Test: Company Accounts Issue Of Shares - 2 - Commerce MCQ

Equity Shares are not convertible. Preference shares can be converted into equity shares depend upon the terms and conditions.

Types of capital in order:
(a) Authorized Capital
(b) Issued Capital
(c) Subscribed Capital
(d) Called up capital
(e) Paid up capital

When a company makes an offer or invites the public in general to subscribe its shares, it is known as Initial public offer (IPO).

Calls in arrears is shown by way of deduction from subscribed capital while preparing notes to account. At the time of preparation of Balance Sheet of a company, while ascertaining the amount of share capital by preparing notes to accounts, the amount of calls in arrears should be deducted from the subscribed capital (subscribed but not fully paid up).

Reserve Capital: It is uncalled capital which can be called up by the company in case of an emergency i.e. winding up. It is a part of Authorized Capital.

When the entire face value of a share is called by the company and is also paid by the shareholder, It is known as Subscribed and fully paid up capital.

Authorised capital is also known as nominal capital. It refers to that amount which is stated in the Memorandum of Association.

When a company issues its shares at a price which is more than the actual face value, it is known as shares issued at premium.

The Statement given as ‘Company is managed by all the members’ is not correct because it is not mandatory for all the members to run the company.

When a company receives excess applications i.e. more applications than the shares offered for subscription, is called oversubscription of shares.

Situations at the time oversubscriptions are:
1.Rejecting Excess Applications
2.Pro-rata allotment
3.Both Rejecting some applications and pro-rata allotment to remaining applicants
Note: Under subscription is a different situation, it is not concerned with over subscription

As per the Companies Act, 2013, A company cannot issue its shares at discount except sweat equity shares.

Total amount should be 10 + 30% i.e. 10 + 3 = 13
On Application Rs.4
On Allotment Rs.4
On First call Rs.2
Second & final call Rs.3

A company can sell its shares only through stock exchange. Company should be listed in the stock exchange to sell its shares.

Equity Shareholders have voting rights in all circumstances. Preference shareholders have voting rights only in special situations.

The Correct order is:
(a) Promotion
(b) Incorporation
(c) Capital Subscription
(d) Commencement of business

The amount of Calls in Arrears should be deducted from Subscribe but not fully paid up under share capital, while preparing notes to accounts for share capital.

Share capital is shown in the balance sheet under the heading of Shareholders’ Funds because share capital is that amount of capital which is contributed by the shareholders.

The maximum amount of share capital a company is allowed to raise is called its authorized capital.

The company must specify the total amount of equity it wants to raise and the base value of its shares, called the par value.

 For example, if a company obtains authorization to raise $5 million and its stock has a par value of $1, it may issue and sell up to 5 million shares of stock.