Commerce MCQs Quiz Multiple Choice Questions & Answers

1. After getting minimum subscription of shares, the company has to allot shares with in ..........days

1. 90
2. 100
3. 110
4. 120

2. All direct & indirect expenses related to business are charged

1. Profit and loss account
2. Trading account
3. Trading account Profit and Loss account
4. Directly to Balance sheet

3. Both of the old companies will not exist in

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

4. Hitanshi Ltd.s purchase consideration is Rs.12,345 and Net Assets Rs.3,568, then...........

1. Goodwill Rs. 8,777
2. Capital Reserve Rs. 8,777
3. Goodwill Rs. 15,913
4. Capital Reserve R

5. Holders of preference shares will have a right to vote if the dividend remains in arrears for a period not lessthan

1. 2 year
2. 3 years
3. 6 years
4. none of these

6. If amalgamation is in the ..............., the General Reserve or Profit and Loss A/c balance will not be shown in the balance sheet.

1. Form of Merger
2. Form of purchase
3. Net assets method
4. Consideration method

7. If Company A purchases the majority shares of Company B, what combination would this be referred to?

1. Amalgamation
2. Takeover
3. Absorption
4. None of the above

8. If the intrinsic values of shares exchanged are not equal, the difference is paid in ...........

1. Cash
2. Debenture
3. Pref. share
4. Assets

9. If the market price of the shares to be given for Purchase Consideration at the time of absorption, ............of the share is to be determined

1. Fair Value
2. Face Value
3. Intrinsic Value
4. Yield Value

10. If the minimum subscription is not received by the company, then the refund of application money should be made within ...........days

1. 7
2. 9
3. 10
4. 22

11. If the two companies have different accounting policies in respect of the same item, then they make necessary changes to adopt.............. Accounting policies.

1. Lifo method
2. Fifo method
3. Weighted method
4. Uniform

12. In amalgamation of two companies

1. Both companies lose their existence
2. Both companies continue
3. Any one company continues
4. None of the above

13. In case of ..................one existing company takes over the business of another company and no new company is formed.

1. Amalgamation
2. Absorption
3. Reconstruction
4. None of the Above

14. In case of public limited company, after getting the ..................the company can start the business

1. Memorandum of Association
2. Table A
3. Certificate of commencement of business
4. Articles of Association

15. Maximum number of members in public limited company is

1. 10
2. 20
3. 50
4. unlimited

16. Minimum number of members in case of public company is

1. 4
2. 5
3. 6
4. 7

17. Net Assets minus Capital Reserve is

1. Goodwill
2. Total assets
3. Purchase consideration
4. None of these

18. Premium on issue of shares can be used for

1. distribution of dividend
2. writing of capital losses
3. transferring to general reserve
4. paying fees to directors

19. Premium received on issue of shares cannot be utilised for

1. for the issue of bonus shares
2. for writing of preliminary expenses
3. for providing premium payable on redemption
4. for distribution of dividend

20. Premium received on issue of shares is shown on

1. asset side of the balance sheet
2. liability side of the balance sheet
3. credit side of the P&L a/c.
4. debit side of the P & L a/c

21. Section .............of companies act 1956 deals with the scheme of stock invest

1. 69 to 70
2. 69 to 71
3. 69 to 72
4. 69 to 73

22. Share allotment account is a

1. personal account
2. Real account
3. Nominal account
4. Impersonal account

23. Shares received from the new company are recorded at

1. Face value
2. Average price
3. Market value
4. None of the above

24. The Amalgamation Adjustment Account appears in the books, it is shown under the heading of ......... in the balance sheet.

1. Reserve and Surplus
2. Fixed Assets
3. Investments
4. Miscellaneous expenditure

25. The minimum share Application money is

1. 5% of the face value of shares
2. 10% of the issue price of shares
3. Re. 1 per share
4. 15% of the face value of shares

26. The original amount of preference share capital should be transferred to ...................account in the time of amalgamation in the books of vendor co.

1. Preference shareholders Account
2. Capital Reserve Account
3. Equity share capital Account
4. Equity share capital Account

27. The shares received from the new company is recorded at

1. Face value
2. Market value
3. Average price
4. None of these

28. Trade Payables are recorded in .............

1. Asset side of B/S
2. Liability side of B/S
3. P & L a/c
4. None ofthe above

29. When company purchases the business of another company ................comes into existence.

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

30. When liquidation expenses is paid and borne by seller company then it is debited to

1. Bank A/c
2. Goodwill A/c
3. Realisation A/c
4. Capital Reserve A/c

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