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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.
| 401. |
What is meant by Solvency? |
| Answer» Solution :The term 'SOLVENCY' implies ability of an ENTERPRISE to MEET its long-term indebtedness and thus, solvency ratios CONVEY an enterprise's ability to meet its long-term obligations. | |
| 402. |
What is meant by Rights Issue of Shares? |
| Answer» SOLUTION :Rights Issue is an issue of SHARES in which the existing SHAREHOLDERS have a right to subscribe for the NEW shares. | |
| 403. |
What is meant by Sacrificing Partners ? |
| Answer» SOLUTION :The partners whose shares have decreased as a RESULT of CHANGE in profit sharing RATIO are CALLED 'Sacrificing Partners'. | |
| 404. |
What is meant by Revenue Expenditure? |
| Answer» Solution :REVENUE Expenditure is that expenditure the benefit of which is exhausted within the same accounting YEAR. For EXAMPLE, SALARIES, wages, rent, etc. | |
| 405. |
What is meant by retirement of a partner? |
| Answer» Solution :Retirement of a partner means that the partner ceases to be a partner of the firm. It results in reconstitution of the firm by which OLD partnership COMES to an END and a new partnership AMONG the continuing (remaining) partners comes into EXISTENCE. | |
| 406. |
What is meant by Reserve Fund? |
| Answer» Solution :When the AMOUNT of reserve created is not RETAINED in the business but INVESTED outside the business, it is CALLED a Reserve Fund. | |
| 407. |
What is meant by Reserve Capital ? |
| Answer» Solution :According to section 65 of the Companies ACT, a COMPANY may, by a special resolution, determine that a PORTION of its uncalled Capital shall not be CALLED up, except in the event of winding up of the Company. In such a case, that portion of the subscribed capital becomes Reserve Capital. It is available only for the CREDITORS on the winding up of the company. | |
| 408. |
What is meant by redemption of debentures out of Profits? |
| Answer» Solution :When profits equal to the amount utilised for repayment to DEBENTUREHOLDERS is transferred from Surplus of Statement of Profit and Loss to a newly opened account TITLED 'Debenture Redemption RESERVE Account' it is CALLED redemption out of profits. | |
| 409. |
What is meant by redemption of debentures out of Capital? |
| Answer» Solution :When no profits are SET aside for redemption of debentures it is CALLED redemption out of Capital. In such a CASE no profit are TRANSFERRED to Debenture Redemption Reserve. | |
| 410. |
What is meant by redemption of debentures by lump sum payment? |
| Answer» Solution :Under this METHOD, the COMPANY redeems whole of its debentures in ONE lump-sum at the expiry of a specified PERIOD, i.e., at maturity date of the debentures or earlier at the option of the company. | |
| 411. |
What is meant by Redemption of Debenture? |
| Answer» SOLUTION :Redemption of DEBENTURES is a PROCESS of repayment of loan TAKEN by the issue of debentures. | |
| 412. |
What is meant by Redemption of Debentures? |
| Answer» Solution :Redemption of debentures MEANS repayment of the AMOUNT of debentures to DEBENTUREHOLDERS. In other words, redemption refers to discharge of LIABILITY on account of debentures by repaying the due amount of debentures. | |
| 413. |
What is meant by reconstitution of partnership firm ? |
| Answer» SOLUTION :Partnership is the RESULT of agreement and any CHANGE in EXISTING agreement brings to an end the existing agreement and a new agreement comes into force. It AMOUNTS to reconstitution of the firm. | |
| 414. |
What is meant by 'Reconstitution of a Parthership Firm ? |
| Answer» SOLUTION :Reconstituation of a partnership FIRM means change in ECONOMIC relationship among partners. For example, change in profit-sharing ratio or retirement of a partner. | |
| 415. |
What is meant by Ratio Analysis? |
| Answer» SOLUTION :An Analysis of Financial Statements with the help of 'Accounting Ratio' is termed as 'Ratio Analysis'. It is a process of DETERMINING and interpreting relationship between the ITEMS of Financial Statements to provide a meaningful understanding of the performance and financial POSITION of an ENTERPRISE. | |
| 416. |
What is meant by Ratio? |
| Answer» | |
| 417. |
What is meant by Public Issue of Shares? |
| Answer» SOLUTION :Public ISSUE of shares means an INVITATION by a company to public to subscribe the shares offered through a PROSPECTUS. | |
| 418. |
What is meant by 'Profitability Ratio'? |
| Answer» Solution :The accounting RATIOS which MEASURE the profitability of BUSINESS are known as Profitability Ratios. | |
| 419. |
What is meant by 'Profitability' of Business? |
| Answer» Solution :Profitability means return achieved through the efforts of the management on the FUNDS INVESTED in the BUSINESS. | |
| 420. |
What is meant by profitability of business? |
| Answer» | |
| 421. |
What is meant by 'Pro rata Allotment of Shares'? |
| Answer» SOLUTION :Pro rata allotment of shares means allotment of shares in a FIXED proportion. Pro rata allotment takes palce only when the public ISSUE of shares is oversubscribed. | |
| 422. |
What is meant by 'Private Placement of Shares'? |
| Answer» Solution :Private PLACEMENT of Shares IMPLIES and allotment of shares to a select group of persons privately andnot to public in general through public ISSUE. In order to place the shares privately, a company must PASS a special resolution to this effect. | |
| 423. |
What is meant by private placement of shares? |
| Answer» Solution :PRIVATE placement of shares MEANS issue and ALLOTMENT of shares to aselect group of PERSONS (individuals and COMPANIES) privatelyand not to the public in general through public issue. | |
| 424. |
What is meant by 'Private Placement of Shares' ? |
| Answer» SOLUTION :As per Section 42 of the Companies Act, 2013, Private Placement of Shares means ISSUE and allotment of Shares to a SELECTED group of persons. In other words, in case of 'Private Placement of Shares', shares are not offered to the public in general through public issue but offered to a selected group of persons such as promoters, their friends, shareholders of group companiens, Mutual Funds, Non-Resident Indians (NRIs), FINANCIAL Institutions etc. | |
| 425. |
What is meant by Preferential Allotment of Shares? |
| Answer» Solution :PREFERENTIAL allotment of shares is one that is made at a predetermined PRICE to the pre-identified people, such as PROMOTERS, vanture capitalists, FINANCIAL institutions, buyers of companies' PRODUCTS or its suppliers, who wish to take a strategic stake in the company. | |
| 426. |
What is meant by 'partners', 'firm' and 'firm's name? |
| Answer» Solution :The persons who have entered into a PARTNERSHIP with one ANOTHER are individually CALLED 'partners' and collectively a 'firm'. The neme under which the business is carried is called 'firm's name'. | |
| 427. |
What is meant by Paid-up Capital? |
| Answer» Solution :ACCORDING to Section 2(64) of the COMPANIES Act, 2013, ''Paid-up SHARE Capital'' or''Share received as paid-up in respect of sharesissued and ALSO includes any amount credited as paid-up in respect of shares of acompany, but does not include any other amount received in respect of such sharcs, by whatever name called. | |
| 428. |
What is meant by Oversubscription of Shares? |
| Answer» Solution :Oversubscription of SHARES MEANS the NUMBER of shares applied for is more than the number of shares offered for SUBSCRIPTION. | |
| 429. |
What is meant by Outflow of Cash while preparing Cash Flow Statement? |
| Answer» Solution :Cash OUTFLOW ARISES when the net effect of TRANSACTION is DECREASE in the amount of Cash and Cash EQUIVALENTS. | |
| 430. |
What is meant by 'Minimum Subscription' ? |
| Answer» Solution :MINIMUM subscription is the minimum amount which must be subscribed byb the public. According to Companies ACT minimum subscription has been fixedat 90 % of the issued amount. If this condition is not satisifed, the COMPANY shall FORTHWITH refund the entire application amount received. | |
| 431. |
What is meant by Operating Activities? |
| Answer» Solution :OPERATING ACTIVITIES are the PRINCIPAL revenue producing activities of the enterprise and other activities that are not INVESTING or financing activities. | |
| 432. |
What is meant by New Profit-sharing Ratio in case of admission ofpartner? |
| Answer» Solution :The ratio in which all partners, including the incoming partner, will SHARE the PROFITS and losses in FUTURE is KNOWN as New profit-sharing Ratio. | |
| 433. |
What is meant by long term debts? |
| Answer» | |
| 434. |
What is meant by Liquidity Ratios? |
| Answer» Solution :The RATIOS which measure the ABILITY of the ENTERPRISE to meet its short-term financial OBLIGATIONS as they BECOME due for payment are called as Liquidity Ratios | |
| 435. |
What is meant by Liquidity of Business? |
| Answer» Solution :Liquidity means FIRM's ability to pay its CURRENT liabilities out of its current assets. It depends upon CONVERTIBILITY of the current assets into cash without LOSS. | |
| 436. |
What is meant by Issue of Shares for consideration other than cash? |
| Answer» SOLUTION :When thecompany purchases some ASSETS (including services) or purchases a running business, instead of MAKING the paymant to the VENDOR in cash, it issues its shares. Such issue of shares is termed as Issue of Shares for CONSIDERATION other than cash. | |
| 437. |
What is meant by 'Issue of shares for consideration other than cash' ? Give an example. |
| Answer» SOLUTION :SOMETIMES company ISSUES fully paid SHARES to the vendor from whom it buys assets. Such type of issue of shares to the vendor is called'Issue of shares for CONSIDERATION other than cash'. | |
| 438. |
What is meant by issue of shares for consideration other than cash ? |
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Answer» Solution :A company may ISSUE fully paid shares for consideration other than cash, in the following CIRCUMSTANCES : (1) Issue of Shares to Promoters. (2) Issue of Shares for Purchase of Assets. |
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| 439. |
What is meant by Issue of Debentures as Purchase Consideration? |
| Answer» Solution :When the company purchases some assets (including services) and , INSTEAD of making payment to the vendor in CASH, issues its fully paid debentures, it is known as issue of debentures for CONSIDERATION other than cash. | |
| 440. |
What is meant by Issue of Shares at a Premium? |
| Answer» Solution :When a company issues SHARES above their nominal (face) VALUE , it is SAID that the company has issued shares at a premium, e.g., an EQUITY SHARE of Rs.10 is issued at a price of Rs.12. | |
| 441. |
What is meant by Issue of Shares at a Par? |
| Answer» Solution :Shares are SAID to have been issued at PAR when shares are issued at a PRICE that is equal to their NOMINAL (face) VALUE. For example, issue price of a share is Rs. 10 and also face value is Rs. 10. | |
| 442. |
What is meant by 'issue of shares at par' ? |
| Answer» SOLUTION :Shares are said to have been ISSUED at par when an applicant has to pay a sum EQUAL to the face VALUE of the share. | |
| 443. |
What is meant by issue of debentures as collateral security? |
| Answer» SOLUTION :What a company issues debentures to the LENDER as a SECURITY over and above the PRIME security, it is 'Issue of Debentures as Collateral Security'. | |
| 444. |
What is meant by Investing Activities? |
| Answer» Solution :Investing Activities include acquisition and DISPOSAL of long-term ASSETS and other investments not INCLUDED in CASH equivalents. | |
| 445. |
What is meant by Intra-firm Comparison? |
| Answer» Solution :A comparison of FINANCIAL variables of a firm over a period of time is KNOWN as Intra-firm Comparison. It analyses the PERFORMANCE of a business over a NUMBER of years and shows trend of financial factors. | |
| 446. |
What is meant by Inter-firm Comparison? |
| Answer» Solution :When the financial statements of two or more firms are analysed and COMPARED for a PERIOD, it is CALLED Inter-firm COMPARISON. | |
| 447. |
What is meant by 'Hidden Goodwill'? |
| Answer» SOLUTION :HIDDEN GOODWILL is the EXCESS of desired total capital of the firm over the actual combined capital of all partners. In other words, when the value of goodwill of the firm is not specifically GIVEN, the value of goodwill has to be calculated on the basis of net wroth of the firm. | |
| 448. |
What is meant by Gross Profit? |
| Answer» SOLUTION : Gross Profit is the excess of REVENUE from OPERATIONS ie, Net Sales over Cost of Revenuefrom Operations,i.e, Cost of Goods Sold. | |
| 449. |
What is meant by Goods ? |
| Answer» Solution :GOODS are those PRODUCTS which a FIRM deals in .Goods are EITHER manufactured or PURCHASED for resale . | |
| 450. |
What is meant by Gaining Partners ? |
| Answer» Solution :The PARTNERS WHOSE shares have increased as a result of change in PROFIT sharing RATIO are called 'Gaining Partners'. | |