Company Accounts

Share Capital

Easy

Instructions: Read the passage carefully and answer the following questions 46-50)

XYZ Ltd is registered with an authorised capital of Rs. 20 lakh divided into 2 lakh equity shares of Rs. 10 each.

The company is in manufacturing of pickles and spices. Due to the increase in demand of packed food in the market they decided to diversify its operation. For this purpose they decided to issue 1 lakh equity share of Rs. 10 each. The company issued 20,000 equity shares to a vendor to supply the machinery required to manufacture the packed food. Rest of the equity shares were issued to general public for subscription. The application were received for 46,000 equity shares. Due to undersubscription of equity shares the shares were not issued to public.

The company issued 20,000 equity shares of Rs. 10 each to vendor. After issuing them the shares the vendor will be considered as:

Creditors

Owners

Customer

Lender

✅ Correct Option: 2

When a company issues equity shares to a vendor in exchange of assets, the vendor becomes a shareholder. Equity shareholders are the owners of the company. Hence, the vendor is now considered as an Owner.

Question 47

In order to raise money by issuing the shares in the market the company must get applications for at least ____.

Question 48

The process of issuing shares to a vendor in exchange of any asset is known as:

Question 49

If the company is unable to get minimum subscription, the shares cannot be issued and the amount must be refunded within 8 days from the date of closure. If not, company shall be liable to pay ______% interest p.a.

Question 50

The following refer to the maximum amount of share capitals issued by a company in its life times except:

The company issued 20,000 equity shares of Rs. 10 each to vendor. After issuing them the shares the vendor will be considered as:

Solution

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