Buy Back of Shares MCQ (Free) | Section 68 of Companies Act
Buy Back of Shares MCQ
1. Buy back of equity shares is permissible to the limit of ___________ in a year.
a) 30%
b) 25%
c) 10%
d) 20%
2. Amount payable on buy back cannot exceed 25% of _____________ .
a) capital, premium, reserves (shareholders fund)
b) Debt
c) none of the above
3. For calculation of limit of capital and reserve, the amount as per __________ should be considered.
a) Profit & Loss Account
b) latest Balance Sheet
c) none of the above
4. The post buy back debt–equity ratio should not exceed ____________ .
a) 02:02
b) 01:02
c) 01:01
d) 02:01
5. The buyback must be completed within _________ months from the date of resolution.
a) three
b) two
c) twelve
d) six
6. The company should open___________ Account with bank to provide fund for buy back.
a) fixed deposit
b) Saving
c) Current
d) Escrow
7. Buy back of shares can be of _____________ paid up shares.
a) fully
b) partly
c) fully subscribed
d) none of the above
8. The company issue ___________ class of shares which are subject to buy back.
a) equity share
b) preference share
c) Both a & b
d) none of the above
9. Capital redemption reserve is to be created to the extent of ___________ .
a) face value of shares
b) Market Value
c) none of the above
10. Security premium can be __________ for calculating limit.
a) included
b) Excluded
c) none of the above
| Answers: 1)25% 2)capital, premium, reserves (shareholders fund) 3)latest Balance Sheet 4)02:01 5)twelve 6)Escrow 7)fully 8)equity 9)face value of shares 10)included |
11. The buy back of shares can be effected by purchase from __________ .
a) open market
b) Private
c) none of the above
12. The buy back of share is governed by Section _________ of Companies Act.
a) 75
b) 78
c) 80
d) 68
13. Buy Back of shares is for ________ class of shares.
a) preference shares
b) equity shares
c) both a & b
d) none of the above
14. Partly paid shares _________ be bought back.
a) can not
b) can
c) none of the above
15. The amount paid in excess of face value of shares bought back should be debited to __________ .
a) dividend equalisation reserve
b) General Reserve
c) revaluation reserve
d) premium / reserves
16. The buy back of shares upto 10% of capital can be authorized by __________ .
a) directors
b) shareholder
c) creditors
d) none of the above
17. ________ can authorize buy back of shares between 10% and 25%.
a) creditors
b) debentureholder
c) directors
d) Shareholders
18. The shares which are subject to buy back should be physically __________ .
a) re- issued
b) ignored
c) destroyed
d) none of the above
19. The buy back of shares results in reduction of ________ capital of a company.
a) nominal
b) paid-up
c) fully paid up
d) none of the above
20. Authorized capital of a company is ________ to the extent of shares bought back.
a) disclosed
b) reduction
c) not reduced
d) none of the above
| Answers: 11)open market 12)68 13)equity 14)can not 15)premium / reserves 16)directors 17)Shareholders 18)destroyed 19)paid-up 20)not reduced |
21. Buyback of shares leads to _________ in the EPS.
a) disclosed
b) decerase
c) increase
d) none of the above
22. Buyback of own shares requires permission from ___________ .
a) shareholders
b) Article of Association
c) directors
d) none of the above
23. Discount on buyback is credited to _________ Account.
a) General Reserve
b) Revaluation Reserve
c) Profit and Loss A/c
d) Capital Reserve
24. Investment allowance reserve is a ____________ .
a) proceeds of fresh issue
b) paid up capital and reserves
c) securities premium
d) free reserve
25. Buyback of equity shares conditions are specified by section ________ of the Companies Act.
a) 66
b)75
c) 81
d) 68
26. Buyback must be authorized by _________ .
a) MOA
b) Auditors of the company
c) Central Government
d) AOA
27. Debt equity ratio after buyback must not be more than ________ .
a) 01:01
b) 01:02
c) 02:02
d) 02:01
28. After completion of buyback, the return must be filed with ____________.
a) Registrar of companies
b) SEBI
c) Registrar and SEBI
d) Registrar of Stock Exchange
29.The company must open an __________ A/c to comply with the obligations of buyback.
a) Saving
b) Currrent A/c
c) Fixed deposit
d) Escrow
30. Buyback expenses may be treated as _________ expenses.
a) Debenture
b) Revenue
c) share capital
d) none of the above
| Answer: 21)increase 22)Article of Association 23)Capital Reserve 24)free reserve 25)68 26)AOA 27)02:01 28)Registrar and SEBI 29)Escrow 30)Revenue |
31. Revaluation Reserve is not a ___________ .
a) Free Reserve
b) General Reserve
c) Revaluation reserve
d) none of the above
32. Discount on buyback is transferred to __________ A/c.
a) Capital Reserve
b) Profit and Loss A/c
c) General Reserve
d) none of the above
33. Capital Redemption Reserve need not be created when the buyback is not out of _________ .
a) divisible profit
b) Fresh issue
c) none of the above
34. The provisions of buy back of shares are specified in Section ___________ of Companies Act.
a) 68
b) 75
c) 78
d) 80
35. Maximum buy back in a year can be ___________ %.
a) 10%
b) 20%
c) 25%
d) 30%
36. The shares bought back should be ____________ .
a) re- issued
b) pledged to loan
c) cancelled
d) ignored
37. The premium paid on buy back should be provided out of ___________.
a) security premium
b) share capital
c) statutory reserves
d) capital reserves
38. The amount not collected by shareholders should be shown as ___________ .
a) current liabilities
b) capital reserve
c) share capital
d) reserve capital
39. The Debt : Equity ratio, after buy-back should not exceed _________ .
a) 02:01
b) 01:01
c) 01:02
d) 03:04
40. The security under Buyback cannot be issued within _____________ .
a) one year
b) two year
c) six months
d) three months
| Answer: 31)Free Reserve 32) Capital Reserve 33)divisible profit 34)68 35)25% 36)cancelled 37)security premium 38)current liabilities 39)02:01 40)two year |
41. For a buy-back, a company should open an escrow account with __________ .
a) stock exchange
b) broker
c) underwriter
d) bank
42. Board of directors can approve buy back upto ________.
a) 25%
b) 10%
c) 20%
d) 5%
43. The company before buy back has to submit a declaration of ___________ .
a) liquidity
b) solvency
c) insolvency
d) competency
44. A company can buy back ____________ .
a) preference shares
b) equity shares
c) none of the above
d) both (a) and (b)
45. Buyback of shares can be out of ____________.
a) profits only
b) proceeds of fresh issue only
c) capital profit only
d) free reserves or securities premium or proceeds of shares
46. The reserve, which is not a free reserve for the purpose of buyback of shares, is ___________ .
a) Profit & Loss Account
b) dividend equalisation reserve
c) revaluation reserve
d) general reserve
47. Buyback of equity shares in any financial year shall not exceed 25% of its __________ .
a) paid up equity capital of the company
b) paid up capital and reserves
c) paid up capital and free reserves
d) nominal capital and free reserves
48. Which of the following is a free reserve for the purpose of buyback of shares?
a) workmen’s compensation fund (after meeting liabilities)
b) capital redemption reserve
c) debenture redemption reserve
d) Forfeited Shares Account
49. In case equity shares are bought back out of free reserve, amount equal to face value of equity shares bought back should be transferred to ___________.
a) General Reserve Account
b) Development Rebate Reserve
c) Sinking Fund Account
d) Capital Redemption Reserve Account
50. The objective of buyback of equity shares is ___________.
a) To reduce earning per share
b) To increase share capital
c) To bring cash in business
d) None of the above
| Answer: 41)bank 42)10% 43)solvency 44)both a & b 45)free reserves or securities premium or proceeds of shares 46)revaluation reserve 47)paid up equity capital of the company 48)workmen’s compensation fund (after meeting liabilities) 49)Capital Redemption Reserve Account 50)None of the above |
