Chapter:

1680+ more mcqs Solved MCQs

in Financial Accounting

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Business Administration in Computer Applications (BBA [CA]) , Bachelor of Business Administration (BBA) , Bachelor of Accounting and Finance (BAF) , Bachelor of Commerce (B Com) , Cost Accounting .

Chapters

Take a Test

301.	Discount allowed on re-issue of forfeited shares is debited to :
A.	Share Capital A/c
B.	Share forfeiture A/c
C.	Statement of Profit & Loss
D.	General Reserve A/c
Answer» B. Share forfeiture A/c

302.	The balance of the forfeited shares account after re-issue of forfeited shares is transferred to :
A.	Statement of Profit & Loss
B.	Share Capital A/c
C.	Capital Reserve A/c
D.	General Reserve A/c
Answer» C. Capital Reserve A/c

303.	Madhu Ltd. forfeited 800 shares of `10 each issued at 10% premium to Shyam (` 9 called up) on which he did not pay ` 3 of allotment (including premium) and first call of `2. Out of these, 600 shares were re-issued to Ram as fully paid up for `9 per share. What is to amount to be transferred to capital Reserve?
A.	`2,400
B.	` 1,800
C.	`3,000
D.	`3,600
Answer» A. `2,400

304.	Debenture holders are :
A.	Owners of the Company
B.	Debtors of the Company
C.	Creditors of the Company
D.	Promoters of the Company
Answer» C. Creditors of the Company

305.	Debentures represent the :
A.	Long-term Borrowings of a Company
B.	The Investment of Equity-Shareholders
C.	Directors’ shares in a company
D.	Short-term Borrowings of a Company
Answer» A. Long-term Borrowings of a Company

306.	Zero Coupon Bonds are issued :
A.	At Zero Interest Rate
B.	With Specified Rate of Interest
C.	Without Specified Rate of Interest
D.	None of These
Answer» C. Without Specified Rate of Interest

307.	Interest payable on debentures is :
A.	an appropriation of profits of the company
B.	a charge against profits of the company
C.	transferred to sinking fund investment account
D.	transferred to general reserve
Answer» B. a charge against profits of the company

308.	A debenture holder is entitled to :
A.	Fixed dividend
B.	Share in profits
C.	Voting rights in the company
D.	Interest at the fixed rate
Answer» D. Interest at the fixed rate

309.	On liquidation of company, principal amount of debentures is returned :
A.	First of All
B.	Last of All
C.	Before Equity Capital
D.	After Equity Capital
Answer» C. Before Equity Capital

310.	Which of the following statements is false?
A.	Debenture is a form of public borrowing.
B.	It is customary to prefix debentures with the agreed rate of interest.
C.	Debenture interest is a charge against profits.
D.	The issue price and redemption value of debentures cannot differ.
Answer» D. The issue price and redemption value of debentures cannot differ.

311.	Which of the following is not a characteristic of Bearer Debentures?
A.	They are treated as negotiable instruments.
B.	Their transfer requires a deed of transfer.
C.	They are transferable by mere delivery.
D.	The interest on it is paid to the holder irrespective of identity.
Answer» B. Their transfer requires a deed of transfer.

314.	The Principal amount of debentures will be repaid by the company either at the end of a specified period or by instalments during the life time of the company. Such types of debentures are called :
A.	Redeemable Debentures
B.	Irredeemable Debentures
C.	Convertible Debentures
D.	Bearer Debentures
Answer» A. Redeemable Debentures

316.	Debenture Application Account is in the nature of
A.	Real Account
B.	Personal Account
C.	Nominal Account
D.	None of the above
Answer» B. Personal Account

317.	Discount on issue of Debentures is in the nature of
A.	Revenue loss
B.	Capital loss
C.	Deferred Revenue Expenditure
D.	None of the above
Answer» B. Capital loss

318.	Premium received on issue of debentures may be utilised for
A.	For writing off discount allowed on issue of shares
B.	For writing off premium allowed on redemption of debentures
C.	For writing off preliminary expenses
D.	For All of the Above
Answer» D. For All of the Above

312.	Which of the following statements is false?
A.	At maturity, debenture holders get back their money.
B.	Debentures can be forfeited for non-payment of call money.
C.	In company’s balance sheet, debentures are shown under the head Long term Borrowings.
D.	Interest on debentures is a charge against profits
Answer» B. Debentures can be forfeited for non-payment of call money.

313.	Which of the following statements is false :
A.	A Company can issue redeemable debentures.
B.	A Company can issue debentures with voting rights.
C.	A Company can issue convertible debentures.
D.	A Company can buy its own debentures and shares.
Answer» B. A Company can issue debentures with voting rights.

315.	The debentures whose principal amount is not repayable by the company during its life time, but the payment is made only at the time of Liquidation of the company, such debentures are called :
A.	Bearer Debentures
B.	Redeemable Debentures
C.	Irredeemable Debentures
D.	Non-Convertible Debentures
Answer» C. Irredeemable Debentures

319.	If the rate of G/P is 25% of sales and the cost of goods sold is ` 150000, the amount of G/P will be
A.	`30000
B.	`25000
C.	`40000
D.	`50000
Answer» D. `50000

320.	Share application account is classified as
A.	Real account
B.	Personal account
C.	Impersonal account
D.	Nominal account
Answer» A. Real account

321.	The minimum share application is
A.	1% of the face value
B.	5% of the face value
C.	10% of the face value
D.	25% of the face value
Answer» B. 5% of the face value

322.	The excess price received on the par value of the shares should be credited to
A.	Calls in advance
B.	Reserve capital account
C.	Security premium reserve account
D.	None of these
Answer» C. Security premium reserve account

323.	Which of the following should be deducted from the share capital to determine the paid up share capital.
A.	Calls in advance
B.	Calls in arrears
C.	Security premium reserve
D.	Discount on issue of shares.
Answer» B. Calls in arrears

324.	The security premium will be shown under the heading
A.	Share capital
B.	Current liability
C.	Current assets
D.	None of these
Answer» D. None of these

325.	The rate of discount on shares cannot exceed
A.	5%
B.	10%
C.	6%
D.	None of these
Answer» B. 10%

1680+ more mcqs Solved MCQs

Discount allowed on re-issue of forfeited shares is debited to :

The balance of the forfeited shares account after re-issue of forfeited shares is transferred to :

Debenture holders are :

Debentures represent the :

Zero Coupon Bonds are issued :

Interest payable on debentures is :

A debenture holder is entitled to :

On liquidation of company, principal amount of debentures is returned :

Which of the following statements is false?

Which of the following is not a characteristic of Bearer Debentures?

Which of the following statements is false?

Which of the following statements is false :

The Principal amount of debentures will be repaid by the company either at the end of a specified period or by instalments during the life time of the company. Such types of debentures are called :

The debentures whose principal amount is not repayable by the company during its life time, but the payment is made only at the time of Liquidation of the company, such debentures are called :

Debenture Application Account is in the nature of

Discount on issue of Debentures is in the nature of

Premium received on issue of debentures may be utilised for

If the rate of G/P is 25% of sales and the cost of goods sold is ` 150000, the amount of G/P will be

Share application account is classified as

The minimum share application is

The excess price received on the par value of the shares should be credited to

Which of the following should be deducted from the share capital to determine the paid up share capital.

The security premium will be shown under the heading

The rate of discount on shares cannot exceed

Premium on issue of shares can be used for

When shares are forfeited the share capital account is debited by

The profit on reissue of forfeited shares is transferred to

When an existing company offers it shares for sale to the existing shareholders, it is known as

Which of the following should be deducted from the share capital to find out paid up capital

In the balance sheet of a company, the discount on issue of debentures is shown under which heading

The original cost at which an asset or liability is acquired is known as --------

The international accounting standard Committee was set up in --------

The process of converting foreign subsidiary financial statements into the home currency is known as -------

Accounting in india is governed by the -----

Interim dividend paid is always shown

Unclaimed dividend is shown in the B/S under the head

Debentures are shown in the B/S under head.

Preliminary expenses is an example of

Divisible profit do not include

loose tools are shown in the B/S under the head.

Discount on shares and debentures are shown in

In the case of joint stock company, goodwill is shown on the asset side under the head.

Which of the following item will be taken in the surplus statement

Which of the following would not appear in a limited company’s surplus/Deficit statement

Outstanding expenditure is a __________ account.

_________ deals with the depreciation account.

According to which concept, proprietor of a business is treated as a creditors to the extent of his capital

Net worth of business means

The policy of anticipate no profit and provide for all possible losses arises due to

326.	Premium on issue of shares can be used for
A.	Issue of bonus shares
B.	Distribution of profit
C.	Transferring to general reserve.
D.	None of these
Answer» A. Issue of bonus shares

327.	When shares are forfeited the share capital account is debited by
A.	Paid up amount
B.	Called up amount,
C.	Calls in arrear
D.	Nominal value of such share.
Answer» B. Called up amount,

328.	The profit on reissue of forfeited shares is transferred to
A.	General reserve
B.	Capital reserve
C.	Capital redemption reserve
D.	None of these
Answer» B. Capital reserve

329.	When an existing company offers it shares for sale to the existing shareholders, it is known as
A.	Private placement
B.	Bonus issue.
C.	Right issue
D.	Offer for sale
Answer» C. Right issue

330.	Which of the following should be deducted from the share capital to find out paid up capital
A.	Calls in advance
B.	Calls in arrear
C.	Shares forfeited account
D.	Discount on issue of shares.
Answer» B. Calls in arrear

331.	In the balance sheet of a company, the discount on issue of debentures is shown under which heading
A.	Fixed asset
B.	Current asset
C.	Investment
D.	Miscellaneous expenditure
Answer» D. Miscellaneous expenditure

332.	The original cost at which an asset or liability is acquired is known as --------
A.	Amortization
B.	Replacement cost
C.	Historical cost
D.	Carrying cost
Answer» C. Historical cost

333.	The international accounting standard Committee was set up in --------
A.	1982
B.	1976
C.	1967
D.	2009
Answer» C. 1967

334.	The process of converting foreign subsidiary financial statements into the home currency is known as -------
A.	Transmission
B.	Translation
C.	Consolidation
D.	Reconstruction
Answer» B. Translation

335.	Accounting in india is governed by the -----
A.	Income tax department
B.	Company law board
C.	Institute of chartered accountants of india
D.	Reserve bank of india
Answer» C. Institute of chartered accountants of india