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B Com Exam  >  B Com Tests  >  Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - B Com MCQ

Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - B Com MCQ


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10 Questions MCQ Test - Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1

Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 for B Com 2024 is part of B Com preparation. The Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 questions and answers have been prepared according to the B Com exam syllabus.The Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 MCQs are made for B Com 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 below.
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Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 1
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What is the term used when shares are issued to the promoters of a company in lieu of the services provided by them during the incorporation of the company?

Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 1
Promotional shares are issued to the promoters of a company as a form of consideration for the services they provide during the incorporation process. These shares are issued at a certain price, and the amount collected from these shares is typically debited to the "Goodwill A/c."
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 2
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Under what conditions can a company issue its shares at a discount according to the Companies Act?

Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 2
According to Section 79 of the Companies Act, a company can issue its shares at a discount only if at least one year has elapsed from the date of commencement of business. It must also fulfill other conditions, including approval by shareholders and the court.
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Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 3
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What is the term used for the difference between the issue price and face value of a share?

Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 3
The premium is the difference between the issue price and the face value (par value) of a share. It can be either positive (issued at a price higher than face value) or negative (issued at a price lower than face value).
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 4
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When a company issues its shares at a premium, what account is credited with the premium amount?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 4
When a company issues its shares at a premium, the premium amount received is credited to the "Securities Premium A/c." This account represents the amount received over and above the face value of the shares.
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 5
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What is the main objective of pro-rata allotment of shares?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 5
The main objective of pro-rata allotment is to treat all applicants equally by distributing shares proportionately among them. This approach ensures fairness and equal treatment for all applicants.
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 6
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What is the term used for the demand made by a company asking shareholders to remit the remaining unpaid amount on shares allotted to them?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 6
A call is a demand made by the company to its shareholders to pay the remaining unpaid amount on shares allotted to them. Calls can be made in one or more installments depending on the company's financial needs.
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 7
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Under what circumstances can a company issue fully-paid bonus shares using the premium amount collected?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 7
According to Section 78 of the Companies Act, a company can utilize the premium amount to write off preliminary expenses, discount on issue of shares, underwriting commission, expenses on issue, and also to pay premium on redemption of preference shares or debentures. One of the purposes is to reduce accumulated losses.
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 8
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When shares are issued for consideration other than cash, which account is debited with the issue price of these shares?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 8
When shares are issued for consideration other than cash, such as assets or services, the issue price of these shares is normally debited to the "Goodwill A/c" to account for the value received.
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 9
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What is the term used for the amount paid by applicants for shares along with their application?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 9
Application money is the amount paid by applicants for shares along with their application. It is typically a portion of the total share price and is submitted by applicants to express their interest in acquiring shares.
Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 10
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What account is debited when the company receives application money along with the application for shares?
Detailed Solution for Test: Issue Of Shares, Debentures, Underwriting And Bonus Shares- 1 - Question 10

In accounting, when a company receives application money from applicants, cash or bank deposits increase, so the Bank Account (an asset account) is debited. This reflects the inflow of cash. Simultaneously, the Share capital  Account is credited, recognizing the liability the company has to allot shares or refund the application money if shares are not allotted.

The entry would typically be:

  • Debit: Bank Account
  • Credit: Share capital Account
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