McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration (BBA) , Bachelor of Commerce (B Com) .
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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