Commerce MCQ Quiz - Multiple Choice Questions & Answers Page 4

31. When one of the existing companies take over business of another company or companies, it is known as ...........

1. Amalgamation
2. Absorption
3. Internal reconstruction
4. External reconstruction

32. When purchasing company pays purchase consideration, it will be debited to

1. Business purchase account
2. Assets account
3. Liquidator of selling companys account
4. None of the above

33. When shares issued at premium which of the following account is credited?

1. Share premium account
2. Share first call account
3. Share allotment account
4. Share forfeited account

34. When the purchasing company bears the liquidation expenses, it will debit the expenses to

1. Vendor Companys Account
2. Bank Account
3. Goodwill Account
4. None of the above

35. When the purchasing company does not take over a particular liability and the vendor company pays that liability, it will debit it to

1. Realisation Account
2. Bank Account
3. Liability Account
4. None of the above

36. When the Vendor (seller) company agrees to bear liquidation expenses, it will debit

1. Realisation Account
2. Bank Account
3. Goodwill Account
4. None of the above

37. When two or more companies carrying on similar business decide to combine, a new company is formed, it is known as ..................

1. Amalgamation
2. Absorption
3. Internal reconstruction
4. External reconstruction

38. Which of the following statement is correct?

1. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
2. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
3. Goodwill = Net Assets – Purchase price
4. The face value of shares of purchasing company will be taken in to account while calculating purchase consideration

39. While calculating purchase consideration ....................values of assets is to be considered

1. Book value
2. Revalued price
3. Average price
4. Capital

40. While calculating purchase price, the following values of assets are considered

1. Book value
2. New values fixed
3. Average values
4. Market values