Questions and Answers of Corporate Accounting

Intrinsic value per share is equal to ____________ divided by the number of equity shares.
True and False. It is imperative to convert partly paid-up shares into fully paid-up shares by making a notional call, in the case of partly paid-up and fully paid-up shares.
True and False. The intrinsic value of shares and the yield value of shares are not connected with the fair value of shares.
Yield value per share is equal to expected rate of return divided by normal rate of return and multiplied by ____________.
True and False. The expected rate of return is computed when only a few shares are to be sold.
Fair value of shares is the ____________ of the net assets value and yield value of shares.
True and False. Asset backing method is another name of intrinsic value method.
Market value method is also known as ____________.
From the following items found in the trial balance of a company on 31st December 2016 and the adjustments given, show how the items would appear in the relevant accounts.Adjustments: (a).
Define the term Dividend.
Amount realised from sale of goods is regarded in the statement of Profit & Loss as: (a). Other income.(b). Revenue from operations.(c). Any of the above. (d). None of the above.
True and False. Unclaimed dividend can be transferred to capital reserve after the expiry of six years.
Expenses incurred for the employees are called as ____________.
What are the legal requirements for preparing company final accounts as per Companies (Amendment) Act, 1988?
Gain on sale of fixed assets is shown in the statement of Profit & Loss as: (a). Other income (b). Revenue from operations (c). Any of the above (d). None of the above
True and False. Calls-in-Advance are shown as other current liability.
Expenses incurred by the company on the borrowings are called as ____________.
Discuss about the managerial remuneration eligible for different managerial personnel.
Dividend received by a financial company is shown in the statement of Profit & Loss as: (a). Other income (b). Revenue from operations (c). Any of the above (d). None of the
True and False. Bank charges levied by the bank are shown as finance costs.
____________ is the distribution of cost of fixed cost over its useful life.
Write the format of statement of Profit & Loss as per Revised Schedule VI.
The following ledger balances were extracted from the books of Varun Ltd., as on 31st March 2016:Land & Building ₹2,00,000; 12% Debentures ₹2,00,000; Share Capital ₹10,00,000 (equity shares
Raw materials purchased is considered in the statement of Profit & Loss as: (a). Cost of materials consumed (b). Purchase of stock in trade (c). Changes in inventories (d).
True and False. Sale of scrap is treated as revenue from operations by a manufacturing company.
____________ is writing off of intangible assets.
Write the format of balance sheet as per Revised Schedule VI.
Goods purchased for reselling is regarded in the statement of Profit & Loss as: (a). Cost of materials consumed (b). Purchase of stock in trade (c). Changes in
True and False. Shareholders can increase the rate of dividend as directed by the directors.
State any two items appearing under other income.
Share capital includes both ____________ and ____________.
What is meant by Corporate Dividend Tax? Write its accounting treatment.
From the following particular, determine the maximum remuneration available to a full-time director of a manufacturing company. The Profit & Loss A/c of the company showed a net profit of
Payment of wages and salaries is shown in the statement of Profit & Loss under: (a). Employees benefit expenses (b). Other expenses (c). Finance costs (d). None of these
True and False. Share application money outstanding allotment is shown as a current liability.
What are Tangible Assets?
Liabilities, which are not current liabilities, are termed as ____________.
Give the rules regarding transfer of profits to reserves.
Payment of interest on debentures and bank overdraft is shown in the statement of Profit & Loss under the head: (a). Employees benefit expenses (b). Other expenses (c). Finance
True and False. Spares and stores, and also loose tools are treated as other current assets.
How do you deal with provision for tax in final accounts of companies?
Liabilities that are to be settled within 12 months are termed as ____________.
Explain the provisions relating to transfer to reserves.
Preliminary expenses written off is shown in the statement of Profit & Loss as:(a). Employees benefit expenses. (b). Other expenses. (c). Finance costs. (d). Depreciation and
True and False. Dividend is not paid on Calls-in-Advance.
Give the meaning of Cost of Materials Consumed.
Trade payables include ____________ and ____________.
Carriage outwards is shown in the statement of Profit & Loss as: (a). Employees benefit expenses (b). Other expenses (c). Finance costs (d). Depreciation and amortisation
True and False. Provision for tax is regarded as a charge against profit and not as an appropriation of profit.
Trade receivables include ____________ and ____________.
Debentures redeemable after 10 years of issue are considered as: (a). Long-term borrowings (b). Short-term borrowings (c). Other current liabilities (d). None of these
True and False. If rate of dividend is 20%, then the company has to transfer 7.5% of the current profit to reserve.
What is the maximum rate of managerial remuneration in case of a public limited company?
Assets, which have physical existence, are called ____________.
Bank overdraft is shown in the balance sheet of a company as:(a). Long-term borrowings (b). Short-term borrowings (c). Other current liabilities (d). None of these.
What do you mean by Non-current Liabilities?
Assets that are to be converted into cash within 12 months are known as ____________.
Dividend is paid on: (a). Authorised capital (b). Issued capital (c). Called-up capital (d). Paid-up capital.
Briefly state the meaning of Shareholders Funds.
Statement of Profit & Loss shows ____________ performance.
Securities premium is shown in the balance sheet of a company under: (a). Share capital (b). Reserves and surplus (c). Long-term borrowings (d). None of these.
Balance sheet is a statement of ____________ and ____________.
What do you mean by Trade Receivable?
Alpha Ltd. was incorporated on 1st July 2000, to take over the business carried on by Gopal with effect from 1st April 2000. The following is the Profit & Loss A/c for the year ended 31st March
A company was incorporated on 1st May 1994 to take over a business as a going concern from 1st January of the same year. The turnover for the year ended 31st December was ₹2,00,000, namely
Explain the accounting treatment for Profit Prior to Incorporation in Accounts.
Mohan Company Ltd. was incorporated on 30th June 1995 to take over the business of Mr. K Mohan, as from 1st January 1995. The financial accounts of the business for the year ended 31st December 1995
Vector Ltd. was incorporated on 1st April 1990 for the purpose of taking over the business of Shanta stores as a going concern from 1st January 1990. Purchase consideration will be paid on 31st
X company purchased a business on 1st April 1993. The company obtained certificate of incorporation on 31st July 1993. From the following particulars for the year ending 31st March 1994, ascertain
True and False. Pre-incorporation loss may be treated as revenue loss and debited to profit and loss account.
Establishment expenses are apportioned in the ____________ to ascertain preincorporation profits.
Dravida Nadu Enterprise decided to convert his firm into a limited company with effect from 1st April 1996. But he obtained the certificate of incorporation on 1st August 1996 and certificate to
Explain the term Profits Prior to Incorporation.
Profit prior to incorporation is the profit earned: (a). Between the date of incorporation and the date of commencement of business;(b). Between the date of purchase of business and the date of
True and False. Gross profit is to be divided between pre- and post-incorporation periods in sales ratio.
The two important ratios in the calculation of pre-incorporation profit are ____________ and ____________.
Mahesh, a sole trader has decided to convert his business into a Public Ltd. Company. Calculate time ratio from the following information:(a). Date of sale of the business to the company 30th June
Why do you calculate Profit Prior to Incorporation?
Enumerate the different methods of ascertaining Profit Prior to Incorporation.
Profit prior to incorporation belongs to: (a). The company.(b). The vendor (c). Both the company and the vendor (d). None of the above.
True and False. Profits prior to incorporation are capital profits and are not available for dividend.
Amaravathi sold her business to Komala Ltd., with effects from 1st January 2007 for ₹5,00,000. The company was incorporated on 1st April 2007 and on 31st December 2007, the accounts were
Pre-incorporation profit should be taken as ____________ profit.
Calculate sales ratio from the following particulars: Total sales is ₹10,00,000 and sales during pre-incorporation period is ₹2,00,000.
State the accounting treatment for Profit Prior to Incorporation in accounts?
What are the different ratios used in computing Profit Prior to Incorporation? Briefly describe each of them.
Profit prior to incorporation should be credited to: (a). Asset A/c (b). Profit and Loss A/c (c). Capital Reserve A/c (d). None of the above
True and False. Variable expenses are to be divided in sales ratio, while computing preincorporation profit.
Interest paid to vendors should be apportioned in ____________ ratio.
XYZ Ltd. Company was incorporated on 1st July 2008 in order to purchase a running business from 1st January 1998. From the following particulars, calculate pre-incorporation loss:(a). Total sales for
Explain the various purposes for which profit prior to incorporation can be used?
How do you apportion various expenses and incomes between Pre- and Postincorporation Periods?
Gross profit is to be apportioned between pre- and post-incorporation periods in: (a). Time ratio (b). Adjusted time ratio (c). Sales ratio (d). None of the above.
True and False. For calculating pre-incorporation profit, date of commencement of business is the relevant date in the case of the company over a period of time.
Calculate sales ratio from the following particulars: Total sales is ₹10,00,000 and sales during pre-incorporation period is ₹2,00,000.
Partner’s salary is debited to the ____________ period.
ABC Ltd. was formed on 1st May 2008 and it obtained the certificate of commencement of business on 1st June 2008. It acquired a running business with effect from 1st January 2008. Books were closed
What is the accounting treatment for Loss Prior to Incorporation in accounts?
Discuss the treatment of the following items with appropriate reasons, while ascertaining Profit Prior to Incorporation. a. Rent b. Depreciation c. Directors’ Fees d. Audit
Bad debts are to be apportioned in: (a). Time ratio (b). Sales ratio (c). Post in pre-incorporation period (d). Post in post-incorporation period.

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