UBAF401 : Financial Accounting - IV

Which of the following statement is true?

• For redemption, preference shares may be fully paid up
• Security Premium funds does not form part of divisible profit.
• Issue of right shares means conversion of reserve funds into preference share capital.
• Paid up capital is disclosed only for information.

Which of the following statement is false? (You can select more than 1 option)

• Equity shareholders can earn limited dividend.
• The period of preference shares cannot exceed 10 years.
• Capital Redemption Reserve protects the interest of creditors.
• Calls in arrear means amount to be paid to the Shareholders.

Which of the following statement is true? (You can select more than 1 option)

• Preference shareholders can earn limited dividend.
• General Reserve does not form part of divisible profit.
• The issue of debentures can not be treated as proceeds of fresh issue.
• Profit on sale of investment not increase free reserve.

Which of the following statement are false? (You can select more than 1 option)

• Capital Redemption Reserve can be utilised for issue of right shares.
• Divisible profit means security premium
• The expenses relating to the company should be allocated in pre-incorporation.
• Equity shareholders can earn unlimited dividend.

Vipro Ltd. redeemed 2400 8% Preference shares or Rs. 100 each at a premium of 5% The company have reserve funds - Security Premium Rs. 9000, General Reserve Rs. 80000. For redemption 6000 Equity shares of Rs. 10 each issued at a premium of 10%. Find out amount transfer to CRR Rs.___________

• 65,000
• 70,000
• 61,000
• 1,00,000

Which of the following statements are true? (You can select more than 1 option)

• Transfer to capital redemption reserve is optional for redemption of preference shares.
• Preference shares may be redeemed at premium only
• A company can issue two classes of shares.
• Profit on sale of assets to provide money for redemption is a divisible profit.

Investment at cost Rs. 300000, Part of the investments were sold for Rs. 198000 at a profit of 10% on cost. Calculate cost of investment sold.

• 19,800
• 30,000
• 2,00,000
• 1,80,000

1,00,000 8% Preference shares of Rs. 10 each are to be redeemed at par. General Reserve Rs. 2,90,000, Profit & Loss A/c (Cr.) Rs. 3,57,120, Security Premium Rs. 2,20,000. Loss on sale of investment Rs. 7,120. To issue sufficient equity shares of Rs. 10 each at a premium of Rs. 2 per share to raise the balance of funds required. Calculate number of Equity shares to be issued for redemption of preference shares.

• 35,288
• 36,000
• 13,288
• 30,000

Which of the following statements are true? (You can select more than 1 option)

• Dividend equalization reserve is a divisible profit.
• Issue of bonus shares means conversion of reserve funds into preference share capital.
• Issue of bonus shares results in conversion of profit into share capital.
• Profit on sale of assets to provide money for redemption is a divisible profit.

Which of the following statements are false? (You can select more than 1 option)

• Capital Redemption Reserve protects the interest of creditors.
• Right shares are issued for the purpose of controlling interest of the existing shareholders.
• Security premium can be utilised for creation of Capital Redemption Reserve
• Security premium can be utilised for adjustment of premium on redemption.