Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Match the following:

LIST 1 LIST 2
1) Liability of shareholder a) Capital reserve
2) Equity shares cannot issued for b) Distribution of dividend
3) Not shown in share capital in balance sheet c) Limited
4) Balance of share forfeiture transferred d) Reserve capital
Options:

1) b, 2) c, 3) d, 4) a

1) c, 2) b, 3) d, 4) a

1) c, 2) d, 3) b, 4) a

1) c, 2) b, 3) a, 4) d

Correct Answer:

1) c, 2) b, 3) d, 4) a

Explanation:

* Liability of shareholder- The liability of the members of the company is limited to the extent of unpaid amount of the shares held by them. In the case of the companies limited by guarantee, the liability of its members is limited to the extent of the guarantee given by them in the event of the company being wound up.

* Equity shares cannot issued for- Equity shares cannot be issued for Distribution of dividend.


*Not shown in share capital in balance sheet-  Reserve capital is known as the uncalled capital because it is the reserved amount of the company. It is interesting to note that the amount of reserve capital is not depicted in the company's balance sheet.

* Balance of share forfeiture transferred- The balance of the share forfeiture account is a capital profit; hence, it will be transferred to the capital reserve.