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FILL IN THE BLANKS :

1. The holding company and the subsidiary company may have anumber of inter-company transactions which may be whilepreparing the consolidated balance sheet.

2. If the price paid by the holding company for the shares acquired inthe subsidiary company is more than the intrinsic value of the sharesacquired, the difference is treated as .

3. is equal to the paid-up value of shares held by minorityshareholders plus proportionate share of the companys profits andreserves plus proportionate shares of profits on revaluation of assets ofthe company minus proportionate share of companys losses minusproportionate share of loss on revaluation of assets of the company.

4. If fixed assets of the subsidiary company are at the time ofacquisition of shares by the holding company without any alteration inbook-values, the excess or short depreciation should be adjusted bydebiting or crediting the Consolidated Profit and Loss Account andcrediting or debiting the respective Asset Account.

5. Companies declaring distributing or paying dividends are liable topay tax on the same at prescribed rate which is known tax on .

6. Profit and Loss Appropriation Account shows the of the netprofit as disclosed by the Profit and Loss Account proper.

7. Balance sheet of a company shall be prepared in the form set out inPart and profit and loss account of a company shall comply withthe requirements of Part of Schedule of the Companies Act,1956.

8. Which of these are advantages of declaring bonus shares to theshareholders:As the bonus is not paid in cash, the liquid resources of the companyare not disturbed.

a. more realistic picture of the companys capital structure isdisplayed in the Balance Sheet.

b. With the issue of bonus shares, the overall market capitalizationwill increase

c. This is the cheapest method of increasing capital which isnecessary in case of expansion of business. (However, in effect it

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does not increase the total resources at the disposal of thecompany).

d. Bonus issue will increase the market value of the companye. Bonus issue help in utilization of provisions.

f. Abnormally high rate of dividend can be reduced by increasingcapital.

g. As the profit is permanently ploughed back into the company, itscredit worthiness increases.

h. From the view point of the shareholders

i. If the shareholder requires cash, they can easily convert thebonus shares into cash.

j. These bonus shares become a permanent source of income tothe shareholders, if the rate of dividend is maintained or notreduced proportionately.

k. Although the rate of dividend falls, the total amount of dividendmay increase as the shareholders get dividend on a largernumber of shares.

9. Which of these about bonus issue is incorrect :a. The bonus issue shall be made out of free reserves built out of

the genuine profits or share premium collected in cash only.

b. Reserves created by revaluation of fixed assets can be used forissue of bonus shares.

c. The declaration of bonus issue, in lieu of dividend, is allowed

d. The bonus issue is not made unless the party-paid shares, if anyexisting, are made fully paid-up.

e. the company has to ensure that it has not defaulted in paymentof interest or principal in respect of fixed deposits and interest onexisting debentures or principal on redemption thereof; and

f. The company has to ensure that it has sufficient reason tobelieve that it has not defaulted in respect of the payment ofstatutory dues of the employees such as contribution toprovident fund, gratuity, bonus etc.

10. Articles of the company normally provide that dividends, may bepaid in to the amount paid-up on each share.

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11. The rule regarding issue of dividend out of previous year profit is :the total amount to be drawn from the accumulated profits earned inprevious year(s) transferred to the reserves shall not exceed anamount equal to of the sum of its paid-up capital and free

reserves and the amount so drawn shall first be utilised to set-off thelosses incurred in the financial year before any dividend in respect ofpreference or equity shares is declared; and the balance of reservesafter such draw shall not fall below of its paid-up share capital.

12. In marginal costing are taken into account for computing thevalue of stocks of work-in-progress and finished products.

13. In marginal costing the unit cost of a product means the averagecost of manufacturing the product.

14. In absorption costing the effects of sales and production arecombined, in marginal costing on the other hand, the emphasis isplaced on .

15. When output is less than sales i.e. closing stock is less thanopening stock, the profit under marginal costing is than the profitunder absorption costing;

16. Marginal costing is also known as costing.

17. In case the company goes into liquidation, the amount paid as

calls-in-advance shall not be refundable except after the payment infull to the

18. If forfeited shares are re-issued at a discount, the amount ofdiscount can, in no case, exceed the amount credited to .19. On re-issue of forfeited shares which were originally issued at adiscount, Discount on Issue of Share Account should be reinstated withthe proportionate amount to the shares re-issued so that the discounton issue of shares may be to the shares issued.

20. Those share holders who dont pay on calls, have to be given atleast day notice to the defaulting shareholder calling upon him topay the amount due from him together with interest before a specifieddate

Answers :

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1.eliminated / removed 2.Goodwill 3. Minority Interest 4. revalued.5.Distributed profits. 6. disposal 7. I, II, VI 8. B,D,E are incorrect, restare all correct. 9. B and C are incorrect.10. proportion 11. one-tenth, 15% 12. Only variable costs 13. variable14. sales 15. greater 16. variable 17. ordinary creditors. 18. Shares

Forfeited Account 19. proportionate 20. 14 days.