Gujarat Board GSEB Textbook Solutions Class 12 Commerce Accounts Part 2 Chapter 2 Accounting for Debentures Textbook Exercise Important Questions and Answers.
GSEB Class 12 Accounts Important Questions Part 2 Chapter 2 Accounting for Debentures
Answer the following in one sentence only :
Question 1.
When a separate law for the first time was made in India for the company? How is it known?
Answer:
In year 1956 A.D. a separate law for the first time was made in India, which is known as Companies Act 1956.
Question 2.
In the current era, which is the new law has been implemented by the Government of India by making necessary changes to the law of the old company act?
Answer:
In the current era (in the present time) the new Companies Act 2013 will be put into effect (implement) by the Indian Govt, by making necessary changes in the law of the old company act.
Question 3.
Which two types of the company can be made on the basis of establishment?
Answer:
On the basis of establishment, there are main two types of company :
- Companies established by law and
- Registered companies.
Question 4.
Give the two names of the company or corporation established by law.
Answer:
Companies or Corporations are created by the special act of State or Central legislature.
- Â The new India Assurance Co. Ltd.
- State Bank of India
- Life Insurance Corporation of India
- Gujarat State Finance Corporation
- Gujarat State Civil Supply Corporation etc.
Question 5.
Which are the main types of registered companies? What are they?
Answer:
There are mainly two types of registred companies :
- Private company and
- Public company.
Question 6.
Which word is written after the name of private company?
Answer:
The ‘Private Limited’ word is written after the name of a private company, e.g. Arbuda Cotton Pvt. Limited.
Question 7.
Which word is written after the name of the public company?
Answer:
The ‘Limited’ word is written after the name of a public company e.g. Karnavati Textiles Limited.
Question 8.
What is the limit for the number of members in the private and public company?
Answer:
A private company has at least two and maximum 200 members. However, in public company at least seven and maximum unlimited members. According to the New Companies Act 2013, only one person can become a member of the company and become a one-person company, which is considered to be a part of a private company.
Question 9.
Which company is established not only for the purpose of profits but for the promotion (activity) of the art, science game, cultural activity etc.?
Answer:
Company limited by guarantee is established not only for-profit purposes but for the promotion of art, science, sport game, culture etc. E.g. The Board of Control for Cricket in India.
Question 10.
Which type of property share is?
Answer:
Share is movable and transferable property.
Question 11.
According to Companies Act, how many types of shares can company issued? Which are they?
Answer:
According to Companies Act, company can issue two types of shares :
- Preference shares
- Equity shares.
Question 12.
What is preference share?
Answer:
Preference share is one which gives preferential right to its holder for receiving the dividend at a specified rate before any dividend paid to equity shareholder. They receive amount before amount returned to equity shareholders in case of winding-up to business.
Question 13.
Which shareholders have no right to participate in the management of the company or to vote in the company?
Answer:
Preference shareholders do not have any right in the management as well as in the voting.
Question 14.
State the type of preference share.
Answer:
Following are the types of preference shares :
- Cumulative preference shares
- Non-cumulative preference shares
- Redeemable preference shares
- irredeemable preference shares
- Participating preference shares
- Non-participating preference shares
- convertible preference shares
- Non-convertible preference shares.
Question 15.
State the types of share capital.
Answer:
Following are the types of share capital :
- Authorized share capital
- Issued share capital
- Subscribed share capital
- Called up share capital
- Uncalled up share capital
- Paid-up share capital
- Reserve share capital.
Question 16.
What is authorized capital?
Answer:
The maximum amount which a company can accumulate by share capital during its lifetime is called authorized share capital.
Question 17.
Why is the authorised capital known as registered capital?
Answer:
The Authorized capital of the company’s will be showed in Memorandum of Association, as well as the registration of the company, so it is known as registered capital.
Question 18.
Which other names the authorised capital can be known?
Answer:
The authorised capital is known as registered capital or nominal capital.
Question 19.
What is reserve capital?
Answer:
Amount of difference between subscribed capital and uncalled capital which directors feels that will not be required in future, is transferred as reserve by passing special resolution is known as reserve capital.
Question 20.
According to section-39 of the Companies Act 2013, how much the amount of money is called up with the application?
Answer:
According to section-39 of Companies Act, 2013, the share price with the share application should be at least 5% of the value of shares.
Question 21.
According to the prevaling rule of SEBI, how much amount should be payable with the application form?
Answer:
According to the prevailing rule of SEBI, the amount to be paid with the application form should not be less than 25% of issued price of the share.
Question 22.
Generally which account is held for the purchase or sale of the shares?
Answer:
Purchase sale notes (transaction) of shares are usually kept in the demat account.
Question 23.
What is Lock-in-period?
Answer:
In case of private placement of shares, the allottes will not sell their shares for a certain minimum period from the date of allotement. This period is known as Lock-in-period.
Question 24.
What is the oversubscription of shares?
Answer:
If applications are received for more numbers of shares than the shares issued for public subscription is known as oversubscription.
Question 25.
In how many days should the amount of minimum subscription be received from the date of issue of prospectus?
Answer:
The amount of minimum subscription should be received in 30 days from the date of issue of prospectus.
Question 26.
What is Initial Public Offer (IPO)?
Answer:
An initial public offering is the first time that the share of a private company is offered for purchase to the public.
Question 27.
What is EP.O. (Follow on Public Offer)?
Answer:
If a company has already issued the shares to the public through IPO process and wants to increase the capital fund then the follow-on-public offer is issued by the company to public or to investors.
Question 28.
Explain the type of issuing shares by the company.
Answer:
The company can issue its shares in three ways :
- At par
- At Premium and
- At Discount.
Question 29.
In the present time, a company can issue its shares at discount?
Answer:
According to section-53 of Companies Act,2013, no company will be able to issue its share at discount.
Question 30.
Which types of shares can the company give with the discount?
Answer:
According to section-54 of Companies Act-2013, the company can give its employees or directors the sweat equity shares with the discount in exchange for their work.
Question 31.
What is calls-in-arrears?
Answer:
When company makes call for allotment money or call money and if some shareholders fails to pay such money on due date, such unpaid amount is known as calls-in-arrears.
Question 32.
Where the details of the outstanding balance of the instalments of the company when preparing the final accounts of the company are shown?
Answer:
While preparing the annual accounts of the company the outstanding amount of the instalments are shown after deducting from the called up capital on the liability side of balance sheet.
Question 33.
If there is no provision in the article, then how many percentages of interest can the company charged on the amount of the remaining instalment?
Answer:
If there is no provisions in the articles then according to the Companies Act 2013, of schedule-I of table-F the outstanding amount of instalment can be charged maximum 10% yearly. However, the company’s management has the right to waive completely or partial amount of interest.
Question 34.
Where is the amount of advance received instalment will be shown while preparing the final accounts of the company?
Answer:
While preparing final account on liabilities side under the head of current liabilities land sub head other current liabilities, calls-in-advance or advance received instalment will be shown.
Question 35.
If there is no provision in the articles then what percentage of the interest does the company have to paid on the amount of the advance received instalment?
Answer:
If there is no provision in the articles, then the amount of the interest on calls-in-advance is to be paid at the rate of 12% per annum as per table-F of the Companies Act-2013 of schedule-I. It is compulsory to paid this interest even if the company has no profit.
Question 36.
When does the company issues share with premium?
Answer:
When the company’s reputation is good, profitability is high, internal and external factors are favourable and if the company has issued shares in the past and its market value is more than the face value (cost-price) of the share price then the company has issued its share with premium.
Question 37.
What are the legal restriction on determining the premium amount on the shares?
Answer:
There is no legal restrictions (control) in determining the amount of premium on the shares. The company may issue shares premium as much as possible.
Question 38.
The premium received on the shares is known as which type of profit?
Answer:
The premium received on the shares is considered as capital profit.
Question 39.
Where is the outstanding of Securities Premium A/c will be shown in the balance sheet of the company?
Answer:
The balance of security premium account is shown under the head of reserve and surplus as a security premium reserve on the equity side of balance sheet.
Question 40.
Why is the capital account being debited at the time of share forfeiture?
Answer:
The number of share are decreased due to the share cancellation at the time of forfeiture. Hence the share capital account is debited.
Question 41.
How much minimum amount should be the company received on reissue the forfeited share?
Answer:
On reissue of shares, the company must get of least an amount equal to the amount not received on capital account on forfeited shares.
Question 42.
How much maximum discount can company given on reissue of forfeited shares?
Answer:
At the time of reissue of forfeited shares, company can give maximum discount to new shareholders upto the amount forfeited.
Question 43.
How is the amount of forfeitures shares shown, till the reissue of forfeited shares is not done in the company’s balance sheet?
Answer:
In the balance sheet of the company until the reissue of forfeited share, the balance of forfeited shares account is added to paid-up capital under-subscribed share capital in the note to account on share capital.
Question 44.
How the share issued for consideration other than cash is shown in the balance sheet?
Answer:
The shares issued for consideration other than cash has to be shown separately in balance sheet of company under the heading share capital.
Question 45.
If the company gives shares at a price greater or less than the net assets of the business by purchasing a business then in which account the difference will be recorded?
Answer:
When company purchases any business and shares are issued for consideration then, if value of issued shares is higher than the net assets of business, the amount of difference is transferred to ‘Goodwill A/c’ but if the value of issued shares is less than the net assets of business, the difference is transferred to ‘Capital Reserve’ A/c.
Question 46.
What is bonus share?
Answer:
Shares issued without any consideration by a company to its shareholders out of accumulated profit are known as bonus share.
Question 47.
What is the meaning of the Preferential allotment?
Answer:
Preferntial allotment means allotment of shares of a predetermined price to the pre-identified people means who are interested in taking strategic stake in the company such as promoters, venture capitalists, financial institutions buyers of the companies products or its suppliers.
Question 48.
What is sweat equity share?
Answer:
Sweat equity shares means equity shares issued by company to its employees or directors at a discount or for consideration other than cash for providing know how or making available intellectual property rights.
Question 49.
What is the limit for selling of shares for sweat equity shares?
Answer:
Sweat equity holders can not sell such shares for a period of three years from the date of share received which is called lock-in-period.
Question 50.
What is ‘ASBA’ (Application Supported by Blocked Amount)?
Answer:
‘ASBA’ means an application containing an authorisation to block the application money temporarily in the Bank A/c for subscribing to an issue.
Select the correct option for each question :
Question 1.
From which year Companies Act was applicable in India?
(A) 1932
(B) 1923
(C) 1956
(D) 1965
Answer:
(C) 1956
Question 2.
In which year New Companies Act was implemented in India?
(A) 2013
(B) 2014
(C) 2015
(D) 2016
Answer:
(A) 2013
Question 3.
Which of the following company is a established under special law passed by the central or state government?
(A) Nirma company
(B) Board of control for cricket in India
(C) Life Insurance Corporation of India
(D)None of the given above
Answer:
(C) Life Insurance Corporation of India.
Question 4.
How much minimum numbers of members are required for private companies?
(A) 2
(B) 7
(C) 20
(D) 50
Answer:
(D) 50
Question 5.
How much maximum numbers of members are required for private company?
(A) 10
(B) 5
(C) 100
(D) 200
Answer:
(A) 10
Question 6.
How many minimum numbers of members are required for the public company?
(A) 2
(B) 7
(C) 20
(D) 50
Answer:
(D) 50
Question 7.
How many maximum numbers of members are required for the public company?
(A) 10
(B) 50
(C) 200
(D) Unlimited.
Answer:
(B) 50
Question 8.
Which type to companies can not invite the public to buy shares or debentures?
(A) Public company
(B) Private company
(C) Limited company by shares
(D) Company limited by guarantee
Answer:
(D) Company limited by guarantee
Question 9.
Which type of preference share has right to get unpaid dividend?
(A) Cumulative preference share
(B) Redeemable preference share
(C) Participating preference share
(D) Convertible preference share
Answer:
(B) Redeemable preference share
Question 10.
In which type of preference share amount (finance) are not refunded before the dissolution of the company?
(A) Redeemable preference share
(B) Irredeemable preference share
(C) Cumulative preference share
(D)Non-cumulative preference share
Answer:
(A) Redeemable preference share.
Question 11.
According to Companies Act, what is the minimum face value of share?
(A) ₹ 1
(B) ₹ 10
(C) ₹ 50
(D) ₹ 100
Answer:
(B) ₹ 10
Question 12.
If company’s directors pass a special resolution for the share capital that not called up in the future, then that capital is known as …………………. .
(A) Authorized capital
(B) Paidup capital
(C) Reserve capital
(D) Subscribed
Answer:
(A) Authorized capital
Question 13.
In which year SEBI was established, by the government of India?
(A) 1947 A.D.
(B) 1956 A.D.
(C) 1991 A.D.
(D) 1996 A.D.
Answer:
(C) 1991 A.D.
Question 14.
To which statutory body, application for the public issue is to be send?
(A) Govt, of India
(B) SEBI
(C) Finance Dept.
(D) Board of Directors of the company
Answer:
(C) Finance Dept.
Question 15.
The amount received with the application from the public has to be deposited in which bank by opening a different account by the company?
(A) In International bank
(B) In Local bank
(C) In Scheduled bank
(D) In Govt, bank
Answer:
(B) In Local bank
Question 16.
As per Companies Act 2013, the minimum amount on each share called by company on application must be at least % of the issue price.
(A) 5%
(B) 10%
(C) 20%
(D) 25%
Answer:
(C) 20%
Question 17.
At what amount company receive subscription for at least % of the public issue, then share issue would not be cancelled?
(A) 60%
(B) 75%
(C) 80%
(D) 90%
Answer:
(A) 60%
Question 18.
In how many days should the company receive the minimum subscription amount from the date of expiry of the prospectus?
(A) 15
(B) 30
(C) 60
(D) 90
Answer:
(D) 90
Question 19.
When preparing the final accounts ’from which the outstanding amount of the remaining installment is shown after deducting it?
(A) Bank Balance
(B) Called up share capital
(C) Creditors
(D) Debtors
Answer:
(B) Called up share capital
Question 20.
If there is no provision in the articles, then what is the maximum amount of interest paid on the amount of instalment already received by the company’s directors as per Table F of the Companies Act 2013?
(A) 6% annually
(B) 10% annually
(C) 12% annually
(D) 15% annually
Answer:
(B) 10% annually
Question 21.
Where does the securities premium amount shows in the final account of the company?
(A) In the B/S, Liabilites side
(B) In the B/S, Assets side
(C) P/L Debit side
(D)P/L Credit side.
Answer:
(C) P/L Debit side
Question 22.
What is called the of share premium amount for the company?
(A) Capital profit
(B) Revenue profit
(C) Capital Expenditure
(D) Revenue Expenditure.
Answer:
(A) Capital profit
Question 23.
How much the maximum discount can be given to the new shareholder on the forfeited shares of the company?
(A) Equal to the share forfeited amount
(B) More than the share forfeited amount
(C) Less than the share forfeited amount
(D) 10%
Answer:
(A) Equal to the share forfeited amount.
Question 24.
When company purchases any business against shares and gives more amount of share against the net value of business, then to which account difference will be transferred?
(A) Share discount A/c
(B) Goodwill A/c
(C) Capital reserve A/c
(D)Securities premium A/c
Answer:
(A) Share discount A/c
Question 25.
How many years of lock-in period of sweat equity share?
(A) One
(B) Two
(C) Three
(D) Four
Answer:
(B) Two