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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 1851. |
How does ratio analysis become less effective due to price level change? |
| Answer» Solution :Accounting RATIOS are calculated from Financial Statements which are drawn on the BASIS of historical costs as RECORDED in the BOOKS of account. Thus, these ratios ignore the change in price level and they do not reflect the actual analysis. | |
| 1852. |
How does 'subjectivity' become a limitation of Financial Statement Analysis? |
| Answer» Solution :Subjective means using personal judgement in selecting the methods of accounting treatment from the alternatives available, i.e., CHOICE in the METHOD of depreciation or choice in the method of INVENTORY VALUATION. Since the subjectivity is inherent in personal judgement the financial statements are not FREE from bias. | |
| 1853. |
How do you treat depreciation in calculating Cash Flow from Operating Activities, It being non- cash expenditure . |
| Answer» Solution :DEPERCIATION is to be ADDED back to NET Profit for CALCULATING Cash FLOW Operating Activities It, being non-cash expenditure . | |
| 1854. |
How can we ascertain Cash Flow from Investing Activities? |
| Answer» Solution :Cash Flow from INVESTING ACTIVITIES can be ASCERTAINED by ANALYSING the change in Fixed Assets and Long-term Investments during the accounting period. | |
| 1855. |
How can we ascertain Cash Flow from Investing Activities ? |
| Answer» SOLUTION :Cash Flow from INVESTING Activities can be ASCERTAINED by ANALYSING the change in Fixed Assets and Long -term Invetment during the accouting PERIOD. | |
| 1856. |
How can we ascertain Cash Flow from Financing Activities? |
| Answer» Solution : Cash FLOW from FINANCING ACTIVITIES can be ascertained by analysing the CHANGE in EQUITY Share Capital, Preference Share Capital, Debentures, other Long-term Borrowings and Short-term Borrowings, i.e., Bank Overdraft | |
| 1857. |
How can we ascertain Cash Flow from FinacingActivities ? |
| Answer» Solution :Cash FLOW from Financing Activites can be ascertained by ANALYSING the change in Equtiy Share Captial PREFERENCE share capital ,Debentures, Other Long- term Borrowings and short-term Borrowings ,IE. Bank OVERDRAFT. | |
| 1858. |
How can the profitability of a firm be measured? |
| Answer» SOLUTION :PROFITABILITY of a FIRM can be MEASURED by its profitabilityratios. | |
| 1859. |
How are the following two items shown in a company's Balance Sheet as at 31st March, 2019 as per Schedule III of the Companies Act, 2013? General Reserve (since 31st March, 2018) Rs 4,50,000, Surplus, i.e., Balance in Statement of Profit and Loss (Debit) as at 31st March, 2019 Rs 6,00,000. |
Answer» 
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| 1860. |
How are the accumulated profits and losses distributed when there is change in profit sharing ratio amongst existing partner? |
| Answer» Solution :Accumulated profits are credited to the Capital ACCOUNTS of all the PARTNERS in their OLD profit sharing sharing RATIO and accumlated losses are debited to their Capital Accounts in old profit sharing ratio. | |
| 1861. |
How are Sharehoders' Funds calculated under this project ? |
| Answer» Solution :SHAREHOLDERS FUNDS = Equity Share CAPITAL+ Reserves and SURPLUS. | |
| 1862. |
How are Calls in Advance shown in the Balance Sheet ? |
| Answer» Solution :Calls in ADVANCE A/c is SHOWN SEPARATELY in the Balance SHEET under the main head 'CURRENT Liabilities' and Sub-head 'Other Current Liabilities' . | |
| 1863. |
How are Long-term Funds calculated in a given project? |
| Answer» Solution :Long-term FUNDS = Equity Share Capital + Reserves and SURPLUS + 6%DEBENTURES | |
| 1864. |
How are Current Assets calculated under this project? |
| Answer» SOLUTION : Current Assets = INVENTORIES + TRADE RECEIVABLES + CASH and Cash Equivalents | |
| 1865. |
How are Calls-in-arrears shown in the Balance Sheet ? |
| Answer» SOLUTION :AMOUNT of CALLS in ARREAR will be shown as a deduction from the subscribed but not fully paid capital on the equity and liabilities side of the Balance Sheet. | |
| 1866. |
Hopeful ltd . In the business of manufacturing and selling FMCG decide to set up a new manufacturing unit in economically backward are of chattisgarh. It decided to employ factory staff from the local population. But before that it imp[arted training to them for six months and gave each trainee a stipend of Rs 5000 per month. given below is its comparatiabe balance sheet: |
Answer» SOLUTION :
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| 1867. |
Hopw can the profitablitiy of business? |
| Answer» | |
| 1868. |
Hopeful Ltd in the business of readymade garments, decided to take part in swachh bharat abhiyan by educating the people about the disadvantages of pollution and its effect on health. Its comparative balance sheet is given below: |
Answer» SOLUTION :
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| 1869. |
Home Store Ltd. has to redeem 50,000, 8% Debentures of Rs 100 each on 30th June, 2019. It should have a balance of Rs 12,50,000 in Debenture Redemption Reserve. It decides to set aside amount to Debenture Redemption Reserve on 31st March, 2019 on which date it has following reserves : {:(,Rs,),("Capital Reserve","6,00,000",),("Debenture Redemption Reserve","2,50,000",),("General Reserve","1,00,000",),("Surplus ie Balance in Statement of Profit and Loss","3,00,000",):} How much further amount it needs to set aside to Debenture Redemption Reserve and how much it can set aside out of the above reserves adn surplus ? |
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Answer» RS 10,00,000 and Rs 10,00,000 |
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| 1870. |
Hindustans Steel Ltd. invited applications for 50,000 equity shares of Rs. 10 each at a premium of Rs. 4 per share. The amount was payable as follows : {:("On Application","Rs. 4 (including premium Rs. 2)"),("On Allotment","Rs. 6 (including premium Rs. 2)"),("On First and Final Call","Balance"):} Applications for 60,000 shares were received. Allotment was made to all the applicants on pro-rata basis. Excess application money was adjusted towards sums due on allotment. Ram, to whom 500 shares were allotted, failed to pay allotment and call money. Shyam, to whom 1,000 shares were allotted, failed to pay the call money. These shares were forfeited. Out of the forfeited shares 1,200 shares (including all shares of Shyam) were re-issued at 10% discount as fully paid-up.Pass the necessary journl entries in the books of the company by opening 'Calls in Arrears AS/c' wherever necessary. |
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Answer» Solution :Amount received on ALLOTMENT Rs. 2,57,400, Baslance of Share Forfeiture A/c TRANSFERRED to CAPITAL RESERVE Rs. 560 +Rs. 6,000 - Rs. 1,200 = Rs. 5,360. Hint : Entry for the forfeiture of shares : `{:("Share Capital A/c","Dr.15,000"),("Securities Premium Reserve A/c","Dr.1,000"),("To CALLS in Arrear A/c","8,600"),("To Share Forfeiture A/c","7,400"):}` |
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| 1871. |
Home Store Ltd . Has redeem 50 ,000 , 8% Debentures of Rs.100 each on 30thjune , 2019 , It should have a balance of Rs.12,50,000. in Debenture Redemption Reserve . It decides to aside amount to Debenture Redemption Reserve on 31 st March , 2019 on which date it has following reserve:{:(, "Rs."),("Capital Reserve","6,00,000"),("Debenture Redemption Reserve","2,50,000"),("General Reserve","1,00,000"),("Surplus ie Balance in Statement of Profit and Loss","3,00,000"):}How much further amount it needs toset aside to Debenture Redemption Reserve and how much it can set aside out of the above reserves and surplus ? |
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Answer» Rs.10,00,000. |
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| 1872. |
Hind Electricals Ltd., manufacturer of lamps, has surplus funds of Rs 5,00,000, which it has invested in fixed depositwith a bank. The deposit earned an interest of Rs 30, 000. How will it be shown in the Statement of Profit and Loss? |
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| 1873. |
Hina Ltd. purchased assets of Harish Ltd. for Rs. 8,40,000 and took over the liabilities (creditors) of Rs. 80,000 for an agreed purchase consideration of Rs. 8,00,000. Hina Ltd. issued 12% Debentures of Rs. 100 each at 25% premium for purchase consideration. Pass necessary Journal entries in the books of Hina Ltd. |
Answer» SOLUTION : Note: No. of Debentures to be issued =`("Purchase Consideration")/("ISSUE PRICE of DEBENTURE")=(Rs. 8,00,000)/(Rs.125)=6,400" Debentures".` |
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| 1874. |
Hider Ltd., a mutual fund company invested Rs. 5,00,000 in shares of Prayag Ltd. It received dividend of Rs. 45,000 during the year. How will it be depicted in the Cash Flow Statement? |
| Answer» SOLUTION :It will be depicted in the CASH FLOW STATEMENT as Operating Activity. | |
| 1875. |
Harshedanddhiman arein partnershipsince1stApril2018No partnershipAgreementwasmade theycontributedRs.4,00,000and Rs. 1,00,000 respectively as capitalin addition,Harshedadvancedan amountofRs. 1,00,000to thefirmon1stOctober,2018dueto longillneass ,Harshedcouldnotparticipatein businessactivitesfrom1st August2018to 30 th september,2018profitfor theyearended31 st MArch, 2019wasRs. 1,80,000Dispute has beenarisenbetweenHarshedanddhiman . Harshadclaims :(i)heshouldbe giveninterest@ 10%per annumon capitaland loan , (ii)profitshouldbedistributedin theratiocapital , Dhimanclaims : (i)Profitshouldbedistributedequally ,(ii)heshouldbeallowedRs. 2,000p.masremuneratioforthemanaged thebusiness in the absenceofHarshad, (iii)interest on capitaland loanshouldbe allowed@6%p.ayou arerequiredto sttlethedisputebetweenHArshedanddhimanAlsoprepaneprofitand loss appropriationAccount . |
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Answer» Solution :Harshad's CLAIM :(a) HarshadIs notenttitedto anyintereston capitalbuthesi entitledto INTEREST on hisloan @6% p.a (B)profitwill bedistributedequally as perpartnershipAct 1932 Dhiman 'sclaim (A)his claimis rightthatprofitsshouldbe shared equally , (b) No remunerationwill beallowedto dhiman , ( C)INTERESTON capials willnot beallowed . |
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| 1876. |
Hero Ltd. has raised following long term lonns on 1st April, 2018: {:("10,000, 10% Debentures of Rs 100 each redeemable in four equal ye""₹"),("instalments beginning 1st July, 2019" "10,00,000"),("11% Bank Loan from SBI repayable after 5 years""20,00,000"):} Interest on Debentures and Bank Loan has not yet been paid. How will be the above items shown in the Balance Sheet of the company as at 31st March, 2019? |
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| 1877. |
Harry andGarryareparthersin afirm, theyhavenotenteredintopartnershipDeedbuthad agreedon following: (i)salary willbepaidtop Harry @ Rs. 10.000 per month. (ii)Garry willgetcommission@10%ofNetprofit . (iii)interestwillbechargedoncapitals@ 10%p.a . (iv)Interest willbechargedon drawing@ 10%p.a (v)partnercannotbeadmittedwithouttheconsentof boththepartners .howwillbe thefollowingdisputesresolved? 1. Garry demandsto bepaidsalaryas Harry is beingpaidbecausehiscommisonin lower . 2.Harrydemandsthathissonsherry beadmitted as patner for 25 %shareto begivenoutof hishareof profits towhichGarrydisgrees. |
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Answer» SOLUTION :Partnershipagreementmay bewrittenor oral , THEREFORE , thetermsagreed orallybetweenHarry andGarryis aValid agreement . 1.thedemandof garryto be paidsalary ASIS paidt Harryis notvalidin viewofageementof paymentofcommission . 2.Harry ' s Demandto admitaherry intoparthershipis alsonot vilidas boththepartnerss had agreedto admotanewpartnerwiththeconsentof BOTHTHEPARTNERS. |
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| 1878. |
Harshad and Dhiman are in partnership since April 01, 2016. No Partnership agreement was made. They contributed Rs. 4,00,000 and 1,00,000 respectively as capital. In addition, Harshad advanced an amount of Rs. 1,00,000 to the firm, on October 01, 2016. Due to long illness, Harshad could not participate in business activities from August 1, to September 30, 2016. The profits for the year ended March 31, 2017 amounted to Rs. 1,80,000. Dispute has arisen between Harshad and Dhiman. Harshad Claims: (i) he should be given interest @ 10%per annum on capital and loan, (ii) Profit should be distributed in proportion of capital, Dhiman Claims: (i) Profits should be distributed equally, (ii) He should be allowed Rs. 2,000 p.m. as remuneration for the period he managed the business, in the absence of Harshad, (iii) Interest on Capital and loan should be allowed@ 6%p.a. You are required to settle the dispute between Harshad and Dhiman. Also prepare Profit and Loss Appropriation Account. |
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| 1879. |
Harman carried out dissolution of the firm for a remuneration of Rs 20,000. He later agreed to take stock valued at Rs 18,000 in settlement of his remuneration. What accounting treatment will be given for this arrangement |
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Answer» `{:(,,RS,Rs),("Harman",...Dr,"20,000",),("To STOCK A/c",,,"18,000"),("To REALISATION A/c",,,"2,000"):}` |
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| 1880. |
Hanny, Pammy and Sunny are partners sharing profits in the ratio of 3 : 2 : 1. Goodwill isappearing in the books at a value of Rs. 60,000. Pammy retires and at the time of Pammy's retirement, goodwill is valued at Rs. 84,000. Hanny and Sunny decided to share future profits in the ratio of 2:1. Record the necessary journal entries. |
Answer» Solution : Working Notes (i)Pammy's share of current value of GOODWILL `(1)/(3)` of Rs. 84,000 `=84,000 xx (1)/(3)`= Rs. 28,000 Retirement/Death of a Partner (II)Gaining Share= NEW Share - Old Share Hanny's Gaining Share = `(2)/(3)-(3)/(6)=(1)/(6)` Sunny's Gaining Share = `(1)/(3)-(1)/(6)=(1)/(6)` This gaining Ratio of Hanny and Sunny is `(1)/(6):(1)/(6)=1:1` |
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| 1881. |
Hardeepand Sandeep are partners sharing profits in theration of 4:1 . Theydecide to share profits equally w.e.f1st April, 2019.Their Balance Sheet as at 31st March, 2019 shows a balance of advertisement suspense of ₹20,000. Pass theJournal entryat thetime ofchangein profit -sharing ratio. |
Answer» SOLUTION :
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| 1882. |
Hainf and Jubed were partners in a firm sharing profits in the ratio of their capitals. On 31st March, 2013 their Balance Sheet was as follows: On the above date the firm was dissolved: (i) Debtors were realised at a discount of 5%.50% of the stock was taken over by Hanif at 10% less than the book value. Remaining stock was sold for Rs 65,000. (ii) Furniture was taken over by jubed for Rs 1,35,000. Machinery was sold as scrap for Rs 74,000. (iii) Creditors. Were paid in full. (iv) Expenses on realisation Rs 8,000 were paid by Hanif. Prepare Realisation Account. |
Answer» SOLUTION :
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| 1883. |
H & S Ltd. Has outstanding 10,0008% Debentures of Rs.100 each that are redeemable at premium of Rs.10 each Out of these, 5,000 debentures are to be redeemed on 31st December , 2018. Debenture Redemption Reserve should be |
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Answer» Rs.1,37,500. |
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| 1884. |
Guru Ltd. Invited applications for 5,00,000 equity shares of Rs. 10 each at a premium of Rs. 5 per share. Because of favourable market conditions, the issue was oversubscribed. Suggest the alternatives available to the Board of Directors for the allotment of shares. |
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Answer» Solution :The FOLLOWING alternatives are availble to the Board of Directors for the allotment of SHARES: (i) FIRST Alternative - Rejection of Excess Applications: The company can make full allotment to some applicants and can reject theexcess applications and return their applications money. (ii) Second Alternative - Pro rata Allotment: In this case, all the applicants are ALLOTTED shares on proportionate basis. (iii) Third Alternative - Rejection and Pro rata Allotment: In this case, combination of the above two alternatives is ADOPTED. |
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| 1885. |
Guru Ltd. invited applications for issuing 5,00,000 equity shares of Rs. 10 each at a premium of Rs. 5 per share. Because of favourable market conditions the issue was over-subscribed and applications for 15,00,000 shares were received. Suggest the alternatives available to the Board of Directors for the allotment of shares. |
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Answer» Solution :It is a CASE of Over-subscription. Three ALTERNATIVES for alloting these shares may be : (i) Some applications may be rejected in full, because of some TECHNICAL defect, i.e., insufficient application money. Pro-rata allotment may be MADE to the remaining APPLICANTS. (ii) Some applications may be rejected in full and remaining applications may be accepted in full. (iii) Some applications may be rejected in full, some may be accepted in full and pro-rata allotment may be made to the remaining applicants. |
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| 1886. |
H & S Ltd. has outstanding 10,000, 8% Debentures of Rs 100 each that are redeemable at premium of Rs 10 each. Out of these, 5,000 debentures are to be redeemed on 31st December, 2018. Debenture Redemption Reserve should be |
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Answer» RS 1,37,500 |
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| 1887. |
Guru Ltd. invited applications for5,00,000 Equity Shares of Rs. 10 each at a premium of Rs. 5 per share. Because of favourablemarket conditions, the issue was oversubscribedand applicationsfor 15,00,000 shares were received. Suggest the alternativesavailableto the Boardof Directorsfor the allotment of shares. |
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Answer» Solution :Alternativesavailableto the Board if Directorsof Guru Ltd. are : (i) Excess applicationsmay be rejected and shares may be allotted to the remainingapplicantsin full. (II) Shares may be allotted to all the applicants on PRO rata basis. (III) Some applications may be rejected , some applicationsmay be allotted in full and shares may be allotted on pro rata basis to the REMAINING applicants. |
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| 1888. |
Gupta and sharma whre partners in a firm. They wanted to admit two more members in the firm. List the categories of individuals other than minors who cannot be admitted by them. |
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Answer» Solution :Apart from MINOR, the following individuals connot be admitted as PARTNERS: (i) PERSONS of unsoung mine (e.g., lunatics or insane), and (ii) Persons DISQUALIFIED by law (e.g., ALIEN enemies, insolvents). |
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| 1889. |
GSC Ltd. purchased machinery of Rs 10,00,000 issuing cheque of Rs 2,50,000 and 10% Debentures of Rs 7,50,000. In the Cash Flow Statement, the transaction will be shown as |
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Answer» Outflow under Investing Activity Rs 10,00,000, INFLOW under FINANCING Activity as Receipt for Debentures Rs 7,50,000 |
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| 1890. |
GSC Ltd. Purchase machinary of Rs.10,00,000issuingcheque of Rs.2,50,000 and 10% Debentures of Rs.7,50,000 . In the Cach Flow Statement , the transaction will be shown as |
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Answer» OUTFLOW under INVESTING Activity Rs.10,00,000 , INFLOW under FINANCING Activity as Receipt for Debentures Rs.7,50,000. |
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| 1891. |
Gross profit ratio of a company is 505 state with reason whether the decrease in rent received by Rs 150000 will increase ,decrease or not change the ratio. |
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| 1892. |
Gross profit Rs 1200000 sales : Rs 600000 |
| Answer» | |
| 1893. |
Gross Profit Ratio is 46.72% against Industry Standard of 40%. What does it mean? |
| Answer» Solution : A high Gross Profit MAY be DUE to higher sales realisation or due to lower cost of goods SOLD or closing stock is overvalued. Higher gross profit is better as it leaves higher margin to MEET Operating Expenses and creation of reserves | |
| 1894. |
Gross profitRatio indicatied gross margin on trading and it is calculated as: Gross profit Ratio =("Gross profit")/("Revenue form operations (net sales)")xx100=% |
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| 1895. |
Green Ltd. Had allotted 10,000 shares to the applicants of 14,000 shares on pro rata basis. The amount payable on application is Rs 2 per share. Mohan applied for 420 shares. The number of shares allotted and the amount carried forward for adjustment against allotment money due from Mohan are |
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Answer» 60 SHARES RS 120 |
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| 1896. |
Gross profit ratio =40% |
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| 1897. |
Gross profit 2018 Rs 150000 and 2019 Rs 187200 Gross profit Ratio 2018: 24% and 2019: 24% Net increase in Gross profit Rs 37200.This is accounted for by the increase inn sales volume Rs 155000and by increase in cost of goods sold Rs 117800. |
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| 1898. |
Green Ltd . Had allotted 10,000 shares to the applicants of 14,000 shares on pro basis. The amount payable on application is Rs.2 per share. Mohan applied for 420 shares . The number of shares allotted and the amount carreid forward for adjustment against allotment money due from Mohan are |
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Answer» 60 SHARES RS.120. |
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| 1899. |
Gopal Ltd. Purchased machine of Rs.1,15000 from India Traders , payment of Rs.10,000 was made by issuing cheque and the remaining amount by issue of equity shares of the face value of Rs.10 eachfully paid at an issue price of Rs. 10.50 each . Amount of securities premium will be |
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Answer» Rs.6,000. |
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| 1900. |
Gopal Ltd. Purchased machine of Rs 1,15,000 from Indian Traders, payment of Rs 10,000 was made by issuing cheque and the remaining amount by issue of equity shares of the face value of Rs 10 each fully paid at an issue price of Rs 10.50 each. Amount of securities premium will be |
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Answer» RS 6,000 |
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