Corporate Accounting MCQs
Multiple Choice Questions and Answers
In this page, you will get Corporate Accounting
MCQs asked in B. Com and Various Professional Exams Like CA/CMA and CS.
We update this page frequently to add new questions. Chapter wise Corporate Accounting MCQs are also included in this post.
Introduction to Corporate Accounting
Corporate Accounting is a branch of accounting which is mainly concerned with the preparation of financial statements of Companies.
Corporate accounting include final accounts of companies, Amalgamation and external reconstruction, Internal reconstruction, Accounts of Holding companies and chapters relating to Shares and Debentures.
Company accounting multiple choice questions and answers (MCQs)
Choose the correct answer to the following
questions from the given alternatives:
1) Share allotment Account is
a) Personal.
b) Real.
c) Nominal.
Ans: a) Personal.
2) Public Ltd companies cannot issue
a) Sweet Equity Shares.
b) Deferred Shares.
c) Preference shares.
Ans: b) Deferred
Shares.
3) Capital Redemption Reserve is used
a) For writing of Capital losses.
b) For issuing partly paid bonus share.
c) For issuing fully paid bonus share.
Ans: c) For issuing
fully paid bonus share.
4) Debenture Holders are the
a) Owner of the company.
b) Members of the company.
c) Creditors of the company.
Ans: c) Creditors of
the company.
5) Call-in-arrear is shown
a) Under the head current liabilities.
b) By deducting from the called up
capital.
c) Under the head current liabilities.
Ans: b) By deducting
from the called up capital.
6) Internal reconstruction means
a) Amalgamation in nature of merger.
b) Absorption.
c) Capital Reduction.
Ans: c) Capital
Reduction.
7) Post-acquisition Profit is
a) Capital Profit.
b) Revenue Profit.
c) Super Profit.
Ans: b) Revenue Profit.
8) Pre-acquisition profit is
a) Capital Profit.
b) Revenue Profit.
c) Super Profit.
Ans: a) Capital Profit.
9) The maximum allowable discount on Equity shares is
a) 10%.
b) 8%.
c) 5%.
Ans: a) 10%.
10) Dividend is usually paid on
a) Called-up-capital.
b) Nominal capital.
c) Paid-up-capital.
Ans: c)
Paid-up-capital.
11) As per the SEBI’s guidelines the minimum application money shall not
be less than
a) 25% of issue price.
b) 10% of the issue price.
c) 6% of the issue price.
Ans: a) 25% of issue
price.
12) Consolidated Financial Statements are prepared as per Accounting
Standard
a) 19.
b) 21.
c) 23.
Ans: b) 21.
13) Capital Redemption Reserve Account can be Utilized for
a) Writing off past losses.
b) Writing off capital losses.
c) Issuing fully paid bonus shares.
Ans: c) Issuing fully
paid bonus shares.
14) A company ________ its own debentures
a) Can re-buy.
b) Cannot re-buy.
c) Can partly buy.
Ans: a) Can re-buy.
15) Under sections 61 of the Companies Act, 2013, company shall given
notice of the alteration of its share capital to the financial
health of business.
a) 15.
b) 2.
c) 30.
Ans: c) 30.
16) No call on the share shall exceed
a) 1/4th of the nominal
value.
b) 1/5th of the nominal
value.
c) None of the above.
Ans: a) 1/4th of
the nominal value.
17) Debentures which are transferable by mere delivery are
a) Registered Debentures.
b) Naked Debentures.
c) None of the above.
Ans: c) None of the
above.
18) Investment in Subsidiary Company should be accounted for in
accordance with
a) As-13.
b) As-21.
c) None of these.
Ans: b) As-21.
19) Goodwill arising on amalgamation is to be amortised:
a) Within 5 years.
b) Within 5 years unless a longer
period is justified.
c) None of these.
Ans: b) Within 5 years
unless a longer period is justified.
20) The credit balance of profit & Loss appropriation account in
case of company is to be transferred to
a) Capital Account.
b) Current Account.
c) None of these.
Ans: c) None of these.
21) Called up capital includes
a) Discount of issue of shares.
b) Securities premium.
c) None of these.
Ans: c) None of these.
22) Redeemable preference shares are redeemable
a) Within 20 years.
b) Within 7 years.
c) None of above.
Ans: a) Within 20
years.
23) Dividend declared in General Meeting
a) Can exceed the amount recommended by
the board.
b) Cannot exceed the amount recommended
by the board.
c) None of the above.
Ans: b) Cannot exceed
the amount recommended by the board.
24) When two or more companies are liquidated and a new company is
formed, it is called (AMALGAMATION)
a) Absorption.
b) External Re-construction.
c) Internal Re-construction.
d) None of above.
Ans: d) None of above.
25) Sinking Funds is shown in the Balance Sheet under the heading
a) Reserve and surplus.
b) Securities Loan.
c) None of the above.
Ans: a) Reserve and
surplus.
Also Read: Corporate Accounting MCQs Chapterwise
Issue and Redemption of Debentures
Redemption of Preference Shares
26) As per Income tax Act, Preliminary Expenses may be written off
a) Over 5 years.
b) Over 10 years.
c) None of the above.
Ans: a) Over 5 years.
27) The provision for minimum subscription of 90% will not apply when
shares are
a) Offered to public.
b) Sold through private placement.
c) Issue as right share.
Ans: b) Sold through
private placement.
28) Pricing of public issue is determined by
a) The SEBI.
b) The company consultation with stock
exchange and SEBI.
c) The company consultation with legal
manager.
Ans: b) The company
consultation with stock exchange and SEBI.
29) Proceeds in connection with issue of shares at discount would mean
a) Only the net amount received.
b) Face value of share issued.
c) None of the above.
Ans: a) Only the net
amount received.
30) Proceeds in connection with issue of shares at a premium would mean
a) Only the net amount received.
b) Face value of share issued.
c) None of the above.
Ans: b) Face value of
share issued.
31) A trust shall be executed by the issuer company in favour of the
debenture trustees within
a) Six month of the closure of the
issue.
b) Twelve month of the closure of the
issue.
c) Six month from the date of issue.
Ans: a) Six month of
the closure of the issue.
32) Under polling of interest method, all cost associated with
amalgamation are:
a) Capitalised.
b) Expenses as incurred.
c) None of the above.
Ans: b) Expenses as
incurred.
33) The company must pass
a) A member’s resolution to reduce the
share capital.
b) An ordinary resolution to reduce the
share capital.
c) A special resolution to reduce the
share capital.
Ans: c) A special
resolution to reduce the share capital.
34) Corporate Dividend Tax will be shown in the P/L account as
a) A charge against profit.
b) An appropriation of profit.
c) None of the above.
Ans: b) An
appropriation of profit.
35) Premium on redemption of debenture account is:
a) A real Account.
b) A nominal Account.
c) A personal Account.
Ans: b) A nominal
Account.
36) When Share are issued to promoters for the services offered by them,
it is debited to
a) Preliminary Exp. Account.
b) Goodwill account.
c) Share Capital Account.
Ans: b) Goodwill
account.
37) The excess price received over the Par Value of Shares should be
credited to
a) Call-in Advance Account.
b) Reserve Capital account.
c) Securities premium Account.
Ans: c) Securities
premium Account.
38) A fixed charge generally covers all the
a) Fixed assets of the company
including future one.
b) Current assets of the company
including future one.
c) Specific assets of the company.
Ans: c) Specific assets
of the company.
39) A floating charge generally covers all the
a) Fixed assets of the company
including future one.
b) Current assets of the company
including future one.
c) All assets of the company
including future one.
Ans: c) All assets
of the company including future one.
40) The different between Purchase consideration and Share Capital of
the transferor company is adjusted again:
a) Realisation Account.
b) Reserve Account.
c) Goodwill account.
Ans: c) Goodwill
account.
41) The ‘financial year’ of the Company may be less or more than a
Calendar year but it shall not exceed:
a) Twelve months.
b) Eighteen months.
c) Fifteen months.
Ans: c) Fifteen months.
42) A share represents
a) An interest in the company.
b) Assets of the company.
c) Liabilities of the company.
Ans: a) An interest in
the company.
43) Minority interest is calculated at the date of
a) Consolidated Balance Sheet.
b) Taking control of Subsidiary Company.
c) Closure of accounting year.
Ans: a) Consolidated
Balance Sheet.
44) Interest on calls in arrear should not exceed
a) 10%.
b) 6%.
c) 7%.
Ans: a) 10%.
45) A company can issue shares at a discount under Section
a) 77.
b) 78.
c) 53.
Ans: c) 53.
46) A company can issue shares at a discount under Section
a) 77.
b) 52.
c) 79.
Ans: b) 52.
47) Profit on re-issue of forfeited shares is transferred to:
a) Revenue reserve.
b) General reserve.
c) Capital Reserve.
Ans: c) Capital
Reserve.
48) Account for amalgamation is associated with Accounting standard:
a) 14.
b) 15.
c) 16.
Ans: a) 14.
49) Preference shareholder are
a) Creditors of a company.
b) owner of the company.
c) customers of the company.
Ans: b) owner of the
company.
50) Debentures and shares are show in the Balance sheet at
a) Face value.
b) Discount.
c) Premium.
Ans: a) Face value.
Company accounting multiple choice questions and answers (MCQs)
Fill in the Blanks:
a) Share application and allotment
account is a personal Account.
b) Dividend declared between two annual
general meetings is known as Interim
Dividend.
c) Reduction of capital is unlawful
except when sanctioned by the
court under sec.61.
d) Pre-acquisition Profits are treated
as capital Profit.
e) The minimum Share Application money
is 5% of the face value of
shares.
f) Accounting for Amalgamation is done
as per Accounting Standard 14.
g) Consolidated Financial Statements
are prepared as per Accounting Standard 21.
h) The portion of the authorized
capital which can be called up only on the liquidation of the company is
called Reserve capital.
i) A debenture holder is the creditor of a company.
j) Section 2(87) of the Companies Act, 2013 defines a
subsidiary company.
k) Public Ltd. Companies cannot
issue deferred shares.
(Equity/Preference/Deferred).
l) Preference Shares can be redeemed if
they are fully paid up.
m) In case of holding company shares
held by outsiders are known as Minority
Interest.
n) Internal reconstruction
means reduction of a share capital of a company which is to be reconstructed.
o) If
shares are forfeited, share capital account is debited with the amount of called up
value of shares.
p) Reserve capital is a part of authorised capital.
q) A company can declare and distribute
dividend even if its Memorandum and Articles are silent.
r) Reduction of share capital is unlawful except when
sanctioned by the court.
s) Profit of the subsidiary company made
after the date of the purchase of shares by the holding company is treated
as revenue profits.
t) Public Ltd. Companies cannot
issue deferred shares.
u) Assets of the company cannot be
mortgaged in favour of Shareholders.
v) Companies have a statutory
obligation to prepare Final Accounts as required by Section 129 of the Companies Act,
2013.
w) A wholly owned subsidiary company is
one in which all the shares with voting rights of subsidiary company are owned by the holding company.
Company accounting multiple choice questions and answers (MCQs)
State the following statements whether ‘true’ or
‘false’
1) External Reconstruction means
reduction of share capital of a company which is to be
reconstructed. False
2) Consolidated Financial Statements
are prepared as per Accounting Standard 21. True
3) Out of the face value of the share
at the least 10% is payable with application. False
4) Debenture holders with be entitled
on their debentures interest even if there is loss to a
company. True
5) Minority interest= Paid-up value of
shares held by outsider. False
6) The director of the company must be
a shareholder. False as per Companies Act, 2013
7) Capital reserve is utilised to meet
capital losses. True
8) Pre-acquisition profits are treated
as revenue profit. False
9) Preference share cannot be redeemed
unless they are fully paid up. True
10) For amalgamation, two or more
companies are required to amalgamate themselves. True
11) Profits made by subsidiary company
after the date of acquisition of shares by the holding company are treated as
revenue profits. True
12) A debenture holder is an owner of
the company. False
13) Under net payment method purchase
consideration is calculated by adding the various payments made by the purchasing
company. False
14) Loss on issue of Debenture Account
or debenture discount is a capital loss, not
asset. True
15) Reduction of Capital is an unlawful
except when sanctioned by the Court. True
16) Bonus shares can be issued to the
existing members only. True
17) Dividends cannot be declared except
out of
profits. True
18) Payments made to debentures holders
should be considered as part of purchase consideration. False
19) In a wholly owned subsidiary, there
is no minority interest because all the shares with voting rights are held be
the subsidiary
company. True
20) Under the Income-tax Act, 1961,
companies are required to pay advance tax on their expected
profits. True
21) Any reduction of capital reduces
the security of the creditors. False
22) Section 2(67) of the Companies Act,
2013 defines a subsidiary company. False, 2(87)
23) Interest on Sinking Fund Investment
Account is credited to Profit and Loss
Account. False, Sinking Fund A/c
24) A holding company is one that holds
the whole of the share capital of another company. False
25) Buy-back of shares can also be made
out of the proceeds of the earlier issues of the same kind of shares. False
26) Marked applications are those
applications which bear the stamp of an underwriter. True
27) In order to spread the risk of
under-subscription, the principal underwriters may enter into subsidiary
agreements with sub-leases. False
28) When debentures are issued at
discount, it is prudent to write off the loss during the life of
debentures. True
29) Transfer to Capital redemption
reserve account is not allowed from Dividend Equalization Fund. False
30) Operating Lease is a lease which
transfers substantially all the risks and rewards incidental to
ownership. False
31) Any surplus cash may be utilized by
the company for buy-back and avoid the payment of dividend tax. True
32) The profit on forfeiture and
re-issue of equity shares are credited to Capital Redemption Reserve. False
33) As per Companies Act 2013,
companies are not permitted to buy back their own shares out of securities
premium. False
34) In case the leaseback is a finance
lease, the sale proceeds in excess of the carrying amount should be immediately
recognized in the Income Statement. False
35) Issue of fully paid up bonus shares
increases the total shareholders fund. False
36) Interest and dividend received form
a part of financing cash flow. False
37) Exchange difference arising in
respect of monetary items is to be recognized as income or expenditure during
the year. True
38) Capital Reserve is a Reserve which
is available for distribution as Dividend. False
39) Interest received by a finance
company is a part of cash flow from investing activities. False
40) Interest accrued and due should be
shown under the head Other Current Liabilities in a Balance Sheet of a
Company. True
41) Bonus is the share of profit which
is payable by the insurance company to the policyholders. True
42) Interest on loan is included in
‘other operating expenses’ under the Statement of Profit and Loss. False
43) In case of an underwriting
arrangement, marked applications are those applications that bear the stamp of
the issuing company. False
44) Machinery purchased by issuing shares is shown under Cash Flow from Investments Activities in Cash Flow Statement. False
Multiple Choice Questions and Answers (MCQs) | ||
Financial Accounting | Corporate Accounting |
|
Hire Purchase and Installment System | Issue and Redemption of Debentures |
|
Management Accounting | Chapter Wise MCQs |
|