Principals of Accounting ICOM Part 02 Top 500 + MCQS Download Pdf Chapter 05

written by Assad Javaid | April 26, 2021

Chapter – 5

COMPANY ACCOUNTS

Encircle the most appropriate answer from the following options

1 The joint stock company is formed under companies ordinance:

  1. 1984
  2. 1974
  3. 1884   
  4. 1962

2.A form of business organization come into existence wherein the public was invited to contribute capital, is known as:

  1. A partnership  
  2. Sole tradership
  3. Joint stock company           
  4. None of these

3.The official signature of the company, is called:

  1. Shares
  2. Debentures
  3. Common seal           
  4. Prospectus

4.The liability of the members of a company is generally:

  1. Limited          
  2. Unlimited
  3. Contingent      
  4. Out standing   

5.A joint stock company is an effective organization for raising:

  1. A small amount of capital      
  2. A large amount of capital
  3. A limited amount of capital
  4. No amount of capital

6.A company can be winded up through compliance with the provisions of:

  1. Companies ordinance 1982   
  2. Companies act, 1986
  3. Companies ordinance, 1884
  4. Companies ordinance, 1984

7.A person who buys one or more than one share becomes a:       

  1. Member of the company
  2. Agent of the company
  3. Employees of the company  
  4. Director of the company

8.Joint stock company is an Artificial person created by:

  1. Registrar        
  2. Provincial Govt.
  3. Law    
  4. Employees

9.The company is managed by the group of persons known as:

  1. Board of directors
  2. Group of members
  3. Team of shareholders
  4. None of these

10.In case of public company minimum number of members is:

  1. Six
  2. Seven
  3. Ten
  4. Fifty

11.In case of private company, minimum number of members is two and maximum

  1. Six
  2. Seven
  3. Ten     
  4. Fifty

12.The share of the public company is:

  1. Not refundable           
  2. Not transferable
  3. Transferable 
  4. Not allotable

13. The shares of joint stock company may easily be purchased or sold in the:

  1. Stock exchange market      
  2. Money exchange market
  3. Fruit market   
  4. None of these

14.The basic object of the formation of the joint stock company is to:

  1. The welfare of public 
  2. Earn profit
  3. Promote ethics           
  4. Work for society

15.The shareholders are consider the:

  1. Agents of the company         
  2. Managers of the company
  3. Owners of the company     
  4. Employees of the company

16.A particular amount of money used in business for the purpose of earning revenues is known as:

  1. Profit  
  2. Share
  3. Debenture      
  4. Capital      

  1.      

17.In case of public company, the maximum number of members are:

  1. Unlimit           
  2. Ten
  3. Fifty
  4. Five hundred

18.In case of joint stock company activities are controlled by many:

  1. Shareholders  
  2. Members
  3. Agents
  4. Central or provincial department

19.The powers of the company are governed by the:

  1. Shareholders              
  2. Memorandum of association         
  3. Prospectus     
  4. Article of association

20.The capital of the company is fixed by:

  1. Public 
  2. Auditors
  3. General secretary      
  4. Memorandum

21.A company in which each member gives a guarantee to contribute a specified sum to the company event of its being wound up, is said to be:

  1. Private limited company        
  2. Public limited company
  3. Chartered company   
  4. Company limited by guarantee

22.A company in which the liability of its members is unlimited, is known as:

  1. Public limited company
  2. Chartered company   
  3. Company limited by guarantee
  4. Unlimited company

23.Association not for profit is registered under companies’ ordinance:

  1. Section 42     
  2. Section 48
  3. Section 318    
  4. Section 24

24.Which of the following association is mainly formed for the promotion of commerce, art, religion, charity etc:

  1. Public limited company         
  2. Private limited company
  3. Association not for profit   
  4. Chartered company

25.The company which is incorporated by the royal order is called:

  1. Public limited company
  2. Association not for profit
  3. Chartered company 
  4. Statutory company

26.The company which is formed by the order of Governor General, President or

Prime Minister or by the special act of legislature, is called

  1. Association not for profit        
  2. Statutory company
  3. Chartered company   
  4. None of these

27.The person’ who takes the initiative in the matter of formation of a company is known as the:

  1. Promoter
  2. Shareholder
  3. Director
  4. Registrar

28.The charter of the company containing the being formed, is called:

  1. Articles of association
  2. Prospectus
  3. Memorandum
  4. Notice

29.the document which contains the rules and regulations for the internal management of the company, is called:

  1. Memorandum of association
  2. Articles of association
  3. Notice
  4. Prospectus

30.Statement in the form of a small booklet issued by the company to the public explaining the prospects of the company and inviting them to purchase ‘Shares’ or debentures of the company is called:

  1. Prospectus
  2. Memorandum of association
  3. Articles of association
  4. None of these

31.The audit of the accounts of a company is:

  1. Optional
  2. Compulsory
  3. Restricted       
  4. As per requirement

32. A company comes into existence when the registrar issues the:

  1. Prospectus
  2. Certificate of incorporation
  3. Statement in Lieu of prospectus
  4. Companies ordinance

33. Listed company means a company whose:

  1. Securities are listed
  2. Securities are not listed
  3. Reserve is fixed
  4. Reserve is understated

34. Non profit earning companies are mostly formed as:

  1. Companies limited by shares
  2. Companies limited by guarantee
  3. Unlimited companies 
  4. None of these

35. company has to provide in its articles:

  1. For restricting transfer of its shares
  2. For prohibiting transfer of its shares
  3. For permitting free transfer of its shares
  4. For the restricting of investment of its shares

36.A prospectus of shares can be issued only by:

  1. Public company
  2. A private company
  3. Both public & private company
  4. None of these

37.Preliminary expenses are of the nature of:

  1. Revenue expenses    
  2. Capital expenses
  3. Both (a) & (b)
  4. None of these

38. The expenses incurred in the formation of the company, is called:

  1. Indirect expenses
  2. Revenue expenses
  3. Selling expenses        
  4. Preliminary expenses

39. company registered under the companies Ordinance

  1. 1931   
  2. 1984
  3. 1931
  4. None of these

40. Tax is paid by the company on the:

  1. Whole of its profit    
  2. Half of its profit
  3. Individual profit of the partner
  4. None of these

SHARES & SHARE CAPITAL

41. A joint stock company (Private or public) raises its capital by issuing:

  1. Audit reports   
  2. Share
  3. Certificate of incorporation
  4. Certificate of commencement

42. The total amount of capital, in case of company, is divided into small units, these are called:

  1. Bonds 
  2. Cheques
  3. Shares           
  4. Reserve

43. each share is assigned a value, this value is called the:

  1. Par value of the share         
  2. Discount value of the share
  3. Book value of the share         
  4. Market value of the share

44. The sum total of the nominal value of shares of a company is called as its:

  1. Issued capital 
  2. Subscribed capital
  3. Called-up capital        
  4. Share capital

45. The amount of share capital which a company is authorized to raise is called:

  1. Subscribed capital     
  2. Issued-capital 
  3. Authorized capital   
  4. Paid-up capital

46. The part of the authorized capital which is issued to the public for subscription allotment is called:

  1. Subscribed capital     
  2. Issued capital
  3. Authorized capital      
  4. Paid-up capital

47. The part of the issued capital as has been taken up or subscribed by the public and vendors, is called:

  1. Issued-capital
  2. Authorized capital
  3. Subscribed capital
  4. Paid-up capital

48. The portion of the subscribed capital which has been called up by the company, is known as:

  1. Called-up capital
  2. Subscribed capital
  3. Issued-capital
  4. Paid-up capital

49. The total amount by the company out of the total called-up Y account known as the:

  1. Called-up capital
  2. Paid-up capital
  3. Reserve capital
  4. Issued capital 

50. The portion of the subscribed capital which the company, through a special.

resolution, reserves to call in the event of winding up, is known as: 

  1. Reserve capital        
  2. Called-up capital        
  3. Issued capital 
  1. Authorized capital

51. The value of the share according to the books of accounts of the company, i,

  1. Par value        
  2. Market value
  3. Book-value   
  4. Cost-value      

52. The value of a share as quoted on the stock exchange, is said to be:

  1. Par value        
  2. Book-value
  3. Cost-value
  4. Market-value

53. According to companies ordinance 1984, there is no classification of shares

There is only one type of share which is called:

  1. Ordinary shares or equity shares
  2. Share at par value     
  3. Issued shares
  4. Bonus shares

54. The owner’s equity in a company is commonly called:

  1. Promoters      
  2. Shareholders
  3. Registrar        
  4. Board of directors

55. If the price required to be paid to the company for the share is nominal value of that share it is called:

  1. At discount     
  2. At premium
  3. At par
  4. None of these

56. If the price required to be paid to the company for the share is value of that share, it is called:

  1. At discount     
  2. At premium
  3. At par
  4. None of these

57. If the price required to be paid to the company for the share less than the nominal value of that share, it is called shares:

  1. At discount   
  2. At premium
  3. At par 
  4. None of these

58. Distribution of earnings to the shareholders rest with the board of directors, are            called.

  1. Reserve
  2. Capital
  3. Income           
  4. Dividends

59. On receipt of money against shares, which Ofthe following entry will be passed:

  1. Bank a/c.       Xx.

        To bank.   Xx

  1. Share application a/c xx.

.       To bank xx

  1. Bank a/c.     Xx.

         To bank. Xx

  1. None of these

60.On issuance of debentures, which of the following entry is to be passed:

  1. Bank A/c         xx

    To debenture A/c.  xx

  1. Share application A/c

     To share capital A/c. Xx

  1. Share capital A/c        xx.

     To share application A/c

  1. None of these

61. When shares are Oversubscribed, and application money will be refunded to the applicants, which of the following entry is to be passed:

  1. Bank A/cxx

       To share application

  1. Share application A/c

      To share capital A/c

  1. Share application A/c

      To bank A/c

  1. None of these

62. The amount received by a company by issuing shares at a premium is treated as

  1. Revenue profit for the business
  2. Capital profit for the business
  3. Revenue loss for the business
  4. Capital loss for the business

63. The amount received by a company by issuing shares at a premium is shown in

Balance sheet liabilities side

  1. Balance sheet assets side
  2. Profit & loss account debit side
  3. Profit & loss account credit side
  4. Balance sheet liability side

64. In case of allotment of share at premium, which of the following entry should passed:

  1. Share application A/c. Xx

            Share capital A/c        xx

         To share premium A/c. Xx

  1. Share premium A/cxx

Share application A/cxx. 

         Share capital A/cxx

  1. Share application A/cxx

          To share capital A/cxx. 

          To share premium A/cxx

  1. None of these

65 In case of shares issue at a discount which of the following entry for discount is generally made at the time of allotment:

  1. Share application A/c xx

            Discount on issue of share A/c

                    To share capital A/c

  1. Share application A/c  xx 

         To share capital A/c       xx

  1. Share application A/c   x

        To share capital A/c.   X

        To discount issue of share A/c

  1. None of these

66. A situation where a company receives applications for a less number of shares than offered to the public for subscription is termed as:

  1. Under-subscription
  2. Over-subscription
  3. General-subscription
  4. Above-subscription

67. A situation where a company receives applications for a large number of shares than offered to the public for subscriptions is termed as :

  1. Under-subscription
  2. Over-subscription
  3. General-subscription
  4. None of these

68. Normally the discount on the issue of shares should not exceed:

  1. Five percent   
  2. Eight percent
  3. Seventy percent        
  4. Ten percent

69. The amount of share premium received by the company is shown in the company’s balance sheet, under the heading of:

  1. Creditors        
  2. Profit
  3. Reserve
  4. Loan

70. Equity share-holders are:

  1. Creditors        
  2. Owners
  3. Customers of the company
  4. Debtors of the company

71. Share premium money can be used for:

  1. Payment of dividend  
  2. Writing of goodwill
  3. Issue of fully paid bonus shares
  4. The purchasing of fixed assets

72. Share capital account is in the nature of:

  1. Real account
  2. Personal account
  3. Nominal account        
  4. None of these

73. Discount on issue of shares account being a loss of:

  1. Capital           
  2. Reserve
  3. Expenditure    
  4. Revenue

74. The deferred shares get dividend only after it has been paid to:

  1. Preference shareholders       
  2. Equity shareholders only
  3. Preference & equity shareholders
  4. None of these

75. In case of non-cumulative preference shares, if the dividend is not paid by the company in a particular year, then it:

  1. Accumulates  
  2. Lapses
  3. Grow numerous         
  4. None of these

76.A convertible preference shares is one which can be converted into:

  1. Equity shares           
  2. Deferred shares
  3. Both deferred & founders shares
  4. Founders shares

77. Share capital account is debited, when the application for the shares are:

  1. Accepted        
  2. Rejected
  3. Transferred    
  4. Allotted

78. When money is received against shares the company credits:

  1. Share application A/c          
  2. Share capital A/c
  3. Premium A/c
  4. Discount A/c

79. When the share are allotted, the share capital is:

Debited

  1. Credited
  2. Not credited   
  3. None of these

80. The amount received over and above the nominal value of a share is to be treated as:

  1. Capital receipt          
  2. Revenue receipt        
  3. Capital expenditure    
  4. Revenue expenditure

81. Discount on issue of shares is shown on the:

  1. Liability side of balance sheet
  2. Credit side of profit & loss account
  3. Asset side of the balance sheet
  4. None of these

82. When the market value of a share is greater than its face value, then at the time the right issue, the existing shareholders stand to:

  1. Gain   
  2. Loss
  3. Capital loss     
  4. None of these

83. When shares are allotted, the account to be

  1. Share capital account
  2. Share application a/c 
  3. Share allotment a/c
  4. None of these

84. A preference share which does not carry the right of sharing in the surplus left after paying equity dividend, is called:

  1. Non-convertible preference
  2. Non-cumulative preference share
  3. Non-participating preference share
  4. None of these

85. A deferred share can be issued only by:

  1. Public company
  2. Subsidiary of a public company
  3. Independent private company
  4. None of these

86. When the shares are issued at discount, then the account to be debited

  1. Bank A/c
  2. Bank A/c & share premium A/c
  3. Bank A/c and Discount issue of shares
  4. None of those

87. The amount received over & above the Nominal value of share should be credited

  1. Share capital account
  2. Share allotment account        
  3. Share application account     
  4. Share premium account

88. The  amount to the credit of share premium account can be used for:

  1. The payment of insurance premium
  2. Loss on the sale of an asset
  3. Discount allowed on issue of share
  4. None of these

89. A preference share can be redeemed by:

  1. Company       
  2. Shareholders
  3. Registrar
  4. None of these

90. Reserve fund is allowed to be transferred to capital redemption:

  1. Discount account
  2. Reserve account
  3. Premium account      
  4. None of these

DEBENTURES

91. A certificate issued by a company under its seal acknowledge a debt due by it to its holder, is called:

  1. Debenture
  2. Certificate
  3. Acknowledge certificate
  4. None of

92. Debentures are also termed as:

  1. Certificate of credit
  2. Bonds
  3. dividend
  4. Bonus

93. Those debentures which are repayable at the end as:

  1. Redeemable debentures     
  2. Unredeemable
  3. Repayable debentures
  4. None of these

94. Those debentures which-are never repayable during the existence Of The company, are called:

  1. Redeemable debentures
  2. Unredeemable debentures
  3. Repayable debentures\
  4. None of these

95. Those debentures which carry no security as to payment of interest or repayment of principal, are known as:

  1. Mortgage debentures
  2. Simple or naked debentures
  3. Secured debentures
  4. None of these

96. The debentures which are payable to bearer, are termed as:

  1. Non-transferable        
  2. Registered debentures
  3. Non-Bearer debentures         
  4. Bearer debentures

97. Those debentures which are secured by a fixed or floating charge on the assets:

  1. Naked debentures     
  2. Mortgage debentures
  3. Simple debentures     
  4. None of these

98. The debentures which are registered in the name of the holders in the books of the company, are termed as:

  1. Transferable debenture
  2. Bearer debentures
  3. Non-registered debentures
  4. Registered debentures

99. A debenture stock is a :

  1. Converted debenture          
  2. Non-converted debenture      
  3. Non-transferable debenture
  4. None of these

100. Debenture holders are:

  1. Creditors                               
  2. Owners
  3. Customers of the company
  4. None of these

101. Debentures represent:

  1. The investment of equally business
  2. Directors share in a business
  3. Long-term liabilities of a business
  4. Short-term liabilities of a business

102. Sometimes a company purchases assets from the vender and issue debentures in payment of purchase consideration, this is called:

  1. Issue for cash only
  2. Issue for consideration other than cash
  3. Issue for cash and discount
  4. None of these

103. In case of debentures are issued for•the consideration other than cash, which one of the following entry is to be passed:

  1. Debentures A/c

      To vendor A/c

  1. Vender A/c

      To debentures A/c

  1. Cash A/c

       To debentures A/cxx

  1. Debentures A/c

       To cash A/cxx

104. When debentures for cash, issued at par which of the following entry is to be passed:

  1. Bank A/c        xx

     To debentures A/c           xx

  1. Debentures A/c           xx

     To bank A/c           xx

  1. Vender A/c      xx

     To debentures A/c xx

  1. None of these

105. If debentures for cash, issued at discount, which of the following entry is to be passed:

  1. Debentures A/c

Discount on issue of debentures A/cxx

        To bank A/c        xx

  1. Bank A/c         xx

        To debentures A/c

  1. Bank A/c        xx

Discount on issue of debentures A/cxx.

         To debentures A/c

  1. None of these

106. If the debentures for cash issued at premium, which one of the following entry

will be passed:

  1. Bank A/c

     To debentures A/c          

     To debentures premium A/c

  1. Bank A/c. 

Debentures a/c

     To debentures premium A/c

  1. Bank A/c

Premium A/c  

     To debentures A/c

  1. None of these

107. In case of debentures issued at par and redeemable at par, which of the entry is to be passed:

  1. Bank A/c. 

    To debentures A/c

  1. Debentures Atc          

    To bank A/c

  1. Bank A/c

    To debentures A/c

    To loss on issue of debentures      

                 a/c

  1. None of these

108. When debentures issued at par and redeemable at a premium, which of following entry is to be passed:

  1. Bank A/c

     To debentures A/c

  1. Bank A/c        xx

Loss on issue of debenture A/c. 

     To debenture Alc.

     To premium on redemption of 

                 debentures A/c

  1. Bank A/c         xx

      To premium on redemption of    

                  debentures A/c. 

      To loss on issue of debentures    

                   A/c

                  To debentures A/c

  1. Bank A/c         xx

Premium on redemption of debentures A/c.  

       To loss on issue of debentures

                   A/c.

       To debentures A/c

109. If debentures issued at a discount and redeemable at par, which of the following entry should be passed:

  1. Bank A/c

      To debentures A/c

  1. Bank A/c

       To discount on issue of 

                   debentures A/c

       To debentures A/c

  1. Bank A/c

        To discount on issue of   

                   debentures A/c

  1. Bank A/c

Discount issue of debentures A/c

         To debentures A/c

110. If the debentures issued at a premium and redeemable at par, which of the following entry passed :

  1. Bank A/c

      To debentures A/c

  1. Bank A/c         Xx

      To premium on debentures A/c

  1. Bank A/c        xx        xx.

      To debenture A/c.

      To premium on issuance of

                  debentures A/cxx

  1. None of these

111. In case of debentures issued at a discount and redeemable at a premium, which of the following entry is to be passed:

  1. Bank A/c        xx

Loss on issue of debenture A/c xx

      To debenture A/c.    xx.

      To premium on redemption of       

                   debentures A/cxx

  1. Bank A/c         xx

Premium on redemption of debentures A/c xx         

       To debentures A/cxx.

       To loss on issue of debentures        

                   A/cxx

  1. Bank A/c         xx

Discount on debentures A/c   xx

       To debentures A/cxx      

       To loss on issue of debentures     

                   A/c           

  1. None of these

112. In respect of debentures issued as a collateral security:

  1. Entry for issue of debentures at paris made
  2. Entry for issue of debentures at discount is made
  3. Entry for issue of debentures at premium is made
  4. No entry is made

113. Debentures which have not been secured are called:

  1. Naked debentures   
  2. Mortgaged debentures
  3. Secured debentures  
  4. None of these

114. When debentures are issued at par and are redeemable at premium the credit given to premium on redemption of debentures account is in the nature of:

  1. Personal account     
  2. Real account  
  3. Nominal account        
  4. None of these

115. When debentures are issued at a discount and are to be redeemed at par, which of the following account is to be credited:

  1. Debentures account
  2. Discount account
  3. Profit & loss account
  4. Cash account

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