Practice Test

Q1) The _______ is the process of making changes in the composition of a firms one or more business portfolio in order to have a more profitable enterprise Show Answer

Q2) The _____ means changing the structure of an organizations such as reducing the hierarchical levels.Financial restructuring Show Answer

Q3) ______ is an arrangement whereby the assets of two or more companies come under the control of one company Show Answer

Q4) _____ merger involves firms engaged in unrelated types of activities Show Answer

Q5) In _______ , company distributes its shareholding in subsidiary to its shareholders thereby not changing the ownership pattern Show Answer

Q6) When existing company is dissolved to form few new companies, it is called as _______ Show Answer

Q7) ______ means the action of an organization or government selling or liquidating an asset or subsidiary Show Answer

Q8) ______ means an acquirer takes over the control of the target company Show Answer

Q9) _____ parties work together or a single project for a finite period of time Show Answer

Q10) ______ ay be defined as an arrangement where one party grants another party the right to use trade name Show Answer

Q11) When the company’s existing financial structure is recognized without dissolving the existing company and without forming a new company is referred to as ______ Show Answer

Q12) Internal reconstruction requires _________ Show Answer

Q13) A ______ is the act of gaining control of a company by buying more of its share than anyone else. Show Answer

Q14) In _______ takeover the board member are usually the main shareholders Show Answer

Q15) In _____ takeover occurs when the target company is happy about the arrangement Show Answer

Q16) In a _____ takeover situation, the target company does not want the bidder to acquire it Show Answer

Q17) The ______ make a public offer at a fixed price above the current market price Show Answer

Q18) The _____ can also engage in a proxy fight Show Answer

Q19) In case of lease legal title is with _______ Show Answer

Q20) Corporate Demerger is a form of corporate restructuring Show Answer

Q21) Corporate restructuring changes organizations structure Show Answer

Q22) Demerger is a term coined to reveal some sort of partition or separation of undertaking. Show Answer

Q23) The two main methods of accounting for takeover are pooling interest method and purchase method Show Answer

Q24) Amalgamation helps in enhancing market leadership of the company Show Answer

Q25) Capital reduction requires approval from the High Court Show Answer

Q26) Demerger is a disjoining or a separation of one or more units of a company to form a new company independent from the original one Show Answer

Q27) Takeover takes place when one company acquires control over other company by way of purchase or exchange of shares Show Answer

Q28) Takeovers generally involves the acquisition of a block of equity capital of company, which enables the acquiring business firm to take control of the business affairs of the taken over business firm Show Answer

Q29) A firm can acquire target firm by Show Answer

Q30) ABC Ltd. acquired substantial number of equity shares in XYZ ltd. It is a case off Show Answer

Q31) PQR Ltd.is a profit making company. It is absorbed into another group company XYZ Ltd. Which is a loss company. This case is off Show Answer

Q32) Under AS 14, Amalgamation In the nature of merger is a case where ______of shareholders of transferror company have agreed to become shareholders of Transferee company Show Answer

Q33) Merger of two companies under BIFR Supervision is known as Show Answer

Q34) Which off the following is not a usual method of calculation of share swap ratio? Show Answer

Q35) An acquirer offer to buy shares directly from the shareholder is known as Show Answer

Q36) ABC Ltd. acquires hundred percent of preference share capital of PQR Ltd. It would result in Show Answer

Q37) Which off the following is a case of spin off? Show Answer

Q38) Share of A Ltd. And B Ltd. are currently traded at Rs. 100 and Rs.25 respectively. The share swap ratio based on market price would be Show Answer

Q39) Major advantages of merger are Show Answer

Q40) TCS Ltd. acquires HCL Ltd. MPS of HCL Ltd. Is Rs.20 and EPS is Rs.5 for an exchange ratio of 1.5 : 1, what was the PE ratio used in acquiring HCL Ltd? Show Answer

Q41) Mergers provide tax benefit in the case of set off and carry forward of losses. Show Answer

Q42) The cost of capital of the merged firm is different from both cost of capital of the acquiring firm and the target firm is synergy effects should be taken and risk complexion of both the firms changes on merger. Show Answer

Q43) In an amalgamation, the amalgamated company is entitles to carry forward accumulated losses as well as on absorbed the appreciation of the amalgamating company. Show Answer

Q44) The terms merger and takeover referred to same type of situation. Show Answer

Q45) Accounting standard 14 classifies merger as vertical and horizontal. Show Answer

Q46) A conglomerate merger is a situation when all forms of a group amalgamated into one. Show Answer

Q47) Poison pill and white knight a types of merger Show Answer

Q48) Increasing profit and lessening competition are the only objective of merger. Show Answer

Q49) Swap ratio and share exchange ratio are one and the same thing Show Answer

Q50) The aim of the new takeover code announced by Sebi is to make the process of takeover a more transparent Show Answer

Q51) Offer once made to acquire share cannot be revoked Show Answer

Q52) A merger proposal be evaluated as of capital budgeting decision Show Answer

Q53) In hostile takeover bid, the price of the merger depends upon the mutual consent. Show Answer

Q54) In order to protect the earing available to shareholders, the strap ratio should be based on EPS Show Answer

Q55) In case the swap ratio is calculated on the basis of EPS, the market value of holding of equity shareholder would be protected Show Answer

Q56) Corporate restructuring is done to increase Show Answer

Q57) Restructuring is a process of Show Answer

Q58) Corporate Restructuring is to Show Answer

Q59) Corporate Restructuring is a process of Show Answer

Q60) The essence of Corporate restructuring is Show Answer

Q61) Restructuring is done to Show Answer

Q62) Restructuring activities occur at a much larger scale due to Show Answer

Q63) Corporate Restructuring helps to achieve Show Answer

Q64) The process of Globalization has Show Answer

Q65) In a global scenario focus is on Show Answer

Q66) Corporate Restructuring as a strategy involves Show Answer

Q67) Implications of Corporate Restructuring are Show Answer

Q68) Major areas of Hardware Restructuring include. Show Answer

Q69) Major areas of software Restructuring include Show Answer

Q70) The objective of Corporate Restructuring are Show Answer

Q71) Corporate Restructuring is needed to Show Answer

Q72) Scope of Corporate Restructuring include Show Answer

Q73) The elements of Restructuring plan include Show Answer

Q74) The various factors for implementation of restructuring strategies include Show Answer

Q75) Different forms of restructuring include Show Answer

Q76) Acquisition take place by Show Answer

Q77) The object of takeover is Show Answer

Q78) Takeover may be Show Answer

Q79) Reverse Takeover may be Show Answer

Q80) By de-merger a corporate body Show Answer

Q81) Strategic Alliance involves Show Answer

Q82) Alliances may be Show Answer

Q83) A successful JV has the following benefits Show Answer

Q84) Corporate Restructuring changes organizational structure. Show Answer

Q85) Corporate Restructuring decreases profitability of the organization. Show Answer

Q86) Corporate Restructuring helps to achieve global competitiveness. Show Answer

Q87) Technological advances increases the rate of obsolescence. Show Answer

Q88) Corporate Restructuring involves changing financial structuring. Show Answer

Q89) Downsizing increases organizational strength. Show Answer

Q90) Benchmarking is a search of best practices. Show Answer

Q91) Software Restructuring involves cultural process changes. Show Answer

Q92) Training cannot weed out outdated ideas. Show Answer

Q93) Corporate restructuring reduces risk. Show Answer

Q94) Corporate restructuring reduces ROI. Show Answer

Q95) Corporate restructuring develops core competencies. Show Answer

Q96) Corporate restructuring does not include restructuring of policies. Show Answer

Q97) Motivation to people is not necessary for implementation of strategy. Show Answer

Q98) Suitable organizational climate is not necessary for implementation of strategies. Show Answer

Q99) Merger is a form of restructuring. Show Answer

Q100) The object of takeover is to reduce cost. Show Answer

Q101) The object of takeover is to achieve economy of operations. Show Answer

Q102) Reverse takeover may be Horizontal or Vertical. Show Answer

Q103) De-merger is also called as “Spin-off”. Show Answer

Q104) In De-merger two companies are merged. Show Answer

Q105) De-merger reduces internal competition. Show Answer

Q106) De-merger do not loose synergy. Show Answer

Q107) Strategic alliance is made between two competitors. Show Answer

Q108) Strategic alliance helps the organizations to diversify the activities. Show Answer

Q109) Alliance increases competition. Show Answer

Q110) Franchising is a strategy to keep customers. Show Answer

Q111) Turnkey projects are also known as turnkey plus. Show Answer

Q112) Joint venture helps to develop product. Show Answer

Q113) Disinvestment is a strategic initiative from the point of view of private sector companies. Show Answer

Q114) Capital reduction is implemented per section ________ of companies Act. Show Answer

Q115) The scheme of capital reduction is to be approved by Show Answer

Q116) The scheme of internal reconstruction involves ________ company. Show Answer

Q117) Fictitious assets are to be transferred to _______. Show Answer

Q118) Balance in Capital Reduction should be transferred to ________. Show Answer

Q119) The cancellation of contingent liability is _______ for company. Show Answer

Q120) The payment for contingent liability should be debited to _________. Show Answer

Q121) “And Reduced” words are to be shown as in balance sheet as per ________ requirement. Show Answer

Q122) XYZ Ltd. had on 31th December, 2008; 80,000 equity shares at Rs. 10 each. It was decided to reduce shares to Rs.8 each. The reduction is _______. Show Answer

Q123) Creditors of the company are Rs. 50,00,000 one creditor for Rs.20,00,000 decided to forego 40% of his claim. He is allotted 30,000 equity shares of Rs.40 each in full satisfaction. the amount transferred to capital reduction is Show Answer

Q124) The preferences shareholders agree to forego arrears of preference dividend of Rs.72,000. The amount transferred to Capital reduction is Show Answer

Q125) Creditors are Rs.3,00,000. They are given the option to either accept 50% of their claim in cash in full settlement or to convert their claim in to equity shares of Rs.10 each. Creditors of Rs. 2,00,000 opt for shares in satisfaction of the claim. Capital reduction Account is credited by Rs.________. Show Answer

Q126) Investment costing of Rs. 24,000 given to bank for bank overdraft of Rs.16,800. The capital reduction is debited by Rs._______. Show Answer

Q127) Y Ltd. has 8,000 equity shares of Rs.100 each fully paid. Each share is sub- divided into 10 equity shares of Rs.10 each. The number of shares after sub-division will be _______. Show Answer

Q128) Provision for taxation is Rs.1,00,000. The tax liability of the company is settled at Rs.80,000 & it is paid immediately. Amount credited to capital reduction is _________. Show Answer

Q129) 6% debentures of Rs.100 each Rs.1,00,000 to be converted into such number of 8% debentures of Rs.50 each as to generate the same amount of interest as before. The amount of 8% debentures will be ________. Show Answer

Q130) In internal reconstruction, method of calculation of purchase consideration is by________. Show Answer

Q131) On internal reconstruction, assets are written off except_______. Show Answer

Q132) Payment of reconstruction expenses is debited to ________. Show Answer

Q133) The court Confirmation Order may direct the management to add to its name _______. Show Answer

Q134) Credit balance on Capital Reduction Account is utilized for ________. Show Answer

Q135) The scheme of internal reconstruction requires sanction from ________. Show Answer

Q136) Internal reconstruction is governed by section ________. Show Answer

Q137) Surrender of fully paid shares amounts to _______. Show Answer

Q138) Debenture holders accepting less than the face value of their debenture amounts to ____. Show Answer

Q139) Creditors accepting part payment of their claims amounts to _______. Show Answer

Q140) Share Capital A/c Dr.(Rs.100)
To Share Capital A/c(Rs.10)
The above entry in the scheme of reconstruction records: ______.
Show Answer

Q141) In internal reconstruction _______. Show Answer

Q142) Reduction in share capital of a company means reduction in ___________. Show Answer

Q143) Share Capital A/c Dr. (Rs.10)
To Share Capital A/c (Rs.100)
The above entry is the entry of _________.
Show Answer

Q144) A Ltd. company may alter its share capital to __________. Show Answer

Q145) The existing 1000 shares of Rs.100 each altered to 10,000 shares of Rs.10 each is Show Answer

Q146) Balance on Capital Reduction is utilized to _______. Show Answer

Q147) Internal reconstruction requires _________. Show Answer

Q148) Capital Reduction requires _________. Show Answer

Q149) Amicable settlement of differences by mutual consent by parties is ________. Show Answer

Q150) Re- arrangement of rights or liabilities without any dispute is _________. Show Answer

Q151) Creditor foregoing their claims in whole or in part is__________. Show Answer

Q152) Capital reduction and internal reconstruction is synonym. Show Answer

Q153) Capital reduction is one variety of capital restructuring. Show Answer

Q154) Consolidation of shares result in profit for a company. Show Answer

Q155) Sub- division of shares results in gain for a company. Show Answer

Q156) Fictitious balances are to be transferred to Capital Reduction Account. Show Answer

Q157) Accounting for unrecorded assets and appreciation of assets results in credit to Reconstruction Account. Show Answer

Q158) Provision for unrecorded liability indicates loss to a company. Show Answer

Q159) Accounting for internal and external reconstruction is in identical manner. Show Answer

Q160) The reduction in paid up value should not be coupled with reduction in face value of shares. Show Answer

Q161) If shareholders surrender shares to the company, it is capital profit to the company. Show Answer

Q162) Re-classification of surrendered shares should not be accounted. Show Answer

Q163) Cancellation of contingent liability is treated as profit to the company. Show Answer

Q164) Transfer of assets to creditors at book value is benefit to the company. Show Answer

Q165) The expenses for scheme should be debited to preliminary expenses. Show Answer

Q166) Statutory reserve can be utilized to set-off loss under the scheme. Show Answer

Q167) The final accounts prepared after reconstruction should be suffixed by words “ and reduced”. Show Answer

Q168) The requirements of Schedule III are to be complied while preparing account after internal reconstruction. Show Answer

Q169) Authorized share capital is to be reduced to the extent of capital reduction. Show Answer

Q170) Internal reconstruction scheme cannot be prepared to cover capital reconstruction. Show Answer

Q171) The debit balance in capital reduction should be transferred to Goodwill Account. Show Answer

Q172) Credit balance on Capital Reduction Account is utilized to write off accumulated losses. Show Answer

Q173) After internal reconstruction, Balance Sheet of a company cannot reflect true and fair view. Show Answer

Q174) Profit on sale of asset is credited to Capital Reduction Account. Show Answer

Q175) A company cannot subdivide shares. Show Answer

Q176) Only sick companies undertake capital reduction. Show Answer

Q177) No journal entry is required for cancellation of unissued share capital. Show Answer

Q178) Central Government permission is required for internal reconstruction. Show Answer

Q179) Amount scarified by shareholders in a scheme of reconstruction is transferred to Capital Reserve Account. Show Answer

Q180) Securities Premium Account can be transferred to Capital Reduction Account. Show Answer

Q181) The object of reconstruction is to reorganize capital of the company. Show Answer

Q182) Internal Reconstruction is governed by section 809 of the company law. Show Answer

Q183) Creditors accepting part payment of their claims is a compromise. Show Answer

Q184) Capital Reduction A/c balance is utilized for an issue of bonus share. Show Answer

Q185) Internal Reconstruction requires ordinary Resolution of the Board of Directors. Show Answer

Q186) Capital Reduction requires court order. Show Answer

Q187) Creditors foregoing the claim is an arrangement. Show Answer

Q188) Amicable settlement of differences by mutual consent by parities is a merger. Show Answer

Q189) A company going for internal reconstruction must add the words, and reduced after its name. Show Answer