Buy Back of Shares MCQ (Free) | Section 68 of Companies Act

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