Practice Test

Q1) Preference shares can be redeemed Show Answer

Q2) To the extent preference shares have been redeemed out of profits, amount equal to the face value of preference shares redeemed should be transferred to Show Answer

Q3) X Co. Ltd. has to redeem 1,000 preference shares of Rs.100 each at 10 per cent premium. It issues 5,000 equity shares of Rs.10 each at 10% premium General Reserve amount transferred to capital redemption reserve will be. Show Answer

Q4) A company cannot issue redeemable preference shares for a period exceeding Show Answer

Q5) A company can redeem preference shares Show Answer

Q6) A company can issue redeemable preference shares Show Answer

Q7) 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 will be Show Answer

Q8) Light Ltd. has 10,000 5% preference shares of Rs.10 each to be redeemed after 5 years. The company forfeited 500 preference shares on which final call of Rs.2 has not been received after due notice and cancelled these shares on account of redemption. Remaining shares were redeemed out of reserves of the company. The amount to be credited to capital redemption reserve will be Show Answer

Q9) Indigo Ltd. had 9000, 10% redeemable preference shares of Rs.10 each, fully paid up. The company decided to redeem these preference shares at par by the issue of sufficient number of equity shares of Rs.10 each fully paid up at par. The number of equity shares issued should be : Show Answer

Q10) Ankush Ltd. had issued 10,000, 10% Redeemable Preference Shares of Rs.100 each, fully paid up. The company decided to redeem these preference shares at par, by issue of sufficient number of Equity Shares. Amount to be transferred to capital redemption reserve account will be Show Answer

Q11) Which of the following statements is NOT TRUE with regard to redemption of Preference shares Show Answer

Q12) When Redeemable Preference share are due for redemption,the entry passed is Show Answer

Q13) Which of the following cannot be utilized for the redemption of preference shares of a company Show Answer

Q14) Which of the following statements is false Show Answer

Q15) The company has 2,500, 11% redeemable preference shares of Rs.100 each. These shares were due to be redeemed at a premium of 10%. The company has the following profits. Profit prior to incorporation Rs.40,000Capital Reserve Rs.40,000 Share Premium Rs.20,000General Reserve Rs.85,000Profit and Loss Account Rs.80,000As the divisible profits are inadequate, the company issued the sufficient number of equity share of Rs.10 each at par. What were the numbers of shares issued ? Show Answer

Q16) A Ltd. Company has to redeem Redeemable Preference Shares of the value of Rs.1,00,000 for which the company has issued 3,000 equity shares of Rs.10 each at a premium of 10%. The amount to be transferred to Capital Redemption Reserve Account will : Show Answer

Q17) From which of the following accounts can transfer be made to capital redemption reserve on redemption of preference shares ? Show Answer

Q18) The term 'Divisible Profits' means Show Answer

Q19) A company has issued 20,000 equity shares of Rs.10 each, at a premium of 10%, to redeem 30,000 preference shares of Rs.10 each. The amount to be transferred to Capital Redemption Reserve is Show Answer

Q20) ______ paid preference shares cannot be redeemed. Show Answer

Q21) Redeemable preference shares can be redeemed out of ______ profits of the company. Show Answer

Q22) If some shareholders cannot be paid because they cannot be traced etc., the credit balance in the preference shareholders account indicating such unpaid balance should be shown under _______ in the Balance Sheet. Show Answer

Q23) If Redeemable preference shares are redeemed at a premium, the premium must be provided for out of the company's _____ account; or out of the profits of the company. Show Answer

Q24) When Redeemable preference shares are redeemed out of divisible profits of the company, an amount equal to the nominal value of the share redeemed must be transferred from the divisible profits to the _____ Account. Show Answer

Q25) Redemption of pref. share. is not taken to mean reduction of_______ capital of the company. Show Answer

Q26) Pref. shares, on which calls are in arrears, should be _______for the purpose of redemption. Show Answer

Q27) Workmen's Compensation Fund balance ___ divisible profit available for redemption of pref. share. Show Answer

Q28) Shares Forfeited Account balance _____ divisible profit available for redemption of pref. shares Show Answer

Q29) Investment Fluctuation Reserve balance _____ divisible profit available for redemption of pref. shares. Show Answer

Q30) Revaluation Reserve balance _____ divisible profit available for redemption of pref. shares. Show Answer

Q31) Deb. Redemption Reserve balance ___ divisible profit available for redemption of pref. sh. Show Answer

Q32) Preference shares redeemable within ____ years can be issued. Show Answer

Q33) Capital redemption reserve may be used for issuing ___ shares. Show Answer

Q34) Where a company redeems preference shares from out of profits it is necessary for the company to transfer the nominal value of shares redeemed to a ___. Show Answer

Q35) A company may issue redeemable preference shares if so authorized by its _____. Show Answer

Q36) Premium payable on redemption of redeemable preference shares must be debited against divisible profits only. Show Answer

Q37) Capital redemption reserve account can be utilized for writing off miscellaneous expenditure and losses. Show Answer

Q38) To the extent redemption of preference shares takes place from out of profits an equal amount should be transferred to General Reserve. Show Answer

Q39) Transfer to capital redemption reserve account on redemption of preference shares can be made from Security premium account. Show Answer

Q40) Capital redemption reserve account cannot be used for declaring bonus for making partly paid shares fully paid. Show Answer

Q41) Partly paid pref. shares cannot be redeemed. Show Answer

Q42) Capital Redemption Reserve amount can be utilized for writing off preliminary expenses. Show Answer

Q43) On redemption of pref. shares out of profits, a sum equal to the nominal value of shares so redeemed should be transferred from the profit & loss A/c to the general reserve. Show Answer

Q44) Redemption of pref. shares shall be taken as reduction of company's authorised share capital. Show Answer

Q45) Premium on redemption of pref. shares can be met out of securities premium account. Show Answer

Q46) Redeemable pref. shares can be issued if authorized by the Articles of Association of the company. Show Answer

Q47) Redeemable pref. shares can be redeemed only out of the profits of the company. Show Answer

Q48) Dividend equalization reserve can be used as divisible profits while redeeming preferenceshares. . Show Answer

Q49) Which of the following is false ? Show Answer

Q50) 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 reference shares ,the amount to be transferred by the company to the capital redemption reserve account Show Answer

Q51) During the year 2000-01,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 2005-06,as the company did not have sufficient cash resources to redeem the preference shares, it issued 10,000,14% debenture of Rs.10 each at a premium of 10% .At the time of redemption of 12% preference shares, the amount to be transferred to the capital redemption reserve=? Show Answer

Q52) According to section 78 of the Companies Act, the amount in the securities premium account cannot be used for the purpose of Show Answer

Q53) Which of the following can be utilized for redemption of preference shares ? Show Answer

Q54) Which of the following can be utilized for redemption of preference shares ? Show Answer

Q55) Which of the following can be transferred to the capital redemption reserve account ? Show Answer

Q56) A company cannot issue redeemable preference shares for a period exceeding Show Answer

Q57) Share premium cannot be used to Show Answer

Q58) Which of the following is false ? Show Answer

Q59) On September 4,2005,the company issued 12,000 7% Debenture having face value of Rs.100 each at a discount of 2.5%.On September 12,2005,the company issued 25,000 8% Preference shares of Rs.100 each. On September 29,2005,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 transaction the Bank, balance of on September 30,2005 =? Show Answer

Q60) O ltd had redeemed its 12% preference shares of Rs.2,00,000 at a premium of 4 % .For the purpose of redemption ,they .issued 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 = ? Show Answer

Q61) 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 = ? Show Answer

Q62) Which of the following cannot be used for the purpose of creation of capital redemption reserve account Show Answer

Q63) which company can issue redeemable preference shares Show Answer

Q64) a company cannot issue Show Answer

Q65) a company cannot issue any preference shares which is redeemable after the expiry of a period of___years Show Answer

Q66) preference shares can be redeem only if these are Show Answer

Q67) preference shares can be redeem out of Show Answer

Q68) which does not form a part of divisible profit Show Answer

Q69) the premium ,if any payable on redemption must be provided for out of Show Answer

Q70) where redeemable preference shares are redeemed out of the divisible profits , an amount equivalents to the nominal value of the share so redeemed must be transferred out of divisible profits to Show Answer

Q71) a transfer to capital redemption reserve is required u/s 80 when preference shares are redeemed Show Answer

Q72) when preference shares are redmeed out of divisible profit ,which amount is transferred to capital redemption reserve u/s 80 : Show Answer

Q73) when preference shares are redmeed out of divisible profit ,a transfer to capital redemption reserve can be made out of: Show Answer

Q74) which of the following account can be transferred to capital redemption reserve account Show Answer

Q75) which of the following cannot be used for the purpose of creation of capital redemption reserve account ? Show Answer

Q76) the capital redemption reserve account may be applied by the company Show Answer

Q77) redemption of preference shares Show Answer

Q78) issue of new shares u/s 80 Show Answer

Q79) which of the following statement is false ? Show Answer

Q80) which of the following statement is false ? Show Answer

Q81) 1,00,000 equity shares of Rs.10 each are issued at premium of 10% to redeem the preference shares ,the proceeds of a fresh issue u/s80 is Show Answer

Q82) 1,00,000 equity shares of Rs.10 each are issued at discount of 10% to redeem the preference shares ,the proceeds of a fresh issue u/s80 is Show Answer

Q83) to redeem 15% preference shares Rs.1,00,000 at 5% premium,Rs.10,000 , 12% debentures of Rs.100 each are issued at a discount of 10 % .the amount to be transferred to capital redemption reserve is Show Answer

Q84) to redeem 15% preference shares Rs.1,00,000 at 5% premium,Rs.10,000 , 12% pref.shares of Rs.100 each are issued at a discount of 10 % .the amount to be transferred to capital redemption reserve is Show Answer

Q85) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.75,000 & a securities premium of Rs.4,000 .if it is decided to redeem pref.shares out of divisible profits ,the amount required to be transferred to capital redemption reserve account Show Answer

Q86) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.75,000 & a securities premium of Rs.4,000 .it is decided to issue 650,15% debentures of Rs.100 each for the purpose of redemption pref.shares,the amount required to be transferred to capital redemption reserve account Show Answer

Q87) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.70,000 & a securities premium of Rs.4,000 .it is decided to issue 6500,equity shares of Rs.10 each at a premium of 5% for the purpose redemption pref.shares, the amount required to be transferred to capital redemption reserve account Show Answer

Q88) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.70,000 & a securities premium of Rs.4,000 .it is decided to issue 1,950,equity shares of Rs.10 each at a premium of 30 % for the purpose redemption pref.shares, the amount required to be transferred to capital redemption reserve account Show Answer

Q89) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.70,000 & a securities premium of Rs.4,000 .it is decided to issue 2000,equity shares of Rs.10 each at a premium of 25 % for the purpose redemption pref.shares, the amount required to be transferred to capital redemption reserve account Show Answer

Q90) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.70,000 & a securities premium of Rs.4,000 .it is decided to issue 3125,equity shares of Rs.10 each at par for the purpose redemption pref.shares, the amount required to be transferred to capital redemption reserve account Show Answer

Q91) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.70,000 & a securities premium of Rs.4,000 .it is decided to issue 2500,equity shares of Rs.10 each at par for the purpose redemption pref.shares, the amount required to be transferred to capital redemption reserve account Show Answer

Q92) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.45,500 & a securities premium of Rs.1,000 .if new equity shares are issued at 30% premium the minimum number of equity share of Rs.10 each to be issued for the purpose of redemption is Show Answer

Q93) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.45,500 & a securities premium of Rs.1,000 .if new equity shares are issued at 25% premium the minimum number of equity share of Rs.10 each to be issued for the purpose of redemption is Show Answer

Q94) X ltd decided to redeem 650 , 15% Red .pref.shares of Rs.100 each at a premium of 10% .it has a general reserve of Rs.45,500 & a securities premium of Rs.1,000 .if new equity shares are issued at par the minimum number of equity share of Rs.10 each to be issued for the purpose of redemption is Show Answer