corporate accounting mcq

CORPORATE ACCOUNTING MCQ WITH SOLUTION

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  • Debentures represent _________________.
    1. Long-term borrowings of a company
    2. The investment of equity shareholders
    3. Director’s share in a company
    4. Short-term borrowings of a company

  • Income tax deducted from interest paid on debentures is shown as ______________.
    1. Expenses of company
    2. Assets of company
    3. Liability of company
    4. Income of company

  • Loss on issue of debenture a/c is ______________.
    1. Liability
    2. Gain
    3. Profit
    4. Expenses

  • Which debenture is transferred by mere delivery ?
    1. Registered Debenture
    2. Bearer Debenture
    3. First Debenture
    4. None of these

  • Zero coupon bonds are issued _____________.
    1. With specified rate of interest
    2. Without specified rate of interest
    3. At zero interest rate
    4. None of these

  • What is entitled to the debenture holder?
    1. Fixed dividend
    2. Share in profit
    3. Voting rights in a company
    4. Interest at fixed rate

  • Interest payable on debenture is _________________.
    1. An appropriation of profit
    2. Charge against profit
    3. Transferred to sinking fund
    4. Transferred to general reserve

  • Loss on issue of debenture is generally written off in ____________.
    1. 5 years
    2. 10 years
    3. 15 years
    4. Over the period of redemption

  • Non-convertible debentures refer to ____________.
    1. Owners capital
    2. Loan capital
    3. Short term fund
    4. None of these

  • Premium on redemption on debenture account is a ____________.
    1. Assets
    2. Liability
    3. Expenses
    4. Revenue



  • Issue Rs. 5000, 8% debenture of Rs. 100 each at a premium of 3% redeemable at a premium of 5% in such case,  ____________.
    1. Loss on issue debited by 20000
    2. Profit on issue debited by 40000
    3. Loss on issue debited by 25000
    4. None of these

  • Debenture application account is in the nature of ___________.
    1. Real account
    2. Personal account
    3. Nominal account
    4. None of the above

  • On liquidation of the company, the principal amount of debenture is returned _____________.
    • Before equity capital
    • After equity capital
    • Last at all
    • First at all

  • Which account is credited on the issue of debenture as a collateral security?
    • Debenture a/c
    • Bank Loan a/c
    • Debenture suspense a/c
    • None of these

  • What is the nature of a discount on the issue of debentures?
    • Capital loss
    • Revenue loss
    • Deferred revenue expenditure
    • Profit

  • If a vendor is issued debentures of Rs. 2,20,000 in consideration of assets of Rs. 2,50,000 and liabilities of Rs. 50,000, the balance of Rs. 20,000 will be debited to _____________?
    • Goodwill account
    • Capital reserve account
    • Statement of profit and loss account
    • General reserve account

  • Interest on debenture issued as a collateral security is paid on ____________.
    • Nominal value of debenture
    • No interest paid
    • Face value of debenture
    • Paid up value of debenture

  • Debentures of a company can be issued _____________.
    • For consideration other than cash
    • For cash
    • As collateral security
    • Any of these

  • The principal amount of debentures will be repaid by the company either at the end of a specified period or by installments during the lifetime of the company. Such types of debentures are called _____________.
    • Redeemable Debentures
    • Irredeemable Debentures
    • Convertible Debentures
    • Bearer Debentures

  • Who is the debenture-holder of a company?
    • Owner
    • Creditors
    • Debtor
    • Promoters

  • Which of the following statements is false?
    • A company can issue redeemable debentures
    • A company can issue debentures with voting rights
    • Company can issue convertible debentures
    • A company can buy its own debentures and shares

  • Find the false statement.
    • Debenture is a form of public deposit.
    • It is customary to prefix debentures with the agreed rate of interest.
    • The issue price and redemption value of debenture cannot differ.
    • Debenture interest is a charge against profit.




  • Which is not a feature of Bearer debenture?
    • They are treated as negotiable instruments.
    • Their transfer requires a transfer deed.
    • They are transferable by mere delivery
    • The interest is paid to the holder, irrespective of identity.

  • Source of finance of redemption is ____________.
    • Redemption of profit
    • Redemption out of capital
    • The process from fresh issue of shares
    • All of the above

  • Provident fund is a ____________.
    • Provision
    • Surplus
    • Current Liability
    • Loan

  • Trade investments appear in a company’s balance sheet in the sub-head ____________.
    • Current investment
    • Non-current investment
    • Short-term loans and advances
    • None of these 

  • Provisions for tax appear in a company balance sheet under the sub-head ___________.
    • Short term provisions
    • Long term provisions
    • Reserve & Surplus
    • None of these

  • Unclaimed dividend appears in a company balance sheet under the sub-head ____________.
    • Other current liabilities
    • Trade payable
    • Current assets
    • None of these

  • When financial statements of several years are analyzed, it is termed as ____________.
    • Vertical analysis
    • Horizontal analysis
    • Both (a) & (b)
    • None of these

  • Which of the following is not a current asset ?
    • Stock
    • Debtors
    • Prepaid expenses
    • Patents

  • Dividend is usually paid on _____________.
    • Authorized capital
    • Issue share capital
    • Paid up share capital
    • Called up share capital

  • Balance sheet is based upon which of the following _____________.
    • Assets = Liabilities + Shareholders’ equity
    • Shareholders’ equity = Liabilities – Assets
    • Assets + Liabilities = Shareholders’ equity
    • None of these

  • Bills receivable appear in the company balance sheet under the sub-heading ______________.
    • Current investments
    • Trade receivables
    • Trade payables
    • None of these

  • A financial statement that summarizes company revenue and expenses is _____________.
    • Balance sheet
    • Income statement
    • Cash flow statement
    • None of these

  • Which statement provides profitability of a business ?
    • Balance sheet
    • Income statement
    • Fund flow statement
    • None of these

  • Goodwill is a ______________.
    • Real assets
    • Fictitious assets
    • Tangible assets
    • Intangible assets

  • Sinking fund is a _____________.
    • Provision
    • Surplus
    • Current Liability
    • None of these

  • Proposed dividend is a _____________.
    • Short term provision
    • Surplus
    • Other current liabilities
    • None of these

  • Unclaimed dividend is _____________.
    • Provision
    • Current Liabilities
    • Current assets
    • Contingent Liability

  • Balance Sheet shows _____________.
    • Profit or loss of company
    • Financial position of company
    • Both (a) & (b)
    • None of these

  • Which of the following is not current liability ?
    • Mortgage Land
    • Bank overdraft
    • Outstanding wages
    • None of these

  • Profit is earned if _____________.
    • Assets exceeds expenditure
    • Income exceeds expenses
    • Assets exceeds liabilities
    • None of these

  • Call in advance appears in the company balance sheet under ____________.
    • Current liability
    • Share Capital
    • Long term borrowings
    • None of these

  • Which tangible asset is not depreciated ?
    • Vehicles
    • Building
    • Land
    • Machinery

  • Which one is true regarding financial statements ?
    • Financial statements reflect the recorded facts.
    • Financial statements disclose monetary and non-monetary facts.
    • Recorded facts are based on replacement cost.
    • Financial statements accomplish only external reporting.

  • Interest on the sinking fund is credited to ______________.
    • P/L account
    • Sinking fund account
    • General Reserve account
    • Sinking fund investment account

  • Loss on issue of debenture is written off ______________.
    • Capital reserve
    • Secret reserve
    • Reserve capital
    • None of these

  • Interest on debenture is calculated on _____________.
    • Face value
    • Issue price
    • Book value
    • Cost price

  • Loss on issue of debenture is ______________.
    • Capital loss
    • Revenue loss
    • Normal loss
    • Abnormal loss

  • Premium on redemption on debenture account is a ______________.
    • Personal account
    • Real account
    • Nominal account
    • None of these

  • Debenture can be redeemed out of ______________.
    • Capital
    • Profit
    • Conversion
    • All of the above

  • Preference shareholders are ______________.
    • Owner of the company
    • Customer of company
    • Creditors of company
    • None of these

  • Preference shares can be redeemed from the _____________.
    • Proceed of fresh issue of share
    • General reserve
    • Accumulated profit
    • All of the above

  • Preference share of a company cannot be redeemed _____________.
    • At par
    • At discount
    • None of these
    • At premium

  • Which of the following is an example of capital profit ?
    • Capital reserve
    • Securities premium
    • Forfeited share
    • All of the above

  • Profit available for dividend distribution is called _____________.
    • Capital profit
    • Divisible profit
    • Capital reserve
    • None of these

  • A company has _____________.
    • Separate legal entity
    • Perpetual existence
    • Limited liability
    • All of the above

  • Shareholders are _____________.
    • Customer of the company
    • Owner of the company
    • Creditors of the company
    • None of these

  • What is the nature of a Share Application Account ?
    • Real Account
    • Nominal Account
    • Personal Account
    • All of these

  • When shares are issued at a higher price than its face value is called _____________.
    • Issued at discount
    • Issue at premium
    • Issued at profit
    • Issued at loss 

  • Person who starts the company is ______________.
    • Promoters
    • Shareholders
    • Directors
    • Auditors

  • The portion of the capital which can be called-up only on the winding up of the company is called _______________.
    • Reserve capital
    • Authorized capital
    • Called up capital
    • Paid up capital

  • What is transferred to the Capital Reserve?
    • Profit from sale of fixed assets
    • Premium on issue of shares
    • Profit on Forfeiture of shares
    • All of these

  • When an appropriation of a certain number of shares is made to an applicant in response to his application, it is called ______________.
    • Share forfeiture
    • Trading
    • Share allotment
    • Share purchase

  • Who receives the dividend of the company ______________.
    • Accountant
    • Auditor
    • Shareholders
    • Government

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