Account appears in the books, it is shown under the heading of ......... in the balance sheet. |
A. | reserve and surplus |
B. | fixed assets |
C. | investments |
D. | miscellaneous expenditure |
Answer» D. miscellaneous expenditure |
8. |
If amalgamation is in the ..............., the General Reserve or Profit and Loss A/c balance will not be shown in the balance sheet |
A. | form of merger |
B. | form of purchase |
C. | net assets method |
D. | consideration method |
Answer» B. form of purchase |
9. |
If the intrinsic values of shares exchanged are not equal, the difference is paid in ........... |
A. | cash |
B. | debenture |
C. | pref. share |
D. | assets |
Answer» A. cash |
10. |
In case of .............., one existing company takes over the business of another company and no new company is formed |
A. | amalgamation |
B. | absorption |
C. | reconstruction |
D. | none of the above |
Answer» B. absorption |
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