Quiz on Share Issuance and Underwriting

When shares are issued at a price higher than face value, the excess is called:

• Discount

• Loss

• Premium

• Commission

The premium on shares is credited to:

• Capital Account

• Share Premium Account

• Suspense Account

• Profit and Loss Account

Share discount is generally debited to:

• General Reserve

• Discount on Issue of Shares Account

• Profit and Loss Account

• Share Capital Account

Shares cannot be issued at a discount except in case of:

• Bonus Shares

• Rights Issue

• Sweat Equity Shares

• Preference Shares

On forfeiture of shares, the Share Capital Account is:

• Debited

• Credited

• Not affected

• Transferred to Reserve

When forfeited shares are reissued at a discount, the discount is debited to:

• Share Capital Account

• Forfeited Shares Account

• Securities Premium Account

• Profit and Loss Account

Reissue price of forfeited shares must not be less than:

• Face value

• Market value

• Amount forfeited

• Par value

In pro-rata allotment, excess application money is:

• Refunded

• Adjusted towards allotment

• Adjusted towards calls

• Both B and C

If a shareholder fails to pay the allotment and calls money, the company may:

• Pay interest

• Forfeit the shares

• Issue bonus shares

• Cancel the issue

On reissue of forfeited shares, the balance of the forfeited shares account is transferred to:

• General Reserve

• Capital Reserve

• Share Capital Account

• Share Premium Account