Mcqs Bba 3rd

Choose the most appropriate answer Marks: (20X 0.
5=10)
1- Twisters Ltd paid debenture interest of £210,000 on 6% debentures. Assuming no debenture

issue was made during the year, what is the amount of debentures in issue during the year?
a) £12,600,000
b) £210,000
c) £2,857,143
d) £3,500,000
2- £120,000 recorded in the Cash Book, upon issuing 100,000 ordinary shares of £1 each, should
be credited to which account or accounts:
a) £100,000 to the Share Capital account and £20,000 to the Share Premium account
b) To a Suspense account
c) To the Share Capital account
d) To the Share Premium account
3- A company was able to acquire a land, with a market value of £6 million, by issuing four million
ordinary shares of £1 each. When accounting for the acquisition of land and the issue of shares,
how much should be credited to the Share Premium account?
a) £2,000,000
b) £6,000,000
c) £4,000,000
d) £10,000,000
4- Epsilon plc had in issue £400,000 6% Debentures as at 31st March 2010 and on 31st Dec. 2010
redeemed £300,000 of these debentures at 10% premium. Interest on debentures were paid
annually in arrears on 31st December. No debentures were issued newly. Calculate the interest
expense in the year to 31st March 2011.
a) £6,000
b) £19,500
c) £32,500
d) £24,000
5- Discount on issue of shares is a ………………
a) Revenue loss and to be charged in the year of issue

b) Capital loss to be written off from capital reserves
c) Deferred cost
d) Capital loss to be shown as goodwill
6- Excess value of net assets over purchase consideration at the time of purchase of business is
credited to:
a) General Reserve
b) Capital Profit
c) Vendors account
d) Goodwill
7- Excess value of purchase consideration over net assets at the time of purchase of business is
credited to:
a) General Reserve
b) Capital Profit
c) Vendors account
d) Goodwill
8- Debentures can be redeemed out of:
a) Capital
b) Profits
c) By converting them into shares
d) All of the above
9- Which of the following is false?
a) A company can issue irredeemable debentures

b) A company can issue debentures with voting rights
c) A company can purchase its own debentures for investment purpose
d) A company can issue debentures as a collateral security
10- G Ltd acquired assets worth Rs.75, 000 from H Ltd by issue of shares of Rs.10 at a premium
of Rs.5. The number of shares to be issued by G Ltd to settle the purchase consideration will be
a) 6000 shares
b) 7500 shares
c) 9375 shares
d) 5000 shares
11- Alfa Ltd issued 20,000 8% debentures of Rs.10 each at par. The debentures are redeemable at
a premium of 20% after 5 years. The amount of loss on redemption of debentures should be:
a) Rs.50,000
b) Rs.40,000
c) Rs.30,000
d) None of the above
12- When debentures are issued as collateral security, interest is paid on:
a) Nominal value of debentures

b) Face value of debentures
c) Discounted value of debentures
d) No interest is paid
13- F Ltd purchased Machinery from G company for a book value of Rs.400,000. The
consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%. The
debenture account was credited with
a) Rs.400,000
b) Rs.500,000
c) Rs.320,000
d) Rs.480,000
14- When shares are issued to promoters for the services offered by them, the account that will be
debited with the nominal value of shares is
a) Goodwill
b) Bank
c) Preliminary expenses
d) Share capital
15- Right issue of shares is for whom
a) General Public
b) Promoters only
c) Employees only
d) Existing shareholders only
16- Share allotment account is a:
a) Real Account
b) Nominal Account
c) Personal Account
d) Company Account
17- Which of the following is true with regard to the underwriting commission?
a) It is paid to the underwriters in the amount of subscription proceed by them

b) It is paid to the underwriters on the amount of shares or debentures underwritten by them
c) It is paid only for the amount subscribed by the general public and not a firm underwriting
d) It is paid on the net liability of each underwriter
18- Own debentures are those debentures of the company which:
a) The company allots to its own promoters

b) The allots to its directors
c) The company purchases from the market and keeps them as investments.
19- Debentures which are transferable by mere delivery are:
a) Registered debentures
b) Bearer Debentures
c) Convertible debentures
d) Secured debentures
20- When debentures are issued as a collateral security then it is our
a) Current Liability
b) Long term liability
c) Contingent Liability
d) None of the above

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Choose the most appropriate answer Marks: (20X 0.

1- Twisters Ltd paid debenture interest of £210,000 on 6% debentures. Assuming no debenture

a) Revenue loss and to be charged in the year of issue

8- Debentures can be redeemed out of:

9- Which of the following is false?

a) A company can issue irredeemable debentures

a) Nominal value of debentures

15- Right issue of shares is for whom

16- Share allotment account is a:

a) It is paid to the underwriters in the amount of subscription proceed by them

a) The company allots to its own promoters

19- Debentures which are transferable by mere delivery are:

20- When debentures are issued as a collateral security then it is our

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