MERGER

1. What is a merger?

• A) Splitting a company into two units

• B) Selling assets to another company

• C) Combining two companies into one new entity

• D) Issuing new shares to the public

2. Amalgamation involves:

• A) The liquidation of one company

• B) One company absorbing another

• C) Formation of a new company by combining two or more companies

• D) Selling goods internationally

3. In an amalgamation in the nature of merger:

• A) Assets and liabilities are not transferred

• B) Assets and liabilities are revalued

• C) Assets and liabilities are pooled at book value

• D) One company is dissolved

4. Which of the following is not a reason for mergers and amalgamations?

• A) To increase market share

• B) To reduce competition

• C) To create inflation

• D) To achieve economies of scale

5. The legal process of combining two companies is governed under:

• A) Income Tax Act

• B) Companies Act

• C) GST Act

• D) Banking Regulation Act

6. When one company takes over another and no new company is formed, it is called:

• A) Consolidation

• B) Merger

• C) Takeover

• D) Amalgamation in the nature of purchase

7. The benefit of a merger that leads to cost reduction is called:

• A) Inflation

• B) Liquidity

• C) Synergy

• D) Capitalization

8. Horizontal merger refers to merging of:

• A) Firms in different industries

• B) Companies in the same industry at the same stage

• C) Companies at different levels of the supply chain

• D) Companies in foreign countries

9. Vertical mergers occur between companies:

• A) That are direct competitors

• B) At different stages of the production process

• C) Located in different countries

• D) With different product lines

10. What is the accounting method used for amalgamation in the nature of purchase?

• A) Pooling of interests method

• B) Fair value method

• C) Purchase method

• D) Cash basis method