Higher Financial Accounting
(HFA)
MCQs
1. Generally, depreciation on fixed assets should be divided between pre and post incorporation periods in _______.
(a) Sales ratio
(b) Time ratio
(c) Post incorporation
(d) Pre incorporation
2. Bad debts should be divided between pre and post incorporation period in _______.
(a) Sales ratio
(b) Time ratio
(c) Post
(d) Equal ratio
3. Director's fees is Rs. 30,000. Time ratio 1:2. Sales ratio 1:3. Compute the amount apportioned in pre incorporation period.
(a) Rs. 10,000
(b) Rs. 7,500
(c) Nil
(d) Rs. 30,000
4. The issue of shares is said to be at premium, if the issue price of a share is _______ the fixed value/par value of a share.
(a) less than
(b) equal to
(c) more than
(d) all of these
5. ABC Ltd. is incorporated on 01/08/2017 to take over the running business of P & Co. from 01/04/2017. Financial year ended on 31/03/2018. Compute the Time ratio.
(a) 5 : 7
(b) 7 : 5
(c) 2 : 1
(d) 1 : 2
6. ______ means the number of shares offered for subscription is more than the number of shares subscribe by the public.
(a) Full subscription
(b) Under subscription
(c) Over subscription
(d) No subscription
7. If the vendors are issued fully paid shares of Rs. 1,00,000 in consideration of net assets of Rs. 1,80,000, the balance of Rs. 80,000 will be credited to
(a) Profit and loss a/c.,
(b) Goodwill a/c.
(c) Capital reserve A/c.,
(d) Capital Redemption Reserve
8. Which reserve is created at the time of redemption of preference shares?
(a) General Reserve
(b) Capital Reserve
(c) Capital Redemption Reserve
(d) Securities Premium
9. B Ltd forfeited 15,000 shares of Rs. 10 each, Rs. 8 called up, on which the shareholder had paid application money of Rs. 2 and allotment money of Rs. 3 per share. Of these, 12,000 shares were reissued as fully paid up for Rs. 8 per share. What is the amount to be transferred to Capital Reserve?
(a) Rs. 51,000
(b) Rs. 65,500
(c) Rs. 36,000
(d) None of these
10. A Ltd acquired a business. Assets acquired worth Rs. 15,00,000 and liabilities taken over amounted to Rs. 2,00,000. Purchase consideration payable by issue of 1,40,000 equity shares of Rs. 10 each at par. What amount will be transferred to Goodwill A/c?
(a) Rs. 1.40 Lakh
(b) Rs. 13 Lakh
(c) Rs. 12 Lakh
(d) Rs. 1 Lakh
11. In case of rights issue, offer document is called __________.
(a) Prospectus
(b) Letter of offer
(c) Acceptance
(d) Red Herring Prospects
12. ASBA stands for _________.
(a) Application Supported by Blocked Amount
(b) Amount Supported by Blocked
Account
(c) Account Supported by Blocked Amount
(d) None of these
13. Which of the following is not included in "Financial Statement"?
(a) Balance sheet
(b) Statement of Profit & Loss
(c) Cash flow statement
(d) Fund flow statement
14. Profit prior to incorporation is _________.
(a) Capital profit
(b) Goodwill
(c) Revenue Profit
(d) Distributable profit
15. Accounting for pre-incorporation profit is done considering ________ of business.
(a) Date of commencement
(b) Date of incorporation
(c) Date of acquisition
(d) None of these
16. _______ profit is available for dividends.
(a) Capital profit
(b) Capital reserve
(c) Revenue profit
(d) Securities premium
17. A share having a face value of Rs. 100 issued at par, called up Rs. 70, Forfeited on nonpayment of Rs. 30. On forfeiture, Share forfeiture account will be credited by amount of _______.
(a) Rs. 35
(b) Rs. 45
(c) Ra. 40
(d) Rs. 80
18. Portion of the uncalled capital which a company has decided to call only in case of liquidation of the company is called _______.
(a) Reserve capital
(b) Capital reserve
(c) Uncalled capital
(d) None of these
19. In case of determining profit between pre incorporation and post incorporation periods, preliminary expenses written off should be allocated on/in
(a) Time basis
(b) Sales basis
(c) Post incorporation period
(d) Pre incorporation period
20. Pre incorporation profit is transferred to _______.
(a) Capital reserve
(b) Capital redemption reserve
(c) General reserve
(d) None of these
21. Profit earned after incorporation is a _______.
(a) Capital profit
(b) Revenue Profit
(c) Both capital profit and revenue profit
(d) None of these
22. Generally, ________ basis is used to allocate items which are related to expiry of time such as rent, salaries etc. for determining pre-incorporation and post-incorporation profit/loss
(a) Sales
(b) Post incorporation period
(c) Time
(d) Actual
23. Which carries preferential rights as to payment of Dividend?
(a) Bonds
(b) Debentures
(c) Preference Shares
(d) Mutual Fund
24. Equity shares have ______.
(a) Voting Rights
(b) Fixed Dividend
(c) Fixed interest
(d) None of the above
25. ________ the document is registered with Registrar of Companies before the issue opens in case of a fixed price issue and after the closure of the issue in case of a book built issue.
(a) Application
(b) Books of Accounts
(c) Prospectus
(d) None of These
26. M Ltd. had issued share capital of Rs. 20,00,000 in Rs. 10 equity shares. It was decided that fully paid up bonus shares of Rs. 10 each be issued at the rate of ONE share for every FOUR existing shares. You are required to calculate numbers of bonus shares issued?
(a) 50,000 shares
(b) 5,00,000 shares
(c) 8,00,000 shares
(d) 80,000 shares
27. X Ltd. invited applications for 50,000 Equity shares of Rs. 10 each payable Rs. 3 per share on application, Rs. 4 per share on allotment and Rs. 3 per share on final call. The entire amount of share money is received in full with the exception of the allotment and final call money on 3,000 shares and these shares were forfeited. Calculate amount to be transferred to forfeiture account.
(a) Rs. 9,000
(b) Rs. 12,000
(c) Rs. 21,000
(d) None of These
28. The preference shares can be redeemed only when they are _________.
(a) Fully Paid Up
(b) Partly Paid Up
(c) Both fully paid up and partly paid up
(d) None of These
29. ______ section of The Companies Act 2013 deals with the sweat equity shares.
(a) Section 2
(b) Section 54
(c) Section 2(84)
(d) Section 52
30. Loss suffered from the date of acquisition of the business to the date of incorporation should be debited to _________.
(a) Goodwill A/c.,
(b) Capital Reserve A/c.,
(c) Profit & Loss A/c.,
(d) None of these
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