Chapter accounting-for-share-capital: Accounting for Share Capital Assertion-Reason Questions | accountancy Class 12 CBSE

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 1

Logic Check

Assertion (A): A company is considered an artificial person under the law. Reason (R): A company is created by law and can sue and be sued, hold property, and enter into contracts in its own name.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 2

Logic Check

Assertion (A): Securities Premium Reserve can be used to pay dividend to shareholders. Reason (R): Securities Premium Reserve is part of the company's reserves and surpluses.

Reasoning Options

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Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 3

Logic Check

Assertion (A): Calls in Advance is shown as a liability in the Balance Sheet. Reason (R): Calls in Advance is money received from shareholders before it is actually called up by the company, creating an obligation to adjust it against future calls.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 4

Logic Check

Assertion (A): A company can issue shares at a discount to the general public at any time. Reason (R): The Companies Act, 2013 permits issue of shares at a discount only for reissue of forfeited shares and sweat equity shares.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 5

Logic Check

Assertion (A): When shares are forfeited, the Share Capital Account is debited with the called-up amount. Reason (R): On forfeiture, all entries relating to forfeited shares (except premium already received) are reversed.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 6

Logic Check

Assertion (A): The fact of over-subscription is not reflected in the company's books. Reason (R): In case of over-subscription, the allotment will be equal to the offer, not the total applications received.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 7

Logic Check

Assertion (A): Perpetual succession means a company continues to exist even after the death of all its members. Reason (R): The existence of a company is dependent on the lives of its shareholders.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 8

Logic Check

Assertion (A): Capital profit on reissue of forfeited shares is transferred to Capital Reserve. Reason (R): Capital Reserve is created from capital profits and cannot be distributed as dividend.

Reasoning Options

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Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 9

Logic Check

Assertion (A): Paid-up capital can exceed called-up capital in a company. Reason (R): Paid-up capital is that portion of called-up capital which has actually been received from shareholders.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 10

Logic Check

Assertion (A): A preference shareholder has a right to receive dividend before equity shareholders. Reason (R): Preference shares carry a preferential right to dividend at a fixed amount or fixed rate before any dividend is paid to equity shareholders.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 11

Logic Check

Assertion (A): When shares issued at premium are forfeited for non-payment of first call, the Securities Premium Reserve Account should be debited. Reason (R): The premium amount on forfeited shares must always be written back irrespective of whether it was received or not.

Reasoning Options

ByteNotes

Assertion-Reason

Hard difficulty • Check the statement and reason

Hard

Question 12

Logic Check

Assertion (A): The minimum amount of Calls in Advance on which interest is paid is Rs. 100 per shareholder. Reason (R): Interest on Calls in Advance is payable at a rate not exceeding 12% per annum as per Table F.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 13

Logic Check

Assertion (A): A One Person Company can carry out non-banking financial investment activities. Reason (R): An OPC has only one member and hence has fewer restrictions than a private company.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 14

Logic Check

Assertion (A): Reserve Capital is available to the creditors of the company during normal operations. Reason (R): Reserve Capital is that portion of uncalled capital which can be called only on winding up of the company.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 15

Logic Check

Assertion (A): Forfeited shares can be reissued at a price lower than the face value. Reason (R): The discount allowed on reissue cannot exceed the amount already received on forfeited shares, as credited in Share Forfeiture Account.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 16

Logic Check

Assertion (A): Share Application Account is a temporary account. Reason (R): Share Application Account is ultimately closed by transferring the balance to Share Capital Account; excess is refunded or adjusted towards allotment.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 17

Logic Check

Assertion (A): When a company makes a pro-rata allotment, every applicant gets shares in proportion to the shares applied for. Reason (R): Pro-rata allotment ensures equal treatment of all applicants who are allotted shares in the same ratio.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 18

Logic Check

Assertion (A): Interest on calls in arrears is income for the company. Reason (R): Calls in arrears represent the amount due from shareholders that has not been paid, and the company charges interest on such delayed payments.

Reasoning Options

ByteNotes

Assertion-Reason

Medium difficulty • Check the statement and reason

Medium

Question 19

Logic Check

Assertion (A): The number of shares to be issued for consideration other than cash is calculated as Amount Payable divided by Issue Price. Reason (R): When shares are issued at premium for purchase of assets, fewer shares are needed compared to issuance at par.

Reasoning Options

ByteNotes

Assertion-Reason

Easy difficulty • Check the statement and reason

Easy

Question 20

Logic Check

Assertion (A): A company with limited liability by shares is the most common form of company in India. Reason (R): In companies limited by shares, the liability of members is restricted to the unpaid amount on shares held by them.

Reasoning Options

ByteNotes

Chapter sections

Chapter accounting-for-share-capital: Accounting for Share Capital | Assertion-Reason

Assertion (A): A company is considered an artificial person under the law. Reason (R): A company is created by law and can sue and be sued, hold property, and enter into contracts in its own name.

Assertion (A): Securities Premium Reserve can be used to pay dividend to shareholders. Reason (R): Securities Premium Reserve is part of the company's reserves and surpluses.

Assertion (A): Calls in Advance is shown as a liability in the Balance Sheet. Reason (R): Calls in Advance is money received from shareholders before it is actually called up by the company, creating an obligation to adjust it against future calls.

Assertion (A): A company can issue shares at a discount to the general public at any time. Reason (R): The Companies Act, 2013 permits issue of shares at a discount only for reissue of forfeited shares and sweat equity shares.

Assertion (A): When shares are forfeited, the Share Capital Account is debited with the called-up amount. Reason (R): On forfeiture, all entries relating to forfeited shares (except premium already received) are reversed.

Assertion (A): The fact of over-subscription is not reflected in the company's books. Reason (R): In case of over-subscription, the allotment will be equal to the offer, not the total applications received.

Assertion (A): Perpetual succession means a company continues to exist even after the death of all its members. Reason (R): The existence of a company is dependent on the lives of its shareholders.

Assertion (A): Capital profit on reissue of forfeited shares is transferred to Capital Reserve. Reason (R): Capital Reserve is created from capital profits and cannot be distributed as dividend.

Assertion (A): Paid-up capital can exceed called-up capital in a company. Reason (R): Paid-up capital is that portion of called-up capital which has actually been received from shareholders.

Assertion (A): A preference shareholder has a right to receive dividend before equity shareholders. Reason (R): Preference shares carry a preferential right to dividend at a fixed amount or fixed rate before any dividend is paid to equity shareholders.

Assertion (A): When shares issued at premium are forfeited for non-payment of first call, the Securities Premium Reserve Account should be debited. Reason (R): The premium amount on forfeited shares must always be written back irrespective of whether it was received or not.

Assertion (A): The minimum amount of Calls in Advance on which interest is paid is Rs. 100 per shareholder. Reason (R): Interest on Calls in Advance is payable at a rate not exceeding 12% per annum as per Table F.

Assertion (A): A One Person Company can carry out non-banking financial investment activities. Reason (R): An OPC has only one member and hence has fewer restrictions than a private company.

Assertion (A): Reserve Capital is available to the creditors of the company during normal operations. Reason (R): Reserve Capital is that portion of uncalled capital which can be called only on winding up of the company.

Assertion (A): Forfeited shares can be reissued at a price lower than the face value. Reason (R): The discount allowed on reissue cannot exceed the amount already received on forfeited shares, as credited in Share Forfeiture Account.

Assertion (A): Share Application Account is a temporary account. Reason (R): Share Application Account is ultimately closed by transferring the balance to Share Capital Account; excess is refunded or adjusted towards allotment.

Assertion (A): When a company makes a pro-rata allotment, every applicant gets shares in proportion to the shares applied for. Reason (R): Pro-rata allotment ensures equal treatment of all applicants who are allotted shares in the same ratio.

Assertion (A): Interest on calls in arrears is income for the company. Reason (R): Calls in arrears represent the amount due from shareholders that has not been paid, and the company charges interest on such delayed payments.

Assertion (A): The number of shares to be issued for consideration other than cash is calculated as Amount Payable divided by Issue Price. Reason (R): When shares are issued at premium for purchase of assets, fewer shares are needed compared to issuance at par.

Assertion (A): A company with limited liability by shares is the most common form of company in India. Reason (R): In companies limited by shares, the liability of members is restricted to the unpaid amount on shares held by them.

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