Practicing Success

Target Exam

CUET

Subject

Accountancy

Chapter

Accounting for Shares

Question:

Match the following-

LIST 1 LIST 2
(A) Application money should be at least...........% of the face value of the share (I)  25%
(B) The amount of Call should not exceed................% of the face value of the share (II) 90%
(C) Minimum subscription of capital  cannot be less than....... of the issued amount according to SEBI guidelines (III) 10%
(D) Interest charged on call-in- arrears is @.........p.a. (IV) 5%


Choose the correct answer from the options given below:

Options:

(A)-(IV), (B)-(I), (C)-(II), (D)-(III)

(A)-(II), (B)-(III), (C)-(IV), (D)-(I)

(A)-(IV), (B)-(II), (C)-(I), (D)-(III)

(A)-(III), (B)-(I), (C)-(IV), (D)-(II)

Correct Answer:

(A)-(IV), (B)-(I), (C)-(II), (D)-(III)

Explanation:

* Application money should be at least...........% of the face value of the share- Application money should be at least 5% of the face value of the share. For e.g. if a share having face value of ₹100 is issued then minimum ₹5 must be collected by the company on application.

* The amount of Call should not exceed................% of the face value of the share- Calls are essential in the process of making shares fully paid-up and collecting the total share amount from shareholders. Once shares are allotted, a company initiates calls. Two critical points concerning calls on shares are noteworthy. First, any call amount should not exceed 25% of the shares' face value. Second, there must be a minimum one-month interval between the issuance of two calls, unless the company's articles of association specify otherwise.

* Minimum subscription of capital  cannot be less than....... of the issued amount according to SEBI guidelines- The company is required to attain a minimum subscription within 120 days from the issuance of the prospectus. If this requirement is not met within the specified time frame, the company cannot proceed with the allotment of shares, and it must refund the application money within 130 days from the prospectus issuance date. It's important to note that as per SEBI (Disclosure and Investor Protection) Guidelines, 2000 [6.3.8.1 and 6.3.8.2], the minimum subscription of capital cannot be less than 90% of the total amount offered.

* Interest charged on call-in- arrears is @.........p.a.- As per Companies Act, 2013, the maximum rate of interest on calls in advance is 12%p.a. As per Companies Act, 2013, the maximum rate of interest on calls in arrears is 10% p.a.