I'd be happy to help you create some multiple-choice questions (MCQs) related to the "Issue of Shares" chapter in the accountancy subject. Here are 30 questions along with their answers:
1)What is the term for the first issue of shares by a company to the public?
a) Initial Public Offering (IPO)
b) Private Placement
c) Rights Issue
d) Bonus Issue
Answer: a
2)Which type of shares do not carry any voting rights?
a) Preference Shares
b) Equity Shares
c) Cumulative Preference Shares
d) Non-cumulative Preference Shares
Answer: a
3)What is the price at which a company offers its shares to the public for the first time?
a) Market Price
b) Issue Price
c) Face Value
d) Book Value
Answer: b
4)A company issuing additional shares to its existing shareholders is known as:
a) Bonus Issue
b) Rights Issue
c) Private Placement
d) Public Issue
Answer: b
5)Which method of share issue involves selling shares to a selected group of investors?
a) Initial Public Offering (IPO)
b) Private Placement
c) Rights Issue
d) Follow-on Public Offering (FPO)
Answer: b
6)What is the legal document that provides details about the company's share issue and financial information?
a) Memorandum of Association
b) Articles of Association
c) Prospectus
d) Balance Sheet
Answer: c
7)Which type of shares have a fixed dividend rate and are paid before equity shareholders?
a) Equity Shares
b) Preference Shares
c) Debentures
d) Rights Shares
Answer: b
8)The market value of a share divided by its earnings per share (EPS) gives the:
a) Dividend Yield
b) Price-Earnings Ratio (P/E Ratio)
c) Dividend Payout Ratio
d) Return on Equity (ROE)
Answer: b
9)What is the term for shares that are issued without any specific maturity period?
a) Redeemable Shares
b) Convertible Shares
c) Non-cumulative Shares
d) Irredeemable Shares
Answer: d
10)Which authority approves the prospectus of a company before a public issue?
a) Securities and Exchange Board of India (SEBI)
b) Reserve Bank of India (RBI)
c) Ministry of Corporate Affairs
d) Stock Exchange
Answer: a
11)Which type of shares can be converted into equity shares after a specific period?
a) Redeemable Shares
b) Cumulative Preference Shares
c) Convertible Preference Shares
d) Non-cumulative Preference Shares
Answer: c
12)What is the maximum period within which a company must redeem its redeemable preference shares?
a) 1 year
b) 5 years
c) 10 years
d) No maximum period
Answer: c
13)If a company wants to raise capital quickly without going through the lengthy process of a public issue, it may choose:
a) Initial Public Offering (IPO)
b) Rights Issue
c) Private Placement
d) Follow-on Public Offering (FPO)
Answer: c
14)A company can issue shares at a price higher than the face value. This difference is known as:
a) Premium
b) Discount
c) Interest
d) Dividend
Answer: a
15)The process of splitting a single share into multiple smaller shares is called:
a) Consolidation of Shares
b) Redemption of Shares
c) Subdivision of Shares
d) Conversion of Shares
Answer: c
16)Which type of shares can be bought back by the company from its shareholders?
a) Preference Shares
b) Equity Shares
c) Debentures
d) Redeemable Shares
Answer: b
17)A company that issues bonus shares to its existing shareholders is increasing which component of its equity?
a) Share Capital
b) Reserves and Surplus
c) Debentures
d) Long-term Loans
Answer: b
18)What is the term for the amount by which the nominal value of shares exceeds their issue price?
a) Premium
b) Discount
c) Par Value
d) Dividend
Answer: a
19)The process of offering shares to the public for the first time is known as:
a) Follow-on Public Offering (FPO)
b) Initial Public Offering (IPO)
c) Private Placement
d) Rights Issue
Answer: b
20)Which regulatory body regulates the primary market and oversees public issues of shares in India?
a) Ministry of Corporate Affairs
b) Reserve Bank of India (RBI)
c) Securities and Exchange Board of India (SEBI)
d) Stock Exchange
Answer: c
21)Which type of shares can be converted into equity shares at the option of the shareholder?
a) Cumulative Preference Shares
b) Non-cumulative Preference Shares
c) Convertible Preference Shares
d) Redeemable Preference Shares
Answer: c
22)What is the term for the nominal value of a share as mentioned in the company's books?
a) Market Value
b) Issue Price
c) Face Value
d) Premium Value
Answer: c
23)A company can issue shares at a price lower than the face value. This difference is known as:
a) Premium
b) Discount
c) Par Value
d) Dividend
Answer: b
24)When a company issues shares to its existing shareholders in proportion to their existing shareholdings, it's called a:
a) Bonus Issue
b) Rights Issue
c) Public Issue
d) Private Placement
Answer: b
25)Which type of shares can be redeemed by the company after a specific period?
a) Cumulative Preference Shares
b) Convertible Preference Shares
c) Redeemable Preference Shares
d) Non-cumulative Preference Shares
Answer: c
26)The process of decreasing the face value of a share to adjust the company's capital structure is known as:
a) Splitting of Shares
b) Consolidation of Shares
c) Subdivision of Shares
d) Reduction of Share Capital
Answer: b
27)A company can issue shares to a select group of individuals without offering them to the public. This is known as:
a) Initial Public Offering (IPO)
b) Bonus Issue
c) Private Placement
d) Follow-on Public Offering (FPO)
Answer: c
28)Which type of shares have a higher claim on the company's profits but do not carry voting rights?
a) Equity Shares
b) Preference Shares
c) Debentures
d) Redeemable Shares
Answer: b
29)The price at which shares are traded on the stock exchange is known as the:
a) Issue Price
b) Face Value
c) Market Price
d) Premium Price
Answer: c
30)When a company issues shares without receiving the application money in full, it's called a:
a) Discounted Issue
b) Underwritten Issue
c) Oversubscribed Issue
d) Forfeited Issue
Answer: d
