Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Financial Accounting – II (112): - Question Paper

Number of shares
Abhinav Bhavan Charan Total
Gross Liability (in shares) 24,000 10,000 6,000 40,000
Less: Allocation of unmarked shares in the ratio of gross
Liability 24:10: six 5,400 2,250 1,350 9,000
The credit to charan in respect of unmarked applications is 1350 shares.
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ans : (b)
cause : The process of stock split outcomes in a reduce in par value per share
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ans : (c)
cause : In the books of the Company Cash Book (Bank Column only)
Date
Particulars
Rs.
Date
Particulars
Rs.
2006 May 11
To Share Application A/c (Being application money received on 50,000 shares @ Rs.5 every including premium of Rs.2 per share)
2,50,000
2006 Dec 31
By Balance c/d
5,96,100
June 30
To Share Allotment A/c (Being allotment money received on 49,500 shares @ Rs.3 each)
1,48,500
Sept. 30
To Share 1st Call A/c (Being 1st call money received on 49,500 shares @ Rs.2 each)
99,000
Dec. 31
To Share Final Call A/c (Being Final Call money received on 49,300 shares @ Rs.2 each)
98,600
5,96,100
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ans : (a)
cause : A company can capitalize its substantial reserves by (a) problem of Bonus of shares. problem of Rights shares for a price less than the market price does not involve capitalization of reserves. On the other hand, Dividends reduces the retained earnings and cash/bank balances. Thus, (a) is the accurate ans.
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ans : (d)
cause : Dividend paid, net income and bonus problem affect total retained earnings, but stock split has no impact on retained earnings. Hence, the ans is (d)
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ans : (a)
cause : This is a case of over subscription. In such a situation the company can follow any of the options provided in choice (b), (c) and (d). However choice (a) cannot be followed. Where the problem is of only 30,000 equity shares, the company cannot problem more than the total problem advertised for. Since the number of shares to be issued is decided as per the resolution taken, to increase the problem size a different resolution should be passed. Hence this solution is infeasible
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ans : (b)
cause : Underwriting commission is paid to the underwriters on the amount of shares/debentures underwritten by them
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ans : (e)
cause : Share application account (I) Share Capital account (II) Calls-in-arrear account (III) Calls-in-advance account(IV) represent either the amounts due to be received or to be paid to the share holder i.e personal accounts. Thus, (e) the combination of all the accounts is the accurate ans.

Earning:   Approval pending.