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McqMate
Chapters
1. |
Shares received from the new company are recorded at – |
A. | Face value |
B. | Average price |
C. | Market value |
D. | None of the above |
Answer» C. Market value |
2. |
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. | Internal reconstruction |
D. | External reconstruction |
Answer» A. Amalgamation |
3. |
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. | External reconstruction |
Answer» B. Absorption |
4. |
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 |
5. |
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» C. Average values |
6. |
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 |
7. |
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 |
8. |
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 |
9. |
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 |
10. |
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 |
11. |
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 |
12. |
In amalgamation of two companies |
A. | Both companies lose their existence |
B. | Both companies continue |
C. | Any one company continues |
D. | none |
Answer» A. Both companies lose their existence |
13. |
When purchasing company pays purchase consideration, it will be debited to |
A. | Business purchase account |
B. | Assets account |
C. | Liquidator of selling company’s account |
D. | none |
Answer» C. Liquidator of selling company’s account |
14. |
When the purchasing company bears the liquidation expenses, it will debit the expenses to |
A. | Vendor Company’s Account |
B. | Bank Account |
C. | Goodwill Account |
D. | none |
Answer» C. Goodwill Account |
15. |
When the Vendor (seller) company agrees to bear liquidation expenses, it will debit |
A. | Realisation Account |
B. | Bank Account |
C. | Goodwill Account |
D. | none |
Answer» A. Realisation Account |
16. |
When the purchasing company does not take over a particular liability and the vendor company pays that liability, it will debit it to |
A. | Realisation Account |
B. | Bank Account |
C. | Liability Account |
D. | none |
Answer» A. Realisation Account |
17. |
When the Net Assets are less than the Purchase Consideration, the difference will be |
A. | Debited to Goodwill A/c. |
B. | Debited to General Reserve |
C. | none of these |
D. | none |
Answer» A. Debited to Goodwill A/c. |
18. |
While calculating purchase consideration ............... values of assets is to be considered. |
A. | Book value |
B. | Revalued price |
C. | Average price |
D. | Capital |
Answer» B. Revalued price |
19. |
Net Assets minus Capital Reserve is _________ |
A. | Goodwill |
B. | Total assets |
C. | Purchase consideration |
D. | None of these |
Answer» C. Purchase consideration |
20. |
Hitesh Ltd.’s purchase consideration is Rs.12,345 and Net Assets Rs.3,568, then.......... |
A. | Goodwill Rs. 8,777 |
B. | Capital Reserve Rs. 8,777 |
C. | Goodwill Rs. 15,913 |
D. | Capital Reserve Rs. 15,913 |
Answer» A. Goodwill Rs. 8,777 |
21. |
The original amount of preference share capital should be transferred to ............ account in the time of amalgamation in the books of vendor co. |
A. | Preference shareholders Account |
B. | Capital Reserve Account |
C. | Equity share capital Account |
D. | Equity share capital Account |
Answer» A. Preference shareholders Account |
22. |
The share capital, to the extent already held by the purchasing company, is closed by the vendor company by crediting it to: |
A. | Share capital account |
B. | Purchasing company's account |
C. | Realisation account. |
D. | none |
Answer» C. Realisation account. |
23. |
In case of inter-company holdings, the purchasing company, at the time of payment of the purchase consideration, surrenders the shares in the vendor company by crediting: |
A. | Vendor company's account |
B. | Shares in the vendor company account |
C. | Share capital account. |
D. | none |
Answer» B. Shares in the vendor company account |
24. |
The vendor company transfers preliminary expenses (at the time of absorption) to: |
A. | Equity shareholders' account |
B. | Realisation account |
C. | Purchasing company's account. |
D. | none |
Answer» B. Realisation account |
25. |
A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is formed. It is a case of: |
A. | Absorption |
B. | External reconstruction |
C. | Amalgamation. |
D. | none |
Answer» C. Amalgamation. |
26. |
For amalgamation in the nature of merger, the shareholders holding at least ______ or more of the equity shares of the transferor company becomes the equity shareholders of the transferee company. |
A. | 51% |
B. | 90% |
C. | 99% |
D. | 100% |
Answer» B. 90% |
27. |
As per AS–14 purchase consideration is what is payable to |
A. | Shareholders |
B. | Creditors |
C. | Debenture holders |
D. | Shareholders and Debenture holders. |
Answer» A. Shareholders |
28. |
In the case of ………………………. only one of the combining companies survives and the other losses its separate identity. |
A. | Acquisition |
B. | Merger |
C. | Amalgamation |
D. | Formation |
Answer» A. Acquisition |
29. |
……………….is the amount payable by the purchasing companies to the vendor company for taking over the business of vendor company. |
A. | Goodwill |
B. | Total assets |
C. | Purchase consideration |
D. | None of these |
Answer» C. Purchase consideration |
30. |
In absorption there is one ……………………and no formation. |
A. | Merger |
B. | Liquidation. |
C. | Demerger |
D. | Formation |
Answer» B. Liquidation. |
31. |
In external liquidations, there is one liquidation and one ……………… |
A. | Formation |
B. | Merger |
C. | Demerger |
D. | Purchase consideration |
Answer» A. Formation |
32. |
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. | Internal reconstruction |
D. | External reconstruction |
Answer» A. Amalgamation |
33. |
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. | External reconstruction |
Answer» B. Absorption |
34. |
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 |
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