Internal Reconstruction 2

Which of the following statement is true

• Asset side of the balance sheet of a sick company shows the asset at lower value than the real values

• Preference dividend on cumulative pref. shares of a sick company may be in arrears for several years

• In internal reconstruction the company is liquidated

• External reconstruction involves reduction of capital

Which of the following statement is false

• In consolidation of shares, the number of shares change but the amount of capital remains same

• Sub division of shares is the reverse of consolidation of shares

• Conversion of stock into shares is similar to consolidation

• There is no liquidation in case of Internal Reconstruction

Past losses and fictitious assets are wiped off through ____

• Various tangible Assets Account

• Reserves and Surplus Account

• Capital Reduction Account

• Long term Liabilities Account

The sick company should be revived through

• Internal Reconstruction

• External Reconstruction

• Amalgamation

• Absorption

• all the above

The credit balance in capital Reduction A/c is utilised for wr

• Paying of dissentient share holders

• writing off deferred expenses

• issuing fully paid bonus shares

• None of the above

Reconstruction refers to an arrangement whereby

• Two companies come together to form a new one

• Changing the proportion of own funds and borrowed funds

• Shares are bought back to reduce capital

• None of the above

Surrendered shares can be reissued True/ False

The existing 1,000 shares of Rs. 1 each are altered to 100 shares of 10 each is an example of

• Sub division

• Conversion

• Consolidation

• surrender

Reduction of share capital of a company means reduction in

• Only called up share capital

• Only authorised share capital

• Subscribed and /or paid up share capital

• Only uncalled share capital

When a company converts its equity shares into Capital Stock , which account is credited

• Equity Share Capital

• Capital Stock Account

• Share holders Account

• None of the above