Company account 2 marks important questions and answers

 1. What are bonus shares?

When shares are issued in the form of shares, such shares are called bonus shares.

2. What are rights shares?

The offer of fresh issue of shares made by the company to the existing holders of equity shares in the specified manner is known as a "rights issue of shares". It is an advantage to the existing shareholders especially when the market value of shares is a higher than there issue value.

3. What are divisible profits?

The part of total profit of the company which is available for distribution of dividend among the shareholders is called a divisible profits.

4. What is book building method of issue of shares?

According to book building method, all the applications received or arranged in the specified manner and A final prices arrived at which is called cut-off price. It is the price at which there are issue due to the investors.

5. What are redeemable debentures?

For certain debentures, the debenture amount is a paid back to the debenture holders after certain period during the life the time of the company, such debentures are called redeemable debentures.

6. What do you mean by underwriting of shares and debentures?

Underwriting of shares and debentures is a contract between the company and persons in which persons are called underwriters. They Undertaker issue of states of the company to the public on behalf of the company with in a stipulated period of time.

7. What is interim dividend? Who declares it?

The dividend which is a declared and paid in the middle of the year in between the two general body meetings is a called a interior dividend it is a declared by the directors of the company.

8. What is profit prior to incorporation?

The profit Arnold by the company during the year before the date of incorporation of the company is the called profit perior to incorporation.

9. Give four examples of expenses chargeable after incorporation.

*Director fees

*Interest on debentures

*Goodwill written off

*Preliminary expenses w/o.

10. What is alteration of share capital?

According to section 94 to 97A limited companies authorised to increase or decrease its share capital or convert fully paid shares into stock or recruitment stock Book into shares this is called alteration of share capital.

11. What are the types of reconstruction?

There are two types of reconstruction.

*Internal reconstruction

*External reconstruction

12. What is the right of issue of shares?

The offer of fresh issue of shares made by the company to the existing holders of an equity shares in the specified manner is known as rights issue of shares.

13. What are convertible debentures?

The debentures which are wholly or partly converted into shares of a company are called convertible debentures.

14. What is proposed dividend?

The amount of dividends proposed to be distributed to and the preference shareholders for the period and related amount to purchase be disclosure a separately is called proposed a dividend.

15. Name the two important method of public issue of shares.

*Fixed price offer method

*Book building method

16. What do you mean by firm underwriting?

FIR under taking means a differ defined commitment by the underwriter or under written to take a first specified a number of shares or debentures of a company is respective of the number of shares are debentures subscribed by the public.

17. What is effective capital?

Effective capital means aggregate of paid of capital, securities premium, capital reserve, surplus, long term loans and deposits and a reduced by aggregate of investment, accumulated losses and preliminary expenses not written off.

18. Mention the various ways of alteration of capital.

*Increase the share capital by issue of new shares 

*Consolidation or subdivision of existing shares into shades of larger or smaller denomination

*Conversion of fully paid shares into stock and vice versa cancellation of  unissued Shares 

19. What is internal reconstruction?

It means recognisation the affairs of the company by revaluation of all assets ascertaining the correct amount of liabilities or the writing off the accumulated losses by reducing the share capital of the company with or without varying the rights of the shareholders but without a liquidation of the existing company.

20. What is ex-interest  debenture?

If the purchase price of debenture does not includes interest it is called ex-interest debenture.