MCQ for CA Intermediate Adv. Accounts - Chapter 4 - BUY BACK OF SECURITIES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS

Sample Multiple Choice Questions (MCQ's) for CA Intermediate - Paper 5 - ADVANCED ACCOUNTING - Chapter 4: BUY BACK OF SECURITIES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS - For Practice relevant for May/November 23 Examinations

 

Q1.  As per section 68(1) of the Companies Act, buy-back of own shares by the company, shall not exceed 

  1. 25% of the total paid-up capital and free reserves of the company.
  2. 20% of the total paid-up capital and free reserves of the company.
  3. 15% of the total paid-up capital and free reserves of the company.

Answer: 1

Q2.  The companies are permitted to buy-back their own shares out of

  1. Free reserves and Securities premium
  2. Proceeds of the issue of any shares.
  3. Both (a) and (b)

Answer: 3

Q3.  Of the following, preference shareholders do not have a right to vote on resolutions 

  1. Which directly affect the rights attached to his preference shares.
  2. For entering a private equity agreement to raise further capital diluting their overall stake in the company.
  3. For the repayment 

Answer: 2

Q4. The differential in the class of equity shares can be created for 

  1. Dividend.
  2. Voting rights
  3. Both  (a) and (b)

Answer: 3

Q5. State which of the following statements is true?

  1. Buy-back is for more than twenty-five per cent of the total paid-up capital and free reserves of the company.
  2. Partly paid shares cannot be bought back by a company
  3. Buy-back of equity shares in any financial year shall exceed twenty-five per cent of its total paid-up equity capital in that financial year.

Answer: 2

Q6. Advantages of Buy-back of shares include to

  1. Encourage others to make hostile bid to take over the company.
  2. Decrease promoters holding as the shares which are bought back are cancelled.
  3. Discourage others to make hostile bid to take over the company as the buy-back will increase the promoters holding. 

Answer: 3

 

CA Intermediate ADV. ACCOUNTS - MCQ for Chapter 5 -   

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