{"id":7000,"date":"2021-09-29T12:33:58","date_gmt":"2021-09-29T07:03:58","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=7000"},"modified":"2025-10-08T13:25:53","modified_gmt":"2025-10-08T07:55:53","slug":"internal-reconstruction-mcq","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/internal-reconstruction-mcq\/","title":{"rendered":"Internal Reconstruction MCQ (Free) | Capital Reduction"},"content":{"rendered":"\n<h2 class=\"wp-block-heading has-text-align-center\"><strong>Internal Reconstruction MCQ<\/strong><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ-1024x576.jpg\" alt=\"Internal Reconstruction MCQ\" class=\"wp-image-7006 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ-1024x576.jpg 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ-300x169.jpg 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ-768x432.jpg 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ-1536x864.jpg 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ-640x360.jpg 640w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Internal-Reconstruction-MCQ.jpg 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;\" \/><figcaption class=\"wp-element-caption\">Internal Reconstruction MCQ<\/figcaption><\/figure>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/financial-accounting-mcqs\/\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/financial-accounting-mcqs\/\" rel=\"noreferrer noopener\">MCQs on other topics of Financial Accounting <\/a><\/strong><\/li>\n\n\n\n<li><a href=\"https:\/\/www.icsi.edu\/media\/webmodules\/modelquestionpaper\/CMA-MCQ%20100.pdf\" target=\"_blank\" data-type=\"URL\" data-id=\"https:\/\/www.icsi.edu\/media\/webmodules\/modelquestionpaper\/CMA-MCQ%20100.pdf\" rel=\"noreferrer noopener\"><strong>Cost Accounting MCQs pdf <\/strong><\/a><\/li>\n<\/ul>\n\n\n\n<p><strong>1. The reduction of capital is permitted under _____________ of Companies Act.<\/strong><br>a) 77 <br>b) 100 <br>c) 66 <br>d) 75<\/p>\n\n\n\n<p><strong>2. The Capital reduction means reduction in ____________ value of shares.<\/strong><br>a) authorized capital <br>b) Called up capital <br>c) Uncalled capital <br>d) paid\u2013up value<\/p>\n\n\n\n<p><strong>3. The Sub \u2013 division of shares does not result in ___________ of capital.<br><\/strong>a) reduction <br>b) added <br>c) Compromise <br>d) none of the above<\/p>\n\n\n\n<p><strong>4. The Shareholders can surrender shares for <em>________ <\/em>or ____________ .<\/strong><br>a) re-issue, cancellation <br>b)Fresh Issue, Redemption <br>c) none of the above<\/p>\n\n\n\n<p><strong>5. The internal reconstruction results in proper valuation of _________ and __________ of companies.<\/strong><br>a) Profit &amp; Loss Account <br>b) reserve &amp; surplus <br>c) assets and liabilities <br>d) none of the above<\/p>\n\n\n\n<p><strong>6. The scheme of internal reconstruction requires approval of ____________ .<br><\/strong>a) Shareholders <br>b) Central Government <br>c) NCLT <br>d) all the above<\/p>\n\n\n\n<p><strong>7. __________ resolution is to be passed by shareholders for approval of scheme of reconstruction.<\/strong><br>a) ordinary <br>b) Special <br>c) both a &amp; b <br>d) none of the above<\/p>\n\n\n\n<p><strong>8. The fictitious debit balances are to be transferred to ___________ Account.<\/strong><br>a) internal reconstruction <br>b) security premium <br>c) share capital <br>d) Capital Reduction<\/p>\n\n\n\n<p><strong>9. The difference in revaluation of assets is to be transferred to ___________ Account.<\/strong><br>a) internal reconstruction <br>b) Capital Reduction <br>c) security primium <br>d) capital reserve<\/p>\n\n\n\n<p><strong>10. A scheme of __________ or __________ mean the scheme having same effect.<\/strong><br>a) capital reduction or internal reconstruction <br>b) Capital Reduction or External reconstruction<br>c) none of the above<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answers:<\/strong> <span class=\"has-inline-color has-vivid-red-color\">1)66  2)paid\u2013up 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<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>11. The full balance of capital is to be debited, if <strong>_<\/strong>____________ value is reduced.<\/strong><br>a) face <br>b) market <br>c) both of a &amp; b <br>d) none of the above<\/p>\n\n\n\n<p><strong>12. Shareholders not approving scheme is called <strong>_________<\/strong> shareholders.<\/strong><br>a) dissenting <br>b) paying <br>c) pay disentient shareholders <br>d) none of the above<\/p>\n\n\n\n<p><strong>13. The Balance Sheet prepared after implementation of the scheme is to be prepared as per <strong>_<\/strong>___________.<\/strong><br>a) Schedule IV <br>b) Schedule VI <br>c) Schedule II <br>d) Schedule III<\/p>\n\n\n\n<p><strong>14. The expenses for forming and implementing scheme should be debited to <strong>_<\/strong>___________ .<br><\/strong>a) security premium <br>b) share capital <br>c) Internal reconstruction <br>d) capital reduction<\/p>\n\n\n\n<p><strong>15. The scheme of internal reconstruction can be utilized to provide <strong>_<\/strong>___________ for the company.<br><\/strong>a) funds <br>b) share capital <br>c) dividend <br>d) none of the above<\/p>\n\n\n\n<p><strong>16. Capital Reduction Account is <strong>_<\/strong>_______ by payment of reconstruction expenses.<br><\/strong>a) credited <br>b) debited <br>c) Cash Account <br>d) none of the above<\/p>\n\n\n\n<p><strong>17. The objective of reconstruction is to write off <strong>_<\/strong>__________ .<\/strong><br>a) profit <br>b) accumulated losses <br>c) nil <br>d) none of the above<\/p>\n\n\n\n<p><strong>18. Court Confirmation Order has to be registered with the <strong>_<\/strong>_________ of companies.<\/strong><br>a) NCLT <br>b) share capital <br>c) Registrar <br>d) none of the above<\/p>\n\n\n\n<p><strong>19. In <strong>_<\/strong>___________ , no new company is formed.<br><\/strong>a) External reconstruction <br>b) Amalgamation<br>c) internal reconstruction <br>d) none of the above<\/p>\n\n\n\n<p><strong>20. Appreciation in the value of land &amp; building is recorded on <strong>________<\/strong> side of Capital Reduction Account.<\/strong><br>a) credit <br>b) debit <br>c) both of a &amp; b <br>d) none of the above<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answers:<\/strong> <span class=\"has-inline-color has-vivid-red-color\">11)face  12)dissenting  13)Schedule III  14)capital reduction  15)funds  16)debited  17)accumulated losses  18)Registrar  19)internal reconstruction  20)credit<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>21. Any credit balance on Capital Reduction Account after writing off losses is transferred to_____ Account.<\/strong><br>a) reserve &amp; surplus <br>b) profit &amp; loss <br>c) capital <br>d) Capital Reserve<\/p>\n\n\n\n<p><strong>22. In re-organisation, shares surrendered are transferred to <strong><em>____________<\/em><\/strong> A\/c.<\/strong><br>a) shares surrendered <br>b) Share Capital <br>c) none of the above<\/p>\n\n\n\n<p><strong>23. Payment for contingent liability is debited to ___________ A\/c.<\/strong><br>a) capital Reduction <br>b) Bank <br>c) none of the above<\/p>\n\n\n\n<p><strong>24. Fictitious assets are written off to ___________ A\/c.<br><\/strong>a) capital Reduction <br>b) Profit &amp; Loss A\/c <br>c) Goodwill <br>d) Land &amp; Building<\/p>\n\n\n\n<p><strong>25. The objective of capital reduction scheme is to w\/off <strong>_<\/strong>___________ .<\/strong><br>a) Losses <br>b) Profit <br>c) no profit \u2013 no loss <br>d) nil<\/p>\n\n\n\n<p><strong>26. In capital Reduction all the adjustments are made in ___________ A\/c.<br><\/strong>a) Goodwill Account <br>b) Capital Reductions A\/c <br>c) Cash Account <br>d) Profit &amp; Loss A\/c<\/p>\n\n\n\n<p><strong>27. Reconstruction expenses are debited to __________ A\/c.<\/strong><br>a) Cash Account <br>b) Goodwill Account <br>c) Profit &amp; Loss A\/c <br>d) Capital Reduction A\/c<\/p>\n\n\n\n<p><strong>28. Appreciation in land and building is credited to <strong>__________<\/strong> A\/c.<\/strong><br>a) Capital Reduction A\/c <br>b) Profit &amp; Loss A\/c <br>c) Cash Account <br>d) Goodwill Account<\/p>\n\n\n\n<p><strong>29. Internal Reconstruction is governed by section <strong>_<\/strong>__________ of Companies Act.<\/strong><br>a) 801 <br>b) 804 <br>c) 809 <br>d) 61<\/p>\n\n\n\n<p><strong>30. Capital Reduction requires <strong><em>_<\/em>___________ <\/strong>.<br><\/strong>a) NCLT order <br>b) court order <br>c) Order of the SEBI <br>d) Order of stock excahnge<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answer:<\/strong><span class=\"has-inline-color has-vivid-red-color\"><strong> <\/strong>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<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>31. Amicable settlement of differences by mutual consent by parties is ___________ .<br><\/strong>a) Confirmation <br>b) Arrangement <br>c) compromise <br>d) Merger<\/p>\n\n\n\n<p><strong>32. Creditors foregoing their claims in whole or in part is <strong>_<\/strong>____________ .<br><\/strong>a) Merger <br>b) Consolidation <br>c) Compromise <br>d) Arrangement<\/p>\n\n\n\n<p><strong>33. Capital reduction is implemented as per Section <strong>_<\/strong>_________ of Companies Act.<\/strong><br>a) 77 <br>b) 75 <br>c) 80 <br>d) 66<\/p>\n\n\n\n<p><strong>34. The scheme of capital reduction is to be approved by <strong>_<\/strong>___________ .<\/strong><br>a) NCLT <br>b) SEBI <br>c) Central Government <br>d) Shareholders<\/p>\n\n\n\n<p><strong>35. The scheme of internal reconstruction involves _________<strong>_<\/strong> company.<\/strong><br>a) one <br>b) two <br>c) three <br>d) many<\/p>\n\n\n\n<p><strong>36. Fictitious assets are to be transferred to <strong>_<\/strong>____________ .<\/strong><br>a) internal reconstruction <br>b) security premium <br>c) share capital <br>d) capital reserve<\/p>\n\n\n\n<p><strong>37. Balance in Capital Reduction should be transferred to <strong>_<\/strong>____________ .<\/strong><br>a) security premium <br>b) capital reserve <br>c) share capital <br>d)  Profit &amp; Loss Account<\/p>\n\n\n\n<p><strong>38. The cancellation of contingent liability is <strong>__________<\/strong> for company<br><\/strong>a) profit <br>b) loss <br>c) no profit \u2013 no loss <br>d) nil<\/p>\n\n\n\n<p><strong>39. The payment for contingent liability should be debited to <strong>___________<\/strong>.<br><\/strong>a) capital reduction <br>b) capital reserve<br>c) Profit and loss<\/p>\n\n\n\n<p><strong>40. \u201cAnd Reduced\u201d words are not to be shown as in Balance Sheet as per <strong>_<\/strong>__________ requirement.<\/strong><br>a) company law <br>b) AS <br>c) income tax <br>d) stock exchange<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answer:<\/strong><span class=\"has-inline-color has-vivid-red-color\"><strong> <\/strong>31)compromise  32)Arrangement  33)66  34)NCLT  35)one  36)internal reconstruction  37)capital reserve  38)no profit \u2013 no loss  39)capital reduction  40)company law<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>41. XYZ Ltd. had on 31st December 2017; 80,000 equity shares at Rs <code>10 each. It was decided to reduce shares to<\/code> Rs 8 each. The reduction is __________<strong>_<\/strong>.<br><\/strong>a) 1,60,000 <br>b) 80,000 <br>c) 2,00,000 <br>d) 1,50,000<\/p>\n\n\n\n<p><strong>42. Creditors of the company are Rs <code>50,00,000 one creditor for<\/code> 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 <strong>_<\/strong>__________.<br><\/strong>a) 8,00,000 <br>b) 10,00,000 <br>c) 4,00,0000 <br>d) 5,00,000<\/p>\n\n\n\n<p><strong>43. The preference shareholders agree to forego arrears of preference dividend of Rs 72,000. The amount transferred to Capital Reduction Account is <strong>_<\/strong>__________ .<\/strong><br>a) Nil <br>b) 72,000 <br>c) 36,000 <br>d) 70,000<\/p>\n\n\n\n<p><strong>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 ___________ .<\/strong><br>a) 1,00,000 <br>b) 1,50,000 <br>c) 50,000 <br>d) 2,00,000<\/p>\n\n\n\n<p><strong>45. Investment costing of Rs 24,000 given to Bank for bank overdraft of 16,800. The capital reduction is debited by _______<strong>_<\/strong>.<\/strong><br>a) 4,0000 <br>b) 8,000 <br>c) 7200<br>d) 4,500<\/p>\n\n\n\n<p><strong>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 <strong>_<\/strong>_______ .<br><\/strong>a) 8,000 <br>b) 80,000 <br>c) 75,000 <br>d) 60,000<\/p>\n\n\n\n<p><strong>47. Provision for taxation is Rs 1,00,000. The tax liability of the company is settled at Rs 80,000 &amp; it is paid immediately. Amount credited to capital reduction is <strong>_<\/strong>___________ .<br><\/strong>a) 80,000 <br>b) 1,00,000 <br>c) 20,000 <br>d) 60,000<\/p>\n\n\n\n<p><strong>48. 6% debentures of Rs <code>100 each<\/code> 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 <strong>_<\/strong>_________ .<br><\/strong>a)1,00,000 <br>b) 25,000 <br>c) 75,000 <br>d) 1,20,000<\/p>\n\n\n\n<p><strong>49. In internal reconstruction, method of calculation of purchase consideration is by <strong>_<\/strong>__________ .<br><\/strong>a) Net Asset Method <br>b) Net Payment Method <br>c) no purchase consideration required <br>d) none of the above<\/p>\n\n\n\n<p><strong>50. On internal reconstruction, assets are written off except <strong>______________<\/strong>.<br><\/strong>a) land &amp; building <br>b) goodwill <br>c) preliminary expenses <br>d) Profit &amp; Loss Account<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Answer:<\/strong><span class=\"has-inline-color has-vivid-red-color\"><strong> <\/strong>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 &amp; building<\/span><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Learn the chapters on TYBCOM from our <a href=\"https:\/\/studio.youtube.com\/channel\/UCExY0hxogv75WdPK1MFS3fw\" data-type=\"link\" data-id=\"https:\/\/studio.youtube.com\/channel\/UCExY0hxogv75WdPK1MFS3fw\" target=\"_blank\" rel=\"noopener\">YouTube channel<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":7006,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,7],"tags":[2957],"class_list":["post-7000","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-bcom","category-degree-college","tag-internal-reconstruction-mcq"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/7000","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=7000"}],"version-history":[{"count":6,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/7000\/revisions"}],"predecessor-version":[{"id":39466,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/7000\/revisions\/39466"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/7006"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=7000"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=7000"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=7000"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}