Page 144 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Unit 7: Accounting for Banking Companies

self assessment notes

State whether the following statements are true or false:
8. Cash discount and trade discount are same.

9. Del Credera commission is calculated on credit sales only.
10. Amount of depreciation arrived at on the basis of straight line method and reducing balance
method are same.

11. The practice of providing for unpaid expenses and prepaid expenses is based on accrual
basis of accounting.
12. Dual aspect is not an accounting convention.
13. The ICAI is a member of the International Accounting standards committee.

14. There are 29 accounting standards in India.
15. The three columns of each side of the three columned cash book represent Real, Personal
and Nominal A/c.

7.4 important facts

The following facts must be kept in mind, while dealing with a company’s accounts relating to
issue of shares by a company:
1. An equity share carries the voting rights.
2. Preference share-holders have voting right when the dividend is outstanding for more
than 2 years for cumulative preference shares and for 3 years in case of non-cumulative
preference shares.

3. Forfeited shares when reissued can be issued at a discount provided the reissue price
plus the amount already received from defaulting shareholder is not less than the amount
credited as paid up on reissue of the share.

4. It is mandatory to cancel the discount on issue of shares account at the time of forfeiture of
shares which were issued at a discount.
5. Preference share enjoys the preferential right only in respect of return of capital on winding
up of the company. It does not have a right to get the dividend.
6. Entries for surrendering the shares are the same as are applicable in case of forfeiture of
shares.
7. Capital redemption reserve is available for declaring fully paid bonus shares.
8. A company can purchase its own shares as well as debentures.
9. A convertible preference share can be converted into equity shares.
10. Face value is the value of a share stated on the share certificate. Paid-up value represents
the amount called by the company and paid by the shareholder, which may or may not be
equal to the face value.

11. Shareholders are not entitled to get dividend on the amount paid as calls-in-advance.
12. Unless permitted by the Central Government, a share cannot be issued at a discount
exceeding 10% of the nominal value. A company can issue shares at discount when
minimum one year has lapsed since commencement of business.

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