McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Uncategorized topics .
| 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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