MCQ of Valuation of shares || Corporate accounting

 S.Y. B.COM

SEMESTER - IV

CORPORATE ACCOUNTING

(CA)

MCQS = UNIT - 3 

CHAPTER - 2

VALUATION OF SHARES

1) Normal Rate of Return depends on .............

A) Rate of interest 

B) Rate of Risk 

C) Both (A) and (B)

D) None of the above

2) While calculating capital employed ............

A) Tangible trading assets should be considered

B) Intangible assets should be considered

C) Fictitious assets should be considered

D) None of the above

3) Any non-trading income included in the profit should be ............

A) Eliminated 

B) Deducted

C) Ignored

D) All of the above

4) Capital employed at the end of the year is Rs. 4,20,000. Profit earned Rs.40,000.

Average capital employed is ...........

A) Rs. 4,00,000

B) Rs. 4,20,000

C) Rs. 4,40,000 

D) Rs. 4,60,000

5) Rate of interest is 11% and the rate of risk is 9%. The normal rete of return is ...........

A) 2%

B) 20%

C) 9%

D) 11%

6) Capital employed at the beginning of the year is Rs. 5,20,000 and the profit earned during the year is Rs 60,000. Average capital employed during the year is ..........

A) Rs. 4,60,000

B) Rs. 5,20,000

C) Rs. 5,80,000

D) Rs. 5,50,000

7) Shares are to be valued on ...........

A) Mergers

B) Sale of Share 

C) Gift Tax

D) All of the above

8) Under net asset method, value of a share depends on ...........

A) Net Assets available to equity shareholders

B) Net assets available to debentures holders

C) Net assets available to preference shareholders 

D) None of the above

9) Net asset value is also called as ............

A) asset backing value 

B) Intrinsic value

C) Liquidation value

D) (A) and (B) and (C)

10) While deciding net asset value, fictitious assets ............

A) Should not be considered

B) Should be considered

C) Added to total assets

D) None of the above

11) Net asset value method is based on the assumption that the company is .........

A) A going concern 

B) Going to be liquidated

C) (a) and (b)

D) None of the above

 

12) Yield value depends on ..........

A) Paid-up equity share capital

B) future maintainable profit

C) Normal rate of return

D) None of the above

13) F.M.P for yield valuation is ...........

A) Profit that would be available to equity shareholders

B) future profit

C) Past profit

D) None of the above

14) Yield value is based on the assumption that .......

A) The company will be liquidated

B) The company is a going concern

C) The company is sick

D) None of the above

15) Fair value of a share is equal to ...........

(A) Intrinsic value only

(B) Yield value only

(C) Average of intrinsic and yield value

(D) None of the above

16) Value of a partly paid equity share is equal to ..............

(A) Value of fully paid share-calls unpaid per share 

(B) Calls in arrears per share

(C) Paid-up value per share

(D) None of the above

17) Following details are extracted from the records of a company:

	Rs
2,000 9% preference shares of Rs.100 each	2,00,000
50,000 Equity shares of Rs.10 each, Rs.8 per share paid up	4,00,000
Expected Profit	2,18,000
Tax Rate	40%
Transfer to general reserve	20%
Normal rate of earning	15%

Yield value per share us ...........

(A) Rs.15

(B) Rs.17.50

(C) Rs.11.55

(D) Rs.16

18) Gross assets are Rs.1,01,000 fictitious assets Rs.350 are included in the gross assets. External liabilities are Rs.7,500. 6% preference share capital is Rs.45,000. Equity capital is 4,500 equity share of Rs. 10 each fully paid. Average expected profit is Rs.8,500. Transfer to reserves is 10% preference dividend is payable. NRR is 9%. The Net Asset Value Per share is .............

(A) Rs. 11

(B) Rs.10.70

(C) Rs.15

(D) Rs.20

19) Following are the profits of past 3 years 39,600, 48,600, 39,600. Average future maintainable profit is

(A) Rs.42,200

(B) Rs.46,600

(C) Rs.42,600

(D) Rs.46,200

20) Quoted shares are those shares which are .............

(A) Listed on the stock exchange

(B) Quoted daily

(C) Quoted by the seller

(D) Quoted by the buyer

21) Following is the method of valuation of share

(A) Net Asset Backing Method

(B) Average Method

(C) Super profit method

(D) None of above

22) Net Asset value of ES is derived by the following formula.

(A) Profit/Esc

(B) Net Assets for ESH/No.of Es

(C) Super profit method

(D) None of above

23) To calculate Net Assets

(A) Fictitious Assets are excluded

(B) Fictitious Assets are included

(C) Tangible Assets are excluded

(D) Intangible Assets are excluded

24) When there are different paid up values of equity shares

(A) Uncalled amount is cancelled 

(B) National call is made

(C) both a and b

(D) None of above

25) Value of share as per yield method is derived by

(A) NRR / EROD × 100

(B) EROD / NRR × 100

(C) EROD / NRR × Paid up Value of ES

(D) EROD / NRR × ESC

26) Market value of share is equal to

(A) PER «  EPS 

(B) EPS x No.of ES 

(C) PER x EPS 

D) EPS « PER

27) Earnings per share is equal to

(A) No. of Es/Profit 

(B) Profit for ESH / No. of ES

(C) PER « No.of ES 

(D) None of above

28) Price Earning Ratio is equal to

(A) NRR/No.of ES

(B) Profit/NRR

(C) NRR/100

(D) 100/NRR

29) Normal Rate of Return is equal to

(A) Profit / EPS

(B) EPS / Profit

(C) Market price per share / Dividend per share × 100

(C) Dividend per share / Market price per share × 100

30)What will be the value of share as per Yield method [dividend basis] if expected rate of 

dividend is 12%, normal rate of dividend is 10% & Paid up value of equity share is ₹

10?

(A) ₹ 10 (B) ₹ 12 (C) ₹ 15 (D) ₹ 20

31) The balance of reserves, after such withdrawal shall not fall below _____of its paid up 

share capital, if dividend declaration is out of Reserves.

(A) 20% (B) 15% (C) 10% (D) None of the above

32) Calculate the value of equity share by yield method on the basis of rate of dividend with 

the held of following information

Expected rate of divided - 15%, Normal rate of dividend - 12% and paid up value of 

equity share - Rs 100

(a) ₹ 100 (b) ₹ 120 (c) ₹ 125 (d) ₹ 130

33) What would be value per share based on P/E ratio, if profit available to equity 

shareholders is ₹ 25,000, number of equity shares 10,000 & Normal Rate Return is 

10%?

(a) ₹ 2.50 (b) ₹ 10 (c) ₹25 (d) None of these

34) Find out profit After Tax (PAT) form the following:-

PBIT ₹ 16,00,000; 12% preference share capital of ₹ 100 each ₹ 20,00,000; 10% 

debentures ₹ 12,00,000; 10% term loan from bank ₹ 14,00,000; tax rate 30%.

(a) ₹ 6,98,000 (b) ₹ 13,40,000

(c) ₹ 9,38,000 (d) None of these

Ans:C

35)  From the following information, find out the amount to be withdrawn from General 

Reserve to declare dividend;-

Equity Share Capital : 50,000 shares of ₹ 10 each; Profit and loss opening balance 

(credit): ₹ 5,00,000 10% preference share capital : 20,000 shares of ₹ 10 each, profit 

of Current year ₹ 1,00,000 and General Reserve ₹ 3,00,000.Directors proposed to 

declare dividend @ 20% and DDT applicable @ 20.358%.

(a) ₹ 1,20,358 (b) ₹ 84,430

(c) ₹ 35,928 (d) None of these.

Ans:D

MCQ of Fund flow Statement ||Corporate Accounting

 S.Y B.COM

SEMESTER - IV

CORPORATE ACCOUNTING

(CA)

MCQS

UNIT - II

CHAPTER 2 : FUND FLOW STATEMENT

1) Funds Flow statement is also known as

(A) Statement of Funds Flow

(B) Statement of Sources and Application of Funds

(C) Statement of Sources and Users of Funds

(D) All of the above

2) As per accounting standard AS3, provision for taxation should be treated as

(A) As a current liability

(B) As an appropriation of profits

(C) Either A or B

(D) None of the above

3) Provision of taxation is treated as

(A) As a current liability

(B) As an appropriation of profits

(C) Either A or B

(D) None of the above

4) Which of the following are treated as long term investments ?

(A) Non-current investments

(B) Trade investments

(C) Sinking fund investments

(D) All of the above

5) Which of the following are applications of funds ?

(A) payment of dividend on share capital 

(B) payment of tax

(C) Increase in working capital

(D) All of the above

6) Which of the following are sources of funds ?

(i) Issue of bonus shares

(ii) Issue of shares against the purchase of fixed assets

(iii) Conversion of debentures into shares

(iv) Conversion of loans into shares

(A) A and D

(B) A and C

(C) A, B, C and D 

(D) None of the above

7) Which of the following statement is true ?

(i) lf the amount of goodwill increase during current year, the difference is treated as purchase of goodwill.

(ii) If the amount of goodwill decrease during current year, it will treated as written off.

(A) Only B

(B) Only A

(C) Both A and B 

(D) None of the above

8) lf reserve for bad and doubtful debts is mentioned in the question of Funds Flow Statement preparation, it can be shown as

(A) In the schedule by deducting from total debtors under current assets

(B) In the schedule separately under the heading of capital liabilities

(C) Both A and B

(D) None of the above

9) Which of the following rules stands true while preparation of Schedule of changes in working capital?

(i) An increase in current assets increase working capital

(ii) An increase in current assets decrease working capital

(iii) An increase in Current liabilities decrease working capital

(iv) An increase in current liabilities increase working capital

(A) (ii) and (iv)

(B) (i) and (iv)

(C) (i) and (ii)

(D) (I), (ii), (iii) and (iv)

10) Funds Flow Statement is prepared on the basis of data of P & L statement and two consecutive balance sheets.

(A) False

(B) True

(C) Value delivery 

(D) None of the above

11) Which statement is prepared in the process of funds flow analysis?

(A) Schedule of changes in working capital 

(B) Funds flow statement 

(C) Both And B

(D) None of the above

12) Funds flow statement holds significance for

(A) shareholders

(B) Financers

(C) Government 

(D) All of the above

13) Funds flow statements are prepared so as to

(A) To identify the changes in working capital

(B) To identify reasons behind change in working capital

(C) To know the item-wise outflow of funds during given period

(D) All of the above

14) Bond, debentures and term loans fall under:

(A) Current assets

(B) Non-current assets

(C) Non-current liabilities

(D) Current liabilities

15) Which of the following are Non-current assets ?

(A) Land, Building and Plant

(B) Leasehold property

(C) Computer software

(D) All of the above

16) Which of the following are current assets ?

(i) Fixed investments

(ii) Trade payables

(iii) Short-term loans and advances

(iv) Furniture

(A) Only A

(B) Only B

(C) Only C

(D) A, B, C and D

17) Which of the following transactions will result in inflow of funds? 

(i) lssue of debentures

(i) Conversion of debentures into equity shares

(iii) Redemption of long term loan

(iv) Creation of General Reserve

(A) Only A

(B) Only D

(C) A and D

(D) A, B, C and D

18) Which of the following statements are true about movement of funds ?

(i) Funds flow in a transaction between current assets and fixed assets

(ii) Funds flow in a transaction between current asset and capital

(iii) Funds flow in a transaction between fixed assets and current liabilities

(iv) Funds flow in a transaction between current liabilities and capital

(A) A and B

(B) A and C

(C) A and D

(D) A, B, C and D

19) Which of the following are examples of Funds Flow Statement?

(i) Collection of debtors

(ii) Shares issued for cash

(iii) Shares issued against the purchase of machinery

(iv) Shares issued for property

(A) (i) and (ii)

(B) (i) and (iii)

(C) (i) and (iv)

(D) (i) (ii) (iii) and (iv)

20) In the context of Funds Flow Analysis, the word 'funds' is used to define

(A) Net working capital

(B) Total current assets: Total current liabilities

(C) Both A and B

(D) None of the above

21) Which of the following statement is true about Funds Flow Statement ?

(i) It highlights change in funds of a firm at different point

(ii) It highlights change in funds of different firm at a single point

(iii) It highlights change in funds of different fims at different point

(iv) It doesn't highlights change in funds

(A) Only A

(B) Only B

(C) Only D

(D) A, B, C and D

22) Which statement is prepared in the process of funds flow analysis?

(A) Schedule of changes in working capital

(B) Funds flow statement

(C) Both A and B

(D) None of the above

23) Funds Flow statement is prepared on the basis of data of P&L statement and two consecutive balance sheets

(A) True

(B) False

(C) Value delivery 

(D) None of the above

24) Which of the following rules stands true while preparation of schedule of changes in working capital?

(i) An increase in current increase working capital

(ii) An increase in current assets decreases working capital

(ii) An increase in current liabilities decreases working capital

(iv) An increase in current liabilities increases working capital

(A) (i) and (iii) 

(B) (i) and (iv)

(C) (ii) and (iv)

(D) (i) (ii) (iii) and (iv)

25) If reserve for bad and doubtful debts is mentioned in the question of Funds flow statement preparation, it can be shown as

(A) In the schedule by deducting from total debtors under current assets

(B) In the schedule separately under the heading of capital liabilities

(C) Both A and B

(D) None of the above

26) Funds flow statement is also known as

(A) Statement of funds flow

(B) Statement of sources and Application of funds

(C) Statement of sources and uses of funds

(D) All of the above

27) Which of the following are sources of funds?

(i) Issue of bonus shares

(ii) Issue of shares against the purchase of fixed assets

(iii) Conversion of debentures into shares

(iv) Conversion of loans into shares

(A) (i) (ii) (iii) and (iv)

(B) (i) and (iv)

(C) (i) and (iii)

(D) None of the above

28) Given Net profit for the year Rs.2,50,000 transferred to general reserves Rs.40,000 and old machinery bought for Rs.50,000 was sold for Rs.20,000. Calculate funds from operations.

(A) Rs.2,90,000

(B) Rs.3,00,000

(C) Rs.2,20,000

(D) Rs.2,80,000

29) The opening and closing balance of general reserves are Rs.10,000 and Rs. 9,000, respectively. It is stated in addition information that a loss of Rs.1000 has been written off in general reserves. In such a case, decline in reverse and loss on investment will be adjusted in P & L account.

(A) True

(B) False

30) The balance of fixed assets of Y Ltd. at cost at the end of 2017 and 2018 were Rs.5,70,800 and Rs.6,15,300. During the year 2018 a machinery costing Rs.60,000 was sold. Determine the purchase of fixed assets.

(A) Rs.1,64,500

(B) Rs.1,40,500

(C) Rs.1,04,500

(D) None of the above

31) The Balance sheet of Ram at end of 2017 and 2018 disclose investment in shares of Rs. 2000 and Rs. 3000, respectively. Rs.100 as pre-acquisition dividend has been credited to investments account. Determine purchase of investments.

(A) Rs.5000

(B) Rs.1000

(C) Rs.1,100

(D) None of the above

32) The balance of property at cost has been Rs.20,000 and Rs.17,000 in 2017 and 2018 respectively. The profit on sale of property of Rs.2000 is credited to Capital Reserves Account. New property costing Rs.5000 bought in 2018. Determine sale of proceeds from land.

(A) Rs.3000

(B) Rs.15,000

(C) Rs.10,000

(D) Rs.7000

33) In the balance sheet of Praveen for 2017 and 2018, 4% debentures are Rs.5,00,000 and RS.4,00,000, respectively. Profit on redemption of debentures in 2017 is nil while in 2018 is Rs.4,000. What is the amount of redemption for the purpose of funds flow statement ?

(A) Rs.96,000

(B) Rs.1,04,000 

(C) Rs.9,00,000

(D) Rs.9,04,000

34) Debentures are Rs.2,50,000 and Rs.3,50,000 in the balance sheet of 2017 and 2018. 1000 of the debentures of Rs.100 each were issued at per in 2018 of which 400 debentures were issued to a supplier for the purchase of a machine. Determine amount of issue for debentures for the purpose of funds flow statement.

(A) Rs.40,000

(B) Rs.10,000

(C) Rs.60,000

(D) None of the above

35) The share capital of A Ltd. stood at Rs.20,00,000 in 2017 and at Rs.26 lac in 2018. As per records, the company bought asset of another company for Rs.6 lac payable in fully paid shares. These assets included Goodwill Rs.2,00,000 Machinery Rs.1,83,600 and Stock Rs.2,16,400. What is the fund from issue of shares?

(A) Rs.2,16,400

(B) Rs.2,15,000

(C) Rs.2,00,000

(D) None of the above

36) During the year, a business was bought by issue of Rs.25,000 debentures and Rs.25,000 shares, The business bought nad machine worth Rs.20,000. Debtors Rs. 15,000. Stock Rs. 5,000 and Creditors Rs.5,000. Determine the effect of this transaction on flow of funds.

(A) Net outflow of Rs.15,000

(B) Net inflow of Rs.15,000

(C) Neither inflow nor outflow

(D) None of the above

37) Given net profit for the year Rs.2,50,000 Transferred to general reserves Rs.40,000 and old machinery bought for Rs.50,000 was sold for Rs.20,000. Calculate funds from operations.

(A) Rs.2,80,000

(B) Rs.2,20,000

(C) Rs.2,90,000

(D) Rs.3,00,000