Please refer to Chapter 1 Accounting for Share Capital MCQ Class 12 Accountancy with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Accountancy. Students should refer to MCQ Questions for Class 12 Accountancy with Answers to score more marks in Grade 12 Accountancy exams. Students should read the chapter Accounting for Share Capital and then attempt the following objective questions.

MCQ Questions Class 12 Accountancy Chapter 1 Accounting for Share Capital

Accounting for Share Capital MCQ Class 12 Accountancy provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. As per sec. of the companies Act amount. received as premium on securities cannot be utilized for :-
(a) Issuing fully paid bonus shares to the members
(b) Purchase of fixed assets
(c) Writing off preliminary expenses
(d) Buy back of its own shares

Question. Maximum number of members in a Public Company
(a) Any Number of members
(b) 50
(c) 60
(d) None of the options

Question. The portion of authorized capital which can be called up only on the liquidation of the company :-
(a) Authorised capital
(b) Reserve capital
(c) Issued capital
(d) Called up capital

Question. The amount collected on allotment……….
(a) 18,000
(b) 12,000
(c) 18,400
(d) 18,600

Question. Issue of share at a premium
(a) Section 78
(b) Section 79
(c) Section 76
(d) None of the options

Question. A company Forfeited 2,000 shares of Rs 10 each issued at 20 % premium to be paid at the time of allotment on which Rs 8 is called up. company not received Rs 4 on Allotment including premium and Rs2 in First call. What will be the amount Debited to share capital account:
(a) 20,000
(b) 16,000
(c) 24,000
(d) 18,000

Question. Issue of share at a discount
(a) Section 79
(b) Section 78
(c) Section 76
(d) None of the options

Question. As per section 78 of the companies act, amount collected as premium on securities cannot be utilised for:
(a) Purchase of fixed assets
(b) Writing off preliminary expenses
(c) Buy back of its own shares
(d) Premium payable on redemption of preference share

Question. The portion of the authorised capital which can be called-up only on the liquidation of the company is called
(a) Reserve capital
(b) Authorised capital
(c) Issued capital
(d) Called up capital

Question. When the shares are issued for consideration other than cash which account will be debited
(a) Securities Premium
(b) Capital Reserve A/c
(c) Vendor A/c
(d) Share Capital A/c

Question. A company issued 50,000 shares of Rs 20 each at 5% premium . Rs10 were payable on application and balance on allotment. What will be the allotment amount?
(a) Rs 5,00,000
(b) Rs 4,75,000
(c) Rs 5,50,000
(d) Rs 5,25,000

Question. Which of the following statements are correct?
(a) Paid-up-capital = called-up-capital – calls in arrear
(b) Subscribed capital is that part of capital which is offered to the public for subscription.
(c) Issued capital is that part of authorised capital which is applied by the public and allotted by company.
(d) None of the options

Question. Maximum limit of premium on shares is :
(a) 32%
(b) 20%
(c) No limit
(d) 100%

Question. Which of the following are the characteristics of a company
(a) Liability of the members is limited upto the face value of shares held by them
(b) It is a voluntary association of persons.
(c) A company is a separate body can sue and be sued in its own name
(d) All of the above

Question. Rajan Limited issued 50,000 shares at a price lower than the nominal value of the share. The shares issued are called:
(a) Sweat equity shares
(b) Redeemable Preference shares
(c) Equity shares
(d) Bonus shares

Question. Interest on calls in advance
(a) 6% P.A
(b) 5% P.A
(c) 9% P.A
(d) No Interest

Question. Zen Ltd purchased the sundry assets of M/s Surat Industries for Rs.28,60,000 payable in fully paid shares of Rs.100 each. State the number of shares issued to vendor when issued at premium of 10%.
(a) 28,000
(b) 31,778
(c) 28,600
(d) 26,000

Question. Z limited issued shares of Rs.100 each at a premium of 10%. Mr. Q purchased 500 shares and paid Rs.20 on application but did not pay the allotment money of Rs.30. If the company forfeited his 30% shares, the forfeiture account will be credited by :
(a) Rs. 4500
(b)Rs. 3500
(c) Rs. 1650
(d) Rs. 3000

Question. Minimum number of members in a Private Company
(a) 2
(b) 5
(c) 7
(d) 1

Question. Liability of the member is limited upto the amount he guaranteed to contribute in the event of winding up.
(a) Guarantee company
(b) Statutory Company
(c) Chartered companies
(d) None of the options

Question. Minimum number of members in a Public Company
(a) 7
(b) 2
(c) 5
(d) 3

Question. A company Forfeited 1,000 shares of Rs 10 each, Rs 7 called up . For the non payment of Rs 2 First call .All these shares were reissued at Rs 5 per share . What will be Amount credited to share capital account at reissue:
(a) 7,000
(b) 10,000
(c) 5,000
(d) 2,000

Question. Maximum number of members in a Private Company
(a) 50
(b) 60
(c) 70
(d) 100

Question. Minimum Capital of a Private Company
(a) 1 Lakh
(b) 2 Lakh
(c) 3 Lakhs
(d) None of the options

Question. Interest on calls in arrears
(a) 5% P.A
(b) 6% P.A
(c) 9% P.A
(d) No Interest

Question. If the Purchase consideration is less than net worth then which account will be debited for the difference amount :
(a) Capital Reserve
(b) Assets
(c) Goodwill
(d) Vendor

Question. Minimum subscription in case of public company
(a) 90% of the entire issue
(b) 75% of the entire issue
(c) 50% of the entire issue
(d) None of the options

Question. Minimum application money in case of public limited company
(a) 5% of the nominal face value
(b) 10% of the nominal face value
(c) 15% of the nominal face value
(d) None of the options

Question. Reserve capital is also known by:
(a) Capital reserve
(b) Called up capital
(c) Subscribed capital
(d) None of the above

Question. Minimum Capital of a Public Company
(a) 5 Lakh
(b) 1 Lakh
(c) 2 Lakh
(d) None of the options

Question. Maximum Rate of discount
(a) 10% of the nominal value of share
(b) 5% of the nominal face value
(c) 15% of the nominal face value
(d) None of the options

Question. A ltd company took over assets worth Rs. 10,00,000 and liabilities of Rs. 3,00,000for a purchase consideration of Rs. 12,00,000 Rs. 2,00,000 bill payable accepted and remaining was paid by issuing shares at a premium of 25% on face value Rs. 100. How much amount will be credited to Securities Premium A/c
(a) Rs. 8,00,000
(b) Rs. 2,00,000
(c) Rs. 10,00,000
(d) Rs. 12,00,00

Question. Which of the following statement is false:
(a) A shareholder is the agent of the company
(b) A company is a legal entity quite distinct from its members.
(c) A company can buy its own share
(d) Same person can agent and creditor of the company

Question. Formed by special act of the legislature or parliament Called
(a) Statutory Company
(b) Guarantee company
(c) Chartered companies
(d) None of the options

Question.  Which one of the following is not a part of subscribed capital:
(a) Equity shares issued to vendor
(b) Preference shares of convertible type
(c) Forfeited shares
(d) Bonus shares

Question. Incorporated under special charter by the king or sovereign
(a) Chartered companies
(b) Statutory Company
(c) Guarantee company
(d) None of the options

Question. Minimum number of directors in Pvt. Ltd company
(a) 2
(b) 3
(c) 4
(d) No limit

Question. Minimum number of directors in Ltd company
(a) 3
(b) 2
(c) 4
(d) No limit

Question. A Company forfeited 1,000 shares of Rs 10 each fully called , on which Rs 6,000 has been paid. Out of these 800 shares were reissued upon payment of Rs 6,600. What is the amount to be transferred to capital reserve?
(a) Rs. 4,800
(b) Rs. 6,000
(c) Rs. 4,600
(d) Rs. 3,400

Question. These shares which in addition to the fixed preference dividend, carry a right to participate in the surplus profits, if any, after dividend at a stipulated rate has been paid to the equity share holders are called:
(a) Participating preference shares
(b) Convertible preference shares
(c) Redeemable preference shares
(d) Cumulative preference shares

Question. A company is said to be Deemed Public company if its Annual Turnover exceeds
(a) 25 Crores.
(b) 20 Crore
(c) 30 Crore
(d) None of the options

Question. Share application and allotment account is a:
(a) Personal account
(b) Real account
(c) Nominal account
(d) None of the options

Question. Securities premium account is shown on the liabilities side of the balance sheet under the head:
(a) Reserves and surplus
(b) Share capital
(c) Current liabilities
(d) None of the options

Question. Discount of issue of share shows debit balance and hence shown on the assets side of the balance sheet under the head
(a) Miscellaneous expenditure.
(b) Reserves and surplus
(c) Share capital
(d) Current liabilities

Question. Penalty for delay in refunding application money
(a) 0.15
(b) 0.06
(c) 0.05
(d) 0.2 

Question. Which of the following statement is false?
(a) A company can raise funds beyond its Authorised capital.
(b) Declared dividend should be classified in the balance sheet as a current liability.
(c) Dividends are usually paid as a percentage of paid-up-capital.
(d) As per the companies act, only preference shares which are redeemable within 20 years can be issued.

Question. Which of the following is not a statistical book of a company?
(a) Register of debenture holders
(b) Share application and allotment book
(c) Register of share warrants
(d) Register of shares and debentures transferred

Question. Which of the following is not a statutory book of a company?
(a) Agenda book
(b) Annual returns
(c) Minutes book
(d) Register of fixed deposits

Question. Securities premium once received cannot be cancelled.
(a) True
(b) False
(c) Both
(d) None of the options

Question. Technique used for marketing a public offer of equity shares of a company is called book building process.
(a) True
(b) False
(c) Both
(d) None of the options

Question. As per SEBI guidelines, A new company without any track record can issue share at a premium.
(a) False
(b) True
(c) Both
(d) None of the options 

Question. Share capital suspense account is opened when:
(a) When application money is received but balance sheet is prepared before allotment of shares.
(b) Balance sheet is not tallied
(c) When dividend is declared but not paid
(d) When shares are forfeited

Question. A new company set up by existing companies with five year track record can issue share at premium provided:
(a) All of the options
(b) Participation of existing companies are not less that 50%
(c) Prospectus contains justification for issue price
(d) The issue price is made applicable to all new investors uniformly.

Question. Issue of share at a discount must be authorised by a resolution passed by the company in general meeting and duly sanctioned by the
(a) Central government.
(b) State government.
(c) Local government
(d) None of the options 

Question. A company can issue share at a discount if
(a) Issue must take place within two must after the date of sanction by the court or within extended time
(b) One year have been elapsed since the date at which the company was allowed to commence business
(c) Shares issued at a discount must belong to a class of shares already issued
(d) All of the options

Question. Capital of a Company is divided in units which is called :
(a) Debenture
(b) Share
(c) Stock
(d) Bond

Question. Shareholders receive from the company :
(a) Interest
(b) Commission
(c) Profit
(d) Dividend

Question. Voluntary return of shares for concellation by the shareholders is called
(a) Cancellation of shares
(b) Forfeiture
(c) Surrender of shares
(d) None of these

 Question. If the Premium on the forfeited shares has already been received, then Securities Premium A/c should be
(a) Credited
(b) Debited
(c) No treatment
(d) None of these 

Question. Balance of share forfeiture account is shown in the balance sheet under the head
(a) Share Capital Account
(b) Reserve and Surplus
(c) Current Liabilities and Provisions
(d) Unsecured Loans

Question. Using information given in above question, what is the net balance in Share Forfeiture Account:
(a) Rs 9,600
(b) Rs.6,400
(c) Rs.16,000
(d) Rs.2,800

Question. When a company issues shares at a premium, the amount of premium should be received by the company :
(a) Along with application money
(b) Along with allotment money
(c) Along with calls
(d) Along with any of the above

Question. Amount of securities premium can be utilised for:
(a) Writing off the preliminary expenses of the company
(b) Issuing bonus shares to the shareholders of the company
(c) Buy-back of its own shares
(d) All of the above

Question. Which shareholders are returned their capital after some specified time :
(a) Redeemable Preference Shares
(b) Irredeemable Preference Shares
(c) Cumulative Preference Shares
(d) Participating Preference Shares

Question. The following statements apply to equity/preference shareholders. Which one of them applies only to preference sharehoders?
(a) Shareholders risk the loss of investment
(b) Shareholders bear the risk of no dividends in the event of losses
(c) Shareholders usually have the right to vote
(d) Dividends are usually given at a set amount in every financial year.

Question. Unless otherwise stated, a preference share is always deemed to be :
(a) Cumulative, participating and non-convertible
(b) Non-cumulative, non-participating and non-convertible
(c) Cumulative, non-participating and non-convertible
(d) Non-cumulative, participating and non-convertible 

Question. Which of the following capital is not shown in companys balance sheet:
(a) Reserve Capital
(b) Authorised capital
(c) Issued and Subscribed capital
(d) Called and paid up capital

Question. Permission from central government to issue share capital is required if Nominal capital exceeds
(a) 1 Crore
(b) 2 Crore
(c) 1 Lakh
(d) 2 Lakh

Question. A company has …………….
(a) Separate Legal Entity
(b) Perpetual Existence
(c) Limited Liability
(d) All of the Above

Question. Shareholders are :
(a) Customers of the Company
(b) Owners of the Company
(c) Creditors of the Company
(d) None of these 

Question. Who are the real owners of a company?
(a) Government
(b) Board of Directors
(c) Equity shareholders
(d) Debentureholders 

Question. Authorised capital of a Company is divided into 5,00,000 shares of Rs. 10 each. It issued 3,00,000 shares. Public applied for 3,60,000 shares. Amount of issued capital will be :
(a) Rs.30,00,000
(b) Rs.36,00,000
(c) Rs.50,00,000
(d) Rs.6,00,000

Question. For what purpose securities premium reserve account cannot be utilized?
(a) Amortization of preliminary expenses
(b) Distribution of dividend
(c) Issue of fully paid bonus shares
(d) Buy Back of own shares

Question. Premium on the issue of shares should be shown :
(a) On the Assets side of balance sheet
(b) On the Equity & Liabilities side of balance sheet
(c) In profit & loss Statement
(d) None of the Above

Question. Equity shares cannot be issued for the purpose of:
(a) Cash Receipts
(b) Purchase of assets
(c) Redemption of debentures
(d) Distribution of dividend 

Question. A company cannot issue :
(a) Redeemable Equity Shares
(b) Redeemable Preference Shares
(c) Redeemable Debentures
(d) Fully Convertible Debentures

Question. Authorised Capital of a Company is mentioned in :
(a) Memorandum of Association
(b) Articles of Association
(c) Prospectus
(d) Statement in lieu of Prospectus

Question. In case of private placement of shares, the lock in period is :
(a) 1 Year
(b) 2 Years
(c) 3 Years
(d) None of the above

Question. A Company may issue
(a) Equity Shares
(b) Preference Shares
(c) Equity and Preference both shares
(d) None of the Above

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