Company Accounts​

What is the minimum number of members required to form a private company?
a) 1
b) 2
c) 7
d) 10
Answer: b) 2

What is the minimum number of members required to form a public company?
a) 2
b) 7
c) 10
d) 50
Answer: b) 7

Which document contains the fundamental rules of a company?
a) Prospectus
b) Articles of Association
c) Memorandum of Association
d) Share Certificate
Answer: c) Memorandum of Association

What does the Articles of Association specify?
a) The company’s objects
b) Internal management rules
c) Shareholders’ names
d) Company’s capital structure
Answer: b) Internal management rules

What is called when a company issues shares to the public for the first time?
a) Bonus Issue
b) Rights Issue
c) Initial Public Offering (IPO)
d) Buyback
Answer: c) Initial Public Offering (IPO)

What type of share has no voting rights but gets fixed dividends?
a) Equity shares
b) Preference shares
c) Bonus shares
d) Sweat equity shares
Answer: b) Preference shares

Which account is credited when shares are issued at a premium?
a) Share Capital Account
b) Securities Premium Account
c) Profit & Loss Account
d) Capital Reserve Account
Answer: b) Securities Premium Account

What is ‘Calls in Arrears’?
a) Calls not yet made by the company
b) Calls made but unpaid by shareholders
c) Calls refunded by the company
d) Calls adjusted against dividend
Answer: b) Calls made but unpaid by shareholders

What is the maximum number of directors in a public company as per Companies Act, 2013?
a) 10
b) 15
c) 20
d) No maximum limit
Answer: b) 15

What is the term for shares issued free of cost to existing shareholders?
a) Bonus shares
b) Rights shares
c) Sweat equity shares
d) Preference shares
Answer: a) Bonus shares

In which account is the company’s share capital recorded?
a) Share Capital Account
b) Securities Premium Account
c) General Reserve
d) Capital Redemption Reserve
Answer: a) Share Capital Account

Which of the following is NOT a source of company’s capital?
a) Equity shares
b) Preference shares
c) Debentures
d) Profit & Loss Account
Answer: d) Profit & Loss Account

What is the accounting treatment for ‘Forfeiture of shares’?
a) Debit Share Capital, Credit Calls in arrears
b) Debit Calls in arrears, Credit Share Capital
c) Debit Share Capital, Credit Forfeiture Account
d) Debit Forfeiture Account, Credit Share Capital
Answer: c) Debit Share Capital, Credit Forfeiture Account

Which account is debited when shares are forfeited?
a) Share Capital Account
b) Calls in arrears Account
c) Forfeiture Account
d) Securities Premium Account
Answer: a) Share Capital Account

What is ‘Buyback of shares’?
a) Issuing new shares
b) Company purchasing its own shares
c) Selling shares to public
d) Transfer of shares between shareholders
Answer: b) Company purchasing its own shares

Which of the following is a liability for the company?
a) Equity shares
b) Preference shares
c) Debentures
d) Bonus shares
Answer: c) Debentures

What is the face value of a share?
a) Market price
b) Par value stated in the share certificate
c) Issue price
d) Dividend declared
Answer: b) Par value stated in the share certificate

When shares are issued at a discount, the discount is debited to which account?
a) Share Capital Account
b) Securities Premium Account
c) Discount on Issue of Shares Account
d) Profit & Loss Account
Answer: c) Discount on Issue of Shares Account

What is a ‘Rights Issue’?
a) Issue of shares to general public
b) Issue of shares to existing shareholders at a discount
c) Issue of shares as bonus
d) Issue of shares for cash
Answer: b) Issue of shares to existing shareholders at a discount

What is ‘Sweat Equity Shares’?
a) Shares issued to promoters for services rendered
b) Shares issued for cash
c) Shares bought back by company
d) Shares issued to the public
Answer: a) Shares issued to promoters for services rendered

What is the minimum paid-up capital for a public company?
a) ₹1 lakh
b) ₹5 lakh
c) ₹10 lakh
d) No minimum limit
Answer: b) ₹5 lakh

Which account records calls received but not yet paid?
a) Calls in arrears
b) Calls in advance
c) Calls received
d) Calls payable
Answer: b) Calls in advance

What happens when shares are reissued after forfeiture?
a) Share Capital is debited
b) Share Forfeiture Account is credited
c) Securities Premium is debited
d) Calls in arrears is credited
Answer: b) Share Forfeiture Account is credited

Which of the following is NOT a type of shares?
a) Equity shares
b) Preference shares
c) Debentures
d) Sweat equity shares
Answer: c) Debentures

What is the journal entry when shares are issued at par?
a) Bank A/c Dr. To Share Capital A/c
b) Share Capital A/c Dr. To Bank A/c
c) Bank A/c Dr. To Securities Premium A/c
d) Share Capital A/c Dr. To Calls in arrears
Answer: a) Bank A/c Dr. To Share Capital A/c

Which account shows the amount due from shareholders on shares issued?
a) Share Capital Account
b) Calls in arrears
c) Calls in advance
d) Calls received
Answer: b) Calls in arrears

What is the maximum amount of share capital a company can issue called?
a) Authorized Capital
b) Issued Capital
c) Subscribed Capital
d) Paid-up Capital
Answer: a) Authorized Capital

Which capital is actually received by the company?
a) Authorized Capital
b) Issued Capital
c) Subscribed Capital
d) Paid-up Capital
Answer: d) Paid-up Capital

What is a ‘Prospectus’?
a) Document describing company’s rules
b) Invitation to public to subscribe shares
c) Internal manual of company
d) Certificate of shares
Answer: b) Invitation to public to subscribe shares

Which account is credited when shares are forfeited?
a) Share Capital Account
b) Calls in arrears
c) Share Forfeiture Account
d) Securities Premium Account
Answer: c) Share Forfeiture Account

What is the maximum number of members allowed in a private company?
a) 7
b) 10
c) 50
d) 100
Answer: c) 50

What type of company can invite public to subscribe shares?
a) Private company
b) Public company
c) Partnership
d) Sole proprietorship
Answer: b) Public company

Which capital represents shares issued to public?
a) Authorized Capital
b) Issued Capital
c) Subscribed Capital
d) Paid-up Capital
Answer: c) Subscribed Capital

Which document is required to register a company?
a) Memorandum of Association
b) Articles of Association
c) Prospectus
d) Both a and b
Answer: d) Both a and b

Which of the following is NOT true about preference shares?
a) Fixed dividend
b) Preference in repayment
c) Voting rights
d) Priority over equity shares
Answer: c) Voting rights

What happens when shares are issued for consideration other than cash?
a) Cash Account is debited
b) Assets Account is debited
c) Share Capital Account is credited
d) Both b and c
Answer: d) Both b and c

What is the face value of shares also known as?
a) Market value
b) Par value
c) Issue price
d) Book value
Answer: b) Par value

Which of the following is NOT a feature of a company?
a) Separate legal entity
b) Limited liability
c) Unlimited liability
d) Perpetual succession
Answer: c) Unlimited liability

What is the meaning of ‘Calls in advance’?
a) Calls made but unpaid
b) Calls received before due date
c) Calls canceled
d) Calls forfeited
Answer: b) Calls received before due date

Which account is debited on share buyback?
a) Share Capital Account
b) Securities Premium Account
c) General Reserve Account
d) Bank Account
Answer: a) Share Capital Account

What is the maximum time allowed for a company to pay call money?
a) 15 days
b) 30 days
c) As per Articles of Association
d) No fixed time
Answer: c) As per Articles of Association

What is the journal entry for calls in arrears?
a) Calls in arrears Dr. To Share Capital
b) Share Capital Dr. To Calls in arrears
c) Calls in arrears Dr. To Bank
d) Bank Dr. To Calls in arrears
Answer: a) Calls in arrears Dr. To Share Capital

What is the maximum number of directors in a private company?
a) 10
b) 15
c) 20
d) No limit
Answer: a) 10

Which document acts as proof of ownership of shares?
a) Share Certificate
b) Share Application
c) Memorandum of Association
d) Prospectus
Answer: a) Share Certificate

What is the treatment of calls received in advance?
a) Credit Share Capital
b) Credit Calls in Advance
c) Debit Calls in Advance
d) Debit Share Capital
Answer: b) Credit Calls in Advance

What is the difference between authorized capital and issued capital called?
a) Unsubscribed capital
b) Paid-up capital
c) Subscribed capital
d) Calls in arrears
Answer: a) Unsubscribed capital

Which of the following is a long-term liability?
a) Equity shares
b) Debentures
c) Calls in arrears
d) Share application money
Answer: b) Debentures

What is ‘Forfeiture of shares’?
a) Refund of share money
b) Canceling shares for non-payment
c) Issue of bonus shares
d) Transfer of shares
Answer: b) Canceling shares for non-payment

When shares are issued at par, the amount received is equal to:
a) Face value
b) Market value
c) Premium value
d) Discount value
Answer: a) Face value

Which account shows the premium received on shares?
a) Securities Premium Account
b) Share Capital Account
c) Capital Reserve Account
d) Profit & Loss Account
Answer: a) Securities Premium Account