MCQ Quiz on Absorption of Company

 MCQ Quiz on Absorption of Company

Absorption of Company MCQ Quiz

     The  MCQ Quiz on Absorption of Company is based on various MCQ on  Absorption of Company in various language with translate button. 


This quiz consist 25 MCQ. 

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This  MCQ Quiz on Absorption of Company is based on following questions. 

Important Note:-👇

"To know the answers to the below questions, you need to solve the following quiz. It has the answers to all the questions"

1. When one of the existing companies take over business of another company or companies and continue its business, it is known as ...........?

a. Amalgamation

b. Absorption

c. External Reconstruction


2. The unique feature of Absorption is …………….?

a. One liquidation one formation

b. One liquidation no formation

c. No liquidation no formation


3. ………….. is the price payable by the transferee company to the transferor company for taking over the business of the transferor company?

a. Payment

b. Purchase consideration

c. Inter company owing


4. ………… is defined as, aggregate of the shares and other securities issued and the payment made in the form of cash or other assets by the transferee company to the shareholders of the transferor company.

a. Purchase Consideration

b. Payment

c. Surplus


5. Purchase consideration ……………..the sum which the transferee company will directly pay to the debenture holders or creditors of the transferor company.

a. Does not include

b. Include

c. None of the above


6. ……………..means the Company, which is amalgamated into another Company.

a. Transferor

b. Transferee

c. Vendee


7. If a certain liability of the transferor company has not been taken over by the transferee company, it will be discharged by the………….?

a. Transferor company

b. Transferee company

c. Purchasing company


8. The Purchase Consideration essentially depends upon the ………..of its elements.

a. Fair Value

b. Market Value

c. Face Value


9. In case of .............., one existing company takes over the business of another company and no new company is formed.

a. Amalgamation

b. Absorption

c. Internal Reconstruction


10. Under ………………….the interests of various parties can be satisfied by issuing shares, debentures, cash or any combinations of any of these modes. 

a. Net Assets Method 

b. Payment basis method 

c. Lump sum Method 


11. If payment made is more than the value of the net assets taken over, the difference will be……….. ? 

a. Goodwill

b. Capital Reserve 

c. General Reserve 


12. If the value of the net assets taken over is more than payments made, the difference represents…………? 

a. Capital Reserve 

b. Statutory Reserve 

c. Goodwill 


13. ………….means the company, which acquires the business of another company. 

a. Vendor Company 

b. Transferee Company 

c. Transferor Company 


14. While closing the books of transferor company, the assets taken over are debited to ………. Account 

a. Assets Account 

b. Realisation Account 

c. Shareholders Account 


15. For recording of purchase consideration, it is credited to ………… in the books of transferor company. 

a. Realisation Account 

b. Shareholders Account 

c. Cash Account 


16. The payment of liquidation expenses borne by vendor company is credited to ………? 

a. Realization account 

b. Expenses account 

c. Cash/Bank account 


17. For payment of liabilities which are not taken over by transferee company ……… will be credited 

a. Cash / Bank account

b. Realization account 

c. Liability account 


18. For receipt of Purchase Consideration …………. Is credited, in the books of transferor company. 

a. Shareholder’s account 

b. Purchasing company account 

c. Realization account 


19. While closing the books of transferor company, share capital, reserves and surplus are transferred to …………..? 

a. Equity share capital account 

b. Equity shareholders account 

c. Realization account 


20. Debit balance of profit & loss account is debited to ………… while closing the books of vendor company. 

a. Equity shareholders account 

b. Purchasing company account 

c. Realization account 


21. The assets and liabilities taken over should be accounted in the Realization Account at………………only. 

a. Book value 

b. Market Value 

c. Realized value 


22. Profit or loss on realization account should be transferred to ………….. ? 

a. Equity shareholders account 

b. Purchasing company account 

c. Cash account 


23. If the purchasing company is required to pay the expenses of liquidation, the amount should be adjusted to ……………..? 

a. Goodwill or capital reserve account 

b. Share capital account 

c. Cash account 


24. While calculating purchase consideration ............... of assets is to be considered. 

a. Book Value 

b. Revalued price 

c. Average price 


25. When liquidation expenses is paid and borne by seller company then it is debited to………… ? 

a. Bank account 

b. Realization account 

c. Goodwill account

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