Internal Reconstruction MCQ (Free) | Capital Reduction
Internal Reconstruction MCQ
1. The reduction of capital is permitted under _____________ of Companies Act.
a) 77
b) 100
c) 66
d) 75
2. The Capital reduction means reduction in ____________ value of shares.
a) authorized capital
b) Called up capital
c) Uncalled capital
d) paid–up value
3. The Sub – division of shares does not result in ___________ of capital.
a) reduction
b) added
c) Compromise
d) none of the above
4. The Shareholders can surrender shares for ________ or ____________ .
a) re-issue, cancellation
b)Fresh Issue, Redemption
c) none of the above
5. The internal reconstruction results in proper valuation of _________ and __________ of companies.
a) Profit & Loss Account
b) reserve & surplus
c) assets and liabilities
d) none of the above
6. The scheme of internal reconstruction requires approval of ____________ .
a) Shareholders
b) Central Government
c) NCLT
d) all the above
7. __________ resolution is to be passed by shareholders for approval of scheme of reconstruction.
a) ordinary
b) Special
c) both a & b
d) none of the above
8. The fictitious debit balances are to be transferred to ___________ Account.
a) internal reconstruction
b) security premium
c) share capital
d) Capital Reduction
9. The difference in revaluation of assets is to be transferred to ___________ Account.
a) internal reconstruction
b) Capital Reduction
c) security primium
d) capital reserve
10. A scheme of __________ or __________ mean the scheme having same effect.
a) capital reduction or internal reconstruction
b) Capital Reduction or External reconstruction
c) none of the above
| Answers: 1)66 2)paid–up value 3)reduction 4)re-issue, cancellation 5)assets and liabilities 6)NCLT 7)Special 8)Capital Reduction 9)Capital Reduction 10)capital reduction or internal reconstruction |
11. The full balance of capital is to be debited, if _____________ value is reduced.
a) face
b) market
c) both of a & b
d) none of the above
12. Shareholders not approving scheme is called _________ shareholders.
a) dissenting
b) paying
c) pay disentient shareholders
d) none of the above
13. The Balance Sheet prepared after implementation of the scheme is to be prepared as per ____________.
a) Schedule IV
b) Schedule VI
c) Schedule II
d) Schedule III
14. The expenses for forming and implementing scheme should be debited to ____________ .
a) security premium
b) share capital
c) Internal reconstruction
d) capital reduction
15. The scheme of internal reconstruction can be utilized to provide ____________ for the company.
a) funds
b) share capital
c) dividend
d) none of the above
16. Capital Reduction Account is ________ by payment of reconstruction expenses.
a) credited
b) debited
c) Cash Account
d) none of the above
17. The objective of reconstruction is to write off ___________ .
a) profit
b) accumulated losses
c) nil
d) none of the above
18. Court Confirmation Order has to be registered with the __________ of companies.
a) NCLT
b) share capital
c) Registrar
d) none of the above
19. In ____________ , no new company is formed.
a) External reconstruction
b) Amalgamation
c) internal reconstruction
d) none of the above
20. Appreciation in the value of land & building is recorded on ________ side of Capital Reduction Account.
a) credit
b) debit
c) both of a & b
d) none of the above
| Answers: 11)face 12)dissenting 13)Schedule III 14)capital reduction 15)funds 16)debited 17)accumulated losses 18)Registrar 19)internal reconstruction 20)credit |
21. Any credit balance on Capital Reduction Account after writing off losses is transferred to_____ Account.
a) reserve & surplus
b) profit & loss
c) capital
d) Capital Reserve
22. In re-organisation, shares surrendered are transferred to ____________ A/c.
a) shares surrendered
b) Share Capiotal
c) none of the above
23. Payment for contingent liability is debited to ___________ A/c.
a) capital Reduction
b) Bank
c) none of the above
24. Fictitous assets are written off to ___________ A/c.
a) capital Reduction
b) Profit & Loss A/c
c) Goodwill
d) Land & Building
25. The objective of capital reduction scheme is to w/off ____________ .
a) Losses
b) Profit
c) no profit – no loss
d) nil
26. In capital Reduction all the adjustments are made in ___________ A/c.
a) Goodwill Account
b) Capital Reductions A/c
c) Cash Account
d) Profit & Loss A/c
27. Reconstruction expenses are debited to __________ A/c.
a) Cash Account
b) Goodwill Account
c) Profit & Loss A/c
d) Capital Reduction A/c
28. Appreciation in land and building is credited to __________ A/c.
a) Capital Reduction A/c
b) Profit & Loss A/c
c) Cash Account
d) Goodwill Account
29. Internal Reconstruction is governed by section ___________ of Companies Act.
a) 801
b) 804
c) 809
d) 61
30. Capital Reduction requires ____________ .
a) NCLT order
b) court order
c) Order of the SEBI
d) Order of stock excahnge
| Answer: 21)Capital Reserve 22)shares surrendered 23)capital Reduction 24)capital Reduction 25)Losses 26)Capital Reductions A/c 27)Capital Reduction A/c 28)Capital Reduction A/c 29)61 30)court order |
31. Amicable settlement of differences by mutual consent by parties is ___________ .
a) Confirmation
b) Arrangement
c) compromise
d) Merger
32. Creditors foregoing their claims in whole or in part is _____________ .
a) Merger
b) Consolidation
c) Compromise
d) Arrangement
33. Capital reduction is implemented as per Section __________ of Companies Act.
a) 77
b) 75
c) 80
d) 66
34. The scheme of capital reduction is to be approved by ____________ .
a) NCLT
b) SEBI
c) Central Government
d) Shareholders
35. The scheme of internal reconstruction involves __________ company.
a) one
b) two
c) three
d) many
36. Fictitious assets are to be transferred to _____________ .
a) internal reconstruction
b) security premium
c) share capital
d) capital reserve
37. Balance in Capital Reduction should be transferred to _____________ .
a) security premium
b) capital reserve
c) share capital
d) Profit & Loss Account
38. The cancellation of contingent liability is __________ for company
a) profit
b) loss
c) no profit – no loss
d) nil
39. The payment for contingent liability should be debited to ___________.
a) capital reduction
b) capital reserve
c) Profit and loss
40. “And Reduced” words are not to be shown as in Balance Sheet as per ___________ requirement.
a) company law
b) AS
c) income tax
d) stock exchange
| Answer: 31)compromise 32)Arrangement 33)66 34)NCLT 35)one 36)internal reconstruction 37)capital reserve 38)no profit – no loss 39)capital reduction 40)company law |
41. XYZ Ltd. had on 31st December, 2017; 80,000 equity shares at Rs 10 each. It was decided to reduce shares to Rs 8 each. The reduction is ___________.
a) 1,60,000
b) 80,000
c) 2,00,000
d) 1,50,000
42. Creditors of the company are Rs 50,00,000 one creditor for Rs 20,00,000 decided to forego 40% of his claim. He is allotted 30,000 equity shares of Rs 40 each in full satisfaction. The amount transferred to capital reduction is ___________.
a) 8,00,000
b) 10,00,000
c) 4,00,0000
d) 5,00,000
43. The preference shareholders agree to forego arrears of preference dividend of Rs 72,000. The amount transferred to Capital Reduction Account is ___________ .
a) Nil
b) 72,000
c) 36,000
d) 70,000
44. Creditors are Rs 3,00,000. They are given the option to either accept 50% of their claim in cash in full settlement or to convert their claim in to equity shares of Rs 10 each. Creditors of Rs 2,00,000 opt for shares in satisfaction of the claim. Capital reduction Account is credited by ___________ .
a) 1,00,000
b) 1,50,000
c) 50,000
d) 2,00,000
45. Investment costing of Rs 24,000 given to Bank for bank overdraft of 16,800. The capital reduction is debited by ________.
a) 4,0000
b) 8,000
c) 7200
d) 4,500
46. Y Ltd. has 8,000 equity shares of Rs 100 each fully paid. Each share is sub-divided into Rs10 equity shares of Rs 10 each. The number of shares after sub-division will be ________ .
a) 8,000
b) 80,000
c) 75,000
d) 60,000
47. Provision for taxation is Rs 1,00,000. The tax liability of the company is settled at Rs 80,000 & it is paid immediately. Amount credited to capital reduction is ____________ .
a) 80,000
b) 1,00,000
c) 20,000
d) 60,000
48. 6% debentures of Rs 100 each Rs 1,00,000 to be converted into such number of 8% debentures of Rs 50 each as to generate the same amount of interest as before. The amount of 8% debentures will be __________ .
a)1,00,000
b) 25,000
c) 75,000
d) 1,20,000
49. In internal reconstruction, method of calculation of purchase consideration is by ___________ .
a) Net Asset Method
b) Net Payment Method
c) no purchase consideration required
d) none of the above
50. On internal reconstruction, assets are written off except ______________.
a) land & building
b) goodwill
c) preliminary expenses
d) Profit & Loss Account
| Answer: 41)Rs 1,60,000 42)Rs 8,00,000 43)Nil 44)Rs 50,000 45)Rs 7,200 46)Rs 80,000 47)Rs 20,000 48)Rs75,000 49)no purchase consideration required 50)land & building |
