Equity shares - class-XI
Description: equity shares | |
Number of Questions: 31 | |
Created by: Gagan Singh | |
Tags: organisation of commerce and management sources of business finance business capital/finance sources of business finance - 2 financing sources of finance companies act, 2013 commerce commercial studies business studies |
The money raised by issue of equity shares is called ________ share capital.
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Equity
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Preference
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Bonus
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Right
The money raised by issue of equity shares is called equity share capital.Equity share represent the ownership of a company and thus thus the capital raised by equity shares are also known as ownership capital or ownership funds.
________ shares is the most important source of raising long term capital by a company.
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Equity
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Preference
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Bonus
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Right
Equity shares is the most important source of raising long term capital by a company.
Equity shares are suitable for investors who are willing to assume risk for ________ returns.
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Lower
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Higher
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Medium
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Equal
Equity shares represent the ownership of the company. Equity share holders do not get a fixed dividend but are paid on the basis of earnings by the company. They enjoy the rewards as well as bear the risks of theownership. Hence, Equity shares are suitable for investors who are willing to assume risk for higher returns.
Which of the following is a merit of equity shares?
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Equity capital provides credit worthiness to the company.
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Equity shares are suitable for investors who are willing to assume risk for higher returns.
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Equity capital serves as permanent capital.
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All of the above
Equity Share capital is also known as ownership capital or owner's funds. The merits of equity shares are, They provide credit worthiness to the company. Equity shares are suitable for investors who are willing to assume risks for higher returns, Equity capital serves as permanent capital.
The cost of equity shares is generally _______ as compared to the cost of raising funds through other sources.
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more
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less
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medium
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equal
Equity shares is the most important source of raising long term capital by a company. Equity shares represent the ownership of the a company and thus is known as owner's capital or owner's funds.
As equity capital stands last in the list of claims, it provides a cushion for __________.
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Debtors
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Creditors
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Owners
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Customers
Equity capital are permanent source of capital and can be only returned at the time of liquidation of the company. Thus equity capital stands last in the list of claims, it provides a cushion for creditors claims that needs to be settled at the time of liquidation.
Investors who need steady income may not prefer equity shares as they get ___________ returns.
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Fixed
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Fluctuating
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Higher
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Lower
Investors who need steady or fixed dividend from the capital invested may not prefer equity shares as they fluctuating returns on the basis of the earnings of the company and receive all the leftovers after all the other claims are delt with.
Equity capital serves as ____________ capital as it is to be repaid only at the time of liquidation of a company.
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Temporary
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Permanent
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Fluctuating
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Fixed
Equity share capital is the prerequisite before the creation of a company.
Equity shares represent the __________ of a company.
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Creditors
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Debtors
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Ownership
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Capital
Equity shares is the most important source of raising long term capital by a company.
If the rights of a particular class of share holders is to be changed then the company should call __________.
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shareholders meeting
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directors
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class meetings
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preference shareholder meeting
A company is an association of several persons. Decisions are made according to the view of the majority. Class meetings are meetings which are held by holders of a particular class of shares, e.g., preference shareholders. Such meetings are normally called when it is proposed to vary the rights of that particular class of shares.
For a guarantee company the liability of shareholder is ____________.
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amount of guarantee specified in memorandum
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amount of guarantee given on paper
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both A & B
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unlimited
A guarantee company is a type of corporation designed to protect members from liability. Guarantee companies often form when non-profit organizations wish to attain corporate status. For a guarantee company the liability of shareholder is amount of guarantee specified in the memorandum.
Equity share holders may receive ____ on their investment.
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interest
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dividend
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bonus
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(B) & (C)
Equity share holders are the owners of the company, equity shares are also known as owner's share capital or owner's fund. Equity share holders may receive dividend and/or bonus. The profits that the company earns after the repayment of creditors and other liabilities is received by the equity share holders.
The Rights Shares are allotted only to the existing ________ of the company.
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equity shareholders
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debenture shareholders
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deposit holders
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(B) & (C)
The Rights Shares are allotted only to the existing equity shareholders. of the company. The shareholders who existed from earlier have the right to subscribe there shares.
Which of the following section of the Companies Act, 2013 prohibits to issue of shares at discount?
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Section 53
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Section 54
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Section 55
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Section 56
Section 53 of the Companies Act, 2013 prohibits to issue of shares at discount. It means this section prevents the process of issuing shares at a less price than the actual price.
__________ have the right to vote on any resolution placed before the company or general meeting.
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Preference shareholder
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Equity shareholders
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Debenture holder
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All of the above
Equity shareholder is _________.
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entitled to dividend at a fixed rate
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not entitled to dividend at a fixed rate
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entitled to dividend of preference shareholder
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all of the above
Which of the following type of security can be issued at discount as per Companies Act, 2013?
(1) Equity Shares
(2) Sweat Equity Shares
(3) Preference Shares
(4) Debentures
(5) Bonds
Select the correct answer from the option given below :-
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(1) & (3) only
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(1) & (3) & (4) only
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(2), (4) & (5) only
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(3), (4) & (5) only
When shares are not payable in a lump sum, first instalment is called ___________.
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Application Money
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Allotment Money
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First Call Money
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Final Call Money
Shares forfeited account is to be shown in the balance sheet by way of ____________ to the paid up share capital on the liabilities side until the concerned shares are re-issued.
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Addition
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Deduction
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Both (A) & (B)
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Neither (A) nor (B)
Which of the following security can be forfeited for non-payment of allotment or call money?
(I) Equity Shares
(II) Equity Shares, Preference Shares
(III) Preference Shares, Equity Shares & Debentures
(IV) Debentures
Select the correct answer from the options given below :-
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(I) only
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(III) only
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(I) & (IV) only
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(II) only
If a company receives excess application money and the application money equal to shares issued transferred to Share Capital A/c and application money received on excess shares-some money is adjusted and against allotment and remaining was refunded, then which of the following entry is correct?
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Share Application A/c Dr.
Bank A/c Dr.
To Share Allotment A/c
To Share Capital A/c -
Share Application A/c Dr.
To share Allotment A/c Dr.
To Share Capital A/c
To Bank A/c -
Share Allotment A/c Dr.
Share CapitalA/c Dr.
To Bank A/c
To Share Application A/c -
None of the above
- Sometimes a company may receive applications for a large number of shares than offered to public by it for subscription and this situation is termed as over-subscription.
- Therefore, such surplus (applications received > offered to public) is to be adjusted.
- Generally, it is stated in the given question that surplus money received on applications will be adjusted either on:
a) Share
allotment only or
b) Share allotment and on subsequent calls
But if question does not specify treatment then it is to be adjusted against allotment and surplus money is refunded by cash or cheque.
- For example:-
Question- A Company invited for 30000 equity shares of ₹ 10 each, payable ₹ 2 on application,₹ 3 on allotment and balance on call. Total applications money received at ₹ 2 per share was ₹ 72000. Application money should be adjusted against allotment and excess money is to be refunded by bank.
Solution- Total application money received is ₹ 72000
Number of applications received = Total application money received ÷ Rate of application money
= ₹ 72000 ÷ ₹2 = 36000 shares
Number of shares to be issued = 30000 shares
Number of application is more than shares to be issued hence, it is over- subscription. As given in question, company decides to allot 30000 shares in full and refund the excess money received on application by bank for 6000 shares at ₹ 2 per share.
The forfeited shares may be re-issued:-
(I) At par only
(II) At par or premium only
(III) At par or at discount only
(IV) At or par at premium or at discount
The correct answer is :
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(II)
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(III)
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(I)
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(IV)
Balance of share forfeiture account remaining after reissue is transferred to ________________.
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Capital Reserve A/c
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Securities Premium A/c
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Revenue Reserve A/c
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Profit & Loss A/c
In case of oversubscription of shares each applicant receives the shares in some proportion, it is known as ____________.
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Bonus allotment
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Right allotment
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Per applicant allotment
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Pro rata allotment
_______may be said to be the compulsory termination of membership by way of penalty for non-payment of allotment and/or any call money.
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Surrender of shares
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Forfeiture of shares
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Transfer of shares
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Transmission of shares
Which of the following statement is false?
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Equity shares have a right to vote on every resolution of the company
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Preference shares cannot vote on all the resolutions of the company
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All the equity shareholders have equal voting rights
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All of the above
As per companies act, 2013, every member of company limited by shares and holding any equity share capital shall have a right to vote in respect of such capital on every resolution placed before the company and his voting rights on a poll shall be proportionate to his share of the equity share capital of a company. Therefore, the statement that all equity shareholders have equal voting rights is FALSE.
Articles of unlimited company having share capital is included in_______.
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Table I
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Table G
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Table H
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Table F
Articles of unlimited company having share capital is included in Table I. An unlimited company refers to that company where the liability of the shareholders is not limited.
Which of the following statements is true?
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A person having share warrant is a member of the company
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A person having share warrant is only a shareholder of the company and not a member
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A legal representative of a deceased shareholder is not a shareholder of a company
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All of the above
The shares issued for providing know how, intellectual property rights, etc are called ____________.
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Golden shares
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Right shares
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Sweat Equity shares
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Bonus shares
A company with a paid up Capital of 5,000 equity shares of Rs.10 each has a turnover of four times with a margin of 8% on sales.
The ROI of the company will be______.
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28%
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32%
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35%
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42%
ROI= margin of 8% on sales * 4 = 32%
The ending balance of owner's equity is Rs.21,000. During the year, the owner contributed Rs.6,000 and withdrew Rs.4000. If the firm had Rs.8,000 net income for the year what was the owner's equity at the beginning?
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Rs.23,000
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Rs.21,000
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Rs.19,000
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Rs.11,000
Owner's equity at the beginning= ending balance of owner's equity - net income + withdrawal amount - contributed amount = 21000-800+4000-6000 = 11000.