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Saturday, September 12, 2020

MCQ - Right Shares and Bonus Shares | Multiple Choice Questions and Answers | Company Accounts | Corprorate Accounts | CMA MCQ


Multiple Choice Questions and Answers on Right Shares and Bonus Shares (MCQ)
For B.Com/CA/CS/CMA Exams
State whether the following statements are true or false:
1. As per Section 62 of the Companies Act 2013, Rights shares are issued after two years from the formation of a company or the expiry of one year from the first allotment of shares in the company whichever is earlier.   True
2. Right shares are first offered to the existing share holders.                                     True
3. Right share are not offered to the existing equity shareholders if:
a.       The company in general meeting has so decided by a special resolution
b.      Decided by an ordinary resolution and same has been approved by the central government
c.       Right shares are offered to existing shareholders only. (Sometimes it is issued to the outsiders if point a and b is satisfied.}
d.      Both a and b.
4. As per SEBI guidelines right issue should be kept open for minimum 30 days and not be kept open for more than 60 days.                                True
5.  Section 62 is not applicable to:
a.       A private company
b.      Conversion of debenture into shares
c.       Option to subscribe for shares in the company attached to debentures issued or loan raised by the company
d.      All of the above.
6. Which of the following statement in false:
a.       Bonus issue is made out of free reserves or securities premium collected in cash only.
b.      Bonus shares can be issued out revaluation profit.
c.       No bonus issue shall be made within 12 months of any public or right issue.
d.      Company can issue bonus shares in any ratio.
7. If after bonus issue the subscribed and paid up capital exceed the authorised share capital, a resolution shall be passed by the company to increase its authorised share capital.                                                True
8. Which of the following Reserves which are not available for issue of fully paid bonus shares:
a.       Profit and loss account
b.      Dividend equalisation reserve
c.       Capital reserve arising due to revaluation
d.      Capital redemption reserve
9. Bonus shares can be issued at a premium.                                       True
10. Which of the following reserves which can be utilised to make partly paid shares into fully paid up:
a.       Securities premium
b.      Capital redemption reserve
c.       Surplus arising from a change in the method of charging depreciation
d.      Capital reserve from sale of fixed assets in cash
11. Issue of bonus share must be provided in the articles of association of the company.                                               True
12. Which of the following statement is false:
a.      Bonus issue is made in lieu of dividend.
b.      Bonus issue is not made unless the partly paid shares are made fully paid up
c.       Bonus issue must be implemented within 15 days from the date of such approval (if Shareholders’ approval is not required) or 2 months (if Shareholders’ approval is required).
d.      Bonus is simply capitalisation of free reserves
13. Which of the following is a free reserves:
a.       Plant revaluation reserve
b.      Development rebate reserve
c.       Investment allowance reserve
d.      Capital reserve collected in cash
14. A ltd is planning to raise funds by making right issue of equity shares to finance its expansion. The existing share capital of the company is one crore. Face value of the shares I Rs. 10 and Market Value is Rs. 40. The company made a right issue of 3 new shares for every 5 old shares @ Rs. 15. From the information given above calculate:
(a) Theoretical market price after right issue
a.       30
b.      30.25
c.       30.63
d.      31
(b) Value of Rights
a.       9.11
b.      9.37
c.       9.50
d.      9.67
(c) Percentage increase in share capital:
a.       40%
b.      50%
c.       60%
d.      70%
(d) Percentage increase in total funds:
a.       80%
b.      90%
c.       75%
d.      100%
15. A resolution must be passed by the board of directors recommending its decision to issue bonus shares. True
16. A company can issue bonus shares even if company has defaulted in payments of interest, debt and statutory dues. False
17. Once the decision to make a bonus issue is announced, the same cannot be withdrawn.        True
18. The following formula is used to find the value of right: R = (M-S)/(N+1): Where R = Value of one right share
M = Cum-right market price of a share
S = Subscription price of issue price for a new share

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