Test: Redemption Of Preference Shares - 1


30 Questions MCQ Test Crash Course of Accountancy - Class 12 | Test: Redemption Of Preference Shares - 1


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QUESTION: 1

Preference shares can be redeemed : 

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QUESTION: 2

 Redeemable preference shares must be redeemed within :

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QUESTION: 3

 Which of the following can be utilized for redemption of preference shares?

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QUESTION: 4

 The balance appearing in books of a company at the end of year were: CRR A/c Rs. 50,000, Security Premium Rs. 5,000 Revaluation Reserve Rs. 20,000, P & L A/c (Dr.) Rs. 10,000. Maximum amount available distribution of Bonus shares will be: 

Solution:
QUESTION: 5

The following is the balance sheet of G Ltd. as on March 31, 2006:

The Board of Directors of the company decided to redeem the preference shares at a premium of 10%. In order to facilitate the redemption, the Board has taken the following decisions: 
? To sell the investments for Rs. 4,00,000
? To issue sufficient equity shares at a premium of Rs. 2 per share to raise the balance of funds needed
&lowest; To maintain minimum bank balance of Rs. 50,000
The Board of Directors initiated the above course of action during the month of April, 2006 and redeemed all the preference shares.
The amount to be transferred to Capital Redemption Reserve =?

Solution:
QUESTION: 6

Preference shares amounting to Rs. 2,00,000 are redeemed at a premium of 5%, by issue of shares amounting to Rs. 1,00,000 at a premium of 10%. The amount to be transferred to capital redemption reserve =?

Solution:
QUESTION: 7

The Balance sheet of A Ltd. as on March 31,2006 is as under:


The 12% preference shares are redeemable at a premium of 10%. The company wishes to maintain the cash balance at Rs. 25,000. For the purpose of redemption of preference shares, it proposed to sell the investments for Rs. 2,00,000. The company proposes to issue sufficient number of equity shares of Rs. 100 each at a premium of 5% to raise required cash resources. 
Number of equity shares to be issued is __________.

Solution:
QUESTION: 8

 O Ltd. has redeemed its 12% preference shares of Rs. 2,00,000 at a premium of 4%. To meet the redemption it has issued Rs. 1,98,084 worth of shares of Rs. 20 each at a premium of 5%. The balance outstanding to the credit of share premium account after adjusting premium on redemption of preference shares =?

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QUESTION: 9

A company cannot issue redeemable preference shares for a period exceeding __________.

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QUESTION: 10

During the year 2000-2001, T Ltd. issued 20,000, 12% Preference Shares of Rs. 10 each at a premium of 5%, which are redeemable after 4 years at par. During the year 2005-2006, as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debentures of Rs. 10 each at a premium of 10%. At the time of redemption of 12% preference shares, the amount to be transferred to capital redemption reserve =?

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QUESTION: 11

 Which of the following statements is false ?

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QUESTION: 12

Which of the following statement is true?

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QUESTION: 13

Which of the following statements is false?

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QUESTION: 14

Redemption of Preference Shares

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QUESTION: 15

A Ltd. had 3,000, 12%. Redeemable preference shares of Rs. 100 each, fully paid up. The company issued 25,000 equity shares of Rs. 10 each at par and 1,000 14%. Debentures of Rs. 100 each. All amounts were received in full. The payment was made in full. The amount to be transferred to capital Redemption Reserve Account Rs.:

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QUESTION: 16

Securities premium cannot be used to ___________.

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QUESTION: 17

Consider the following information pertaining to E Ltd.
On September 4, 2005, the company issued 12,000 7% Debentures having a face value of Rs. 100 each at a discount of 2.5%. on September 12, the company issued 25,000, 8% Preference share of Rs. 100 each. On September 29, the company redeemed 30,000, 6% Preference shares of Rs. 100 each at a premium of 5% together with one month dividend thereon. Bank balance as on August 31, 2005 was Rs. 29,25,000.
After effecting the above transactions, the Bank balance as on September 30, 2005 =?

Solution:
QUESTION: 18

The following is the balance sheet of G Ltd. as on March 31, 2006:

The Board of Directors of the company decided to redeem the preference shares at a premium of 10%. In order to facilitate the redemption, the Board has taken the following decisions: 
? To sell the investments for Rs. 4,00,000
? To issue sufficient equity shares at a premium of Rs. 2 per share to raise the balance of funds needed
&lowest; To maintain minimum bank balance of Rs. 50,000
The Board of Directors initiated the above course of action during the month of April, 2006 and redeemed all the preference shares.
Premium on issue of fresh equity shares =?

Solution:
QUESTION: 19

Which of the following cannot be used for the purpose of creation of capital redemption reserve account?

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QUESTION: 20

A preference share which carry the right of participating in the surplus left after paying equity dividend is called: 

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QUESTION: 21

Following are details of ABC Ltd.:
Outstanding Redeemable preference shares =Rs. 3,00,000
Premium on redemption = 10%
General Reserve = Rs. 1,50,000
Security Premium Balance = Rs. 35,000
Fresh issue of shares to be made at 10% discount
The face value of fresh issued shares will be: 

Solution:
QUESTION: 22

The Balance sheet of A Ltd. as on March 31,2006 is as under:

The 12% preference shares are redeemable at a premium of 10%. The company wishes to maintain the cash balance at Rs. 25,000. For the purpose of redemption of preference shares, it proposed to sell the investments for Rs. 2,00,000. The company proposes to issue sufficient number of equity shares of Rs. 100 each at a premium of 5% to raise required cash resources.
Total Cash required to effect the above decisions is __________.

Solution:
QUESTION: 23

X Ltd. had 5,000 12% Redeemable Preference Shares of Rs. 100 each. The company decided to redeem them by issuing equity shares of Rs. 100 each @ a premium of 255. The member of equity shares to be issued are:

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QUESTION: 24

Preference shares cannot be redeemed unless they are:-

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QUESTION: 25

Which of the following can be utilized for redemption of preference shares?

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QUESTION: 26

S Ltd. issued 2,000, 10% Preference shares of Rs. 100 each at par, which are redeemable at a premium of 10%. For the purpose of redemption, the company issued 1,500 Equity Shares of Rs. 100 each at a premium of 20% per share. At the time of redemption of Preference shares, the amount to be transferred by the company to the Capital Redemption Reserve Account =?

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QUESTION: 27

Which of the following accounts can be transferred to capital redemption reserve account?

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QUESTION: 28

Preference Shares can be issued for a maximum period : 

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QUESTION: 29

According to section 78 of the Companies Act, the amount in the Securities Premium A/c cannot be used for the purpose of 

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QUESTION: 30

Redeemable Preference shares of Rs. 1,00,000 are redeemed at par for which fresh equity shares of Rs. 80,000 are issued at discount of 10%. The amount transferred to Capital Redemption Reserve will be: 

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