MCQ on Accounting Standards for Corporate Affairs
Note: The answer is highlighted in RED COLOUR
1. Shares received from the new company are recorded at –
A. Face value
B. Average price
C. Market value
D. None of the above
C. Market value
2. When two or more companies carrying on similar business decide to
combine, a new company is formed, it is known as ..................
A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction
A. Amalgamation
3. When one of the existing companies takes over the business of another company or companies, it is known as ...........
A. Amalgamation
B. Absorption
C. Internal reconstruction
D. External reconstruction
B. Absorption
4. While calculating the purchase price, the following values of assets are
considered
A. Book value
B. New values fixed
C. Average values
D. Market values
B. New values fixed
5. While calculating the purchase price, the following values of assets are
considered
A. Book value
B. New values fixed
C. Average values
D. Market values
C. Average values
6. Which of the following statement is correct?
A. The amount of Goodwill or Capital
Reserve is found in the books of purchasing company only
B. The amount of Goodwill or Capital
Reserve is found in the books of the vendor company only.
C. Goodwill = Net Assets – Purchase price
D. The face value of shares of the purchasing
company will be taken into account while calculating purchase consideration.
A. The amount of Goodwill or Capital Reserve is found in the books
of purchasing company only
7. If the two companies have different accounting policies in respect of
the same item, then they make necessary changes to adopt ..............
accounting policies.
A. LIFO method
B. FIFO method
C. Weighted method
D. Uniform
D. Uniform
8. The Amalgamation Adjustment Account appears in the books, it is shown
under the heading of ......... in the balance sheet.
A. Reserve and Surplus
B. Fixed Assets
C. Investments
D. Miscellaneous expenditure
D. Miscellaneous expenditure
9. If the amalgamation is in the ..............., the General Reserve or Profit
and Loss A/cbalance will not be shown in the balance sheet.
A. Form of Merger
B. Form of purchase
C. Net assets method
D. Consideration method
B. Form of purchase
10. If the intrinsic values of shares exchanged are not equal, the
difference is paid in...........
A. Cash
B. Debenture
C. Pref. share
D. Assets
A. Cash
11. In the case of .............., one existing company takes over the business
of another company, and no new company is formed.
A. Amalgamation
B. Absorption
C. Reconstruction
D. None of the Above
B. Absorption
12. In an amalgamation of two companies
A. Both companies lose their existence
B. Both companies continue
C. Any one company continues
D. none
A. Both companies lose their existence
13. When purchasing company pays purchase consideration, it will be debited
to
A. Business purchase account
B. Assets account
C. Liquidator of selling company’s account
D. none
C. Liquidator of selling company’s account
14. When the purchasing company bears the liquidation expenses, it will
debit the expenses to
A. Vendor Company’s Account
B. Bank Account
C. Goodwill Account
D. none
C. Goodwill Account
15. When the Vendor (seller) company agrees to bear liquidation expenses,
it will debit
A. Realisation Account
B. Bank Account
C. Goodwill Account
D. none
A. Realisation Account
16. When the purchasing company does not take over a particular liability
and the vendor company pays that liability, it will debit it to
A. Realisation Account
B. Bank Account
C. Liability Account
D. none
A. Realisation Account
17. When the Net Assets are less than the Purchase Consideration, the difference will be
A. Debited to Goodwill A/c.
B. Debited to General Reserve
C. none of these
D. none
A. Debited to Goodwill A/c.
18. While calculating purchase consideration ............... values of
assets are to be considered.
A. Book value
B. Revalued price
C. Average price
D. Capital
B. Revalued price
19. Net Assets minus Capital Reserve is _________
A. Goodwill
B. Total assets
C. Purchase consideration
D. None of these
C. Purchase consideration
20. Hitesh Ltd.’s purchase consideration is Rs.12,345 and Net Assets
Rs.3,568, then..........
A. Goodwill Rs. 8,777
B. Capital Reserve Rs. 8,777
C. Goodwill Rs. 15,913
D. Capital Reserve Rs. 15,913
A. Goodwill Rs. 8,777
21. The original amount of preference share capital should be transferred
to ............account at the time of amalgamation in the books of vendor co.
A. Preference shareholders Account
B. Capital Reserve Account
C. Equity share capital Account
D. Equity share capital Account
A. Preference shareholders Account
22. The share capital, to the extent already held by the purchasing
company, is closed by the vendor company by crediting it to:
A. Share capital account
B. Purchasing company's account
C. Realisation account.
D. none
C. Realisation account.
23. In the case of inter-company holdings, the purchasing company, at the time
of payment of the purchase consideration, surrenders the shares in the vendor
company by crediting:
A. Vendor company's account
B. Shares in the vendor company account
C. Share capital account.
D. none
B. Shares in the vendor company account
24. The vendor company transfers preliminary expenses (at the time of
absorption) to:
A. Equity shareholders' account
B. Realisation account
C. Purchasing company's account.
D. none
B. Realisation account
25. A Ltd. and B Ltd. go into liquidation and a new company X Ltd. is
formed. It is a case of:
A. Absorption
B. External reconstruction
C. Amalgamation.
D. none
26. The form of the balance sheet is………………..
A. Vertical
B. Horizontal
C. Horizontal and vertical
D. None of the above
C. Horizontal and vertical
27. The term current asset doesn’t cover
A. Car
B. Debtors
C. Stock
D. Prepaid expenses
A. Car
28. The P&L statement is also known as
A. Statement of operations
B. Statement of income
C. Statement of earnings
D. All of the above
B. Statement of income
29. Which of the following is true about financial statements?
I)A financial statement gives a summary of accounts.
II) Financial statements can be stated
as recorded facts.
A. Only I
B. Only II
C. Both I and II
D. None of the above
C. Both I and II
30. The statement of financial position and the balance sheet are synonyms
A. True
B. False
C. none
D. none
A. True
31. Which of the following statements is true?
I) Financial statements are
only interim reports.
II) Financial statements are also known as annual records.
III) Financial statements are historic.
A. Both I and II
B. Both I and III
C. Both II and III
D. I, II, III
C. Both II and III
32. Certain assumptions are essential to prepare financial statements.
A. True
B. False
C. none
A. True
33. Premium received on the issue of shares cannot be utilized for ---------.
A. for the issue of bonus shares.
B. for the writing off preliminary expenses
C. for providing premium payable on
redemption
D. for distribution of dividends.
D. for distribution of dividends.
34. In the case of a public limited company, after getting the-----------the
company can start the business
A. Memorandum of Association
B. Table A
C. Certificate of commencement of business
D. Articles of Association
C. Certificate of commencement of business
35. Trade Payables are recorded in………………….
A. Current Liabilities
B. Current Assets
C. Equity
D. Inventories
A. Current Liabilities
36. In company Final Accounts Goodwill is shown under……………
A. Current Liabilities
B. Current Assets
C. Fixed Assets
D. Inventories
C. Fixed Assets
37. Dividend is payable in the amount of…….
A. Profit
B. Reserves
C. Loss
D. Income
A. Profit
38. The dividend paid between two annual general meetings is
known as……………………….
A. Final dividend
B. Ex-Dividend
C. Interim Dividend
D. Dividend
C. Interim Dividend
39. Unclaimed dividend recorded on the…………………….. the balance sheet.
A. Liability
B. Assets
C. Credit
D. Debit
A. Liability
40. A liability that can be measured only by using a substantial degree of
estimation is called……………………….
A. Contingent liabilities
B. Contingent Assets
C. Fixed Assets
D. Non-Current Liabilities
A. Contingent liabilities
41. Unquoted shares means……………………….
A. Listed Shares
B. Quoted Shares
C. Unquoted Shares
D. Unlisted Shares
D. Unlisted Shares
42. Bills receivable is ……………………..assets.
A. Current
B. Non-current
C. Fixed Assets
D. Investment
A. Current
43. The amount of profit kept aside to maintain a uniform rate of dividend is called………………
A. Ex-Dividend
B. Final Dividend
C. Undistributed Dividend
D. Dividend
C. Undistributed Dividend
44. Director’s remuneration shall not exceed ………………. % of the net profits.
A. 10%
B. 20%
C. 15%
D. 13.333%
A. 10%
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