Corporate Accounting – I Course Code 232 (Semester – III)
Valuations
of Shares
MCQ (Multiple Choice Question)
1. The face value of a share is the value
assigned to it by promoters of a company in the capital clause of the
___________
·
Memorandum of Association
·
Article of Association
·
Prospectus
·
None of these
2. The need for valuation of shares arises
in __________
·
Formulations of schemes
of Amalgamation
·
Formulation of schemes of
Absorption
·
Formulations of schemes
of Reconstruction
·
All of these
3. The net assets method of valuation of shares
is also termed as ______
·
Balance Sheet Method
·
Intrinsic Method
·
Break-up Value Method
·
All of these
4. The valuation of shares, calculated under Net Assets Method are ____
·
Net Assets ÷ Number of Issued Shares
·
Net Assets + Number of
Issued Shares
·
Net Assets - Number of
Issued Shares
·
Net Assets × Number of
Issued Shares
5. If the total assets is Rs. 1,00,000,
Liabilities Rs. 20,000 and the number of shares is 40,000 then what will be the
value of each shares under Net Assets Method?
·
Rs. 2
·
Rs. 2.5
·
Rs. 3
·
Rs. 3.5
6. Under Net Assets Method all _______
assets should be excluded.
·
Fixed Assets
·
Current Assets
·
Factious Assets
·
Intangible Assets
7. Under Net Assets Method all non-grading
assets should be taken at their ___________ value.
·
Market Value
·
Book Value
·
Scrap Value
·
Replacement Value
8. Net Assets means _________
·
Total Assets - Total
Liabilities
·
Total Assets - Third
Party Liabilities
·
Total Assets - Third Party Liabilities
+ Preference Shares
·
None of these
9. The yield basis of valuation of shares
may be __________
·
Valuation based on rate
of dividend
·
Valuation based on rate
of earning
·
Valuation based on
productivity factor
·
All of these
10. Valuation based on rate of Dividend Method is particularly suitable for valuing ________
·
Small block of Shares
·
Medium block of Shares
·
Large block of Shares
·
None of these
11. Valuation based on rate of Earning Method
is particularly suitable for valuing ________
·
Small block of Shares
·
Medium block of Shares
·
Large block of Shares
·
None of these
12. If the paid-up value of shares is Rs.
80, the Normal Rate of Return 10% and the past results show that the company
will pay a dividend of 12% in future, then the Value of Shares, according to
valuation based on rate of return will be?
·
Rs.96
·
Rs.67
·
Rs.9.6
·
Rs.6.7
13. If the paid-up value of shares is Rs. 80, the Normal Rate of Earning 10% and the past performance show that it is expected to earn at 12% in future, then the Value of Shares, according to valuation based on rate of earning will be?
·
Rs.96
·
Rs.67
·
Rs.9.6
·
Rs.6.7
14. The
valuation of shares on Yield Basis requires determination of Normal Rate of
return of ______________
·
Dividend
·
Earning
·
Both (Dividend and Earning)
·
None of these
15. If the restrictions on transfer of
shares are more, it will ________ the Normal Rate.
·
Increase
·
Decrease
·
Both (Increase and
Decrease)
·
None of these
16. If the restrictions on transfer of shares are less, it will ________ the Normal Rate.
·
Increase
·
Decrease
·
Both (Increase and
Decrease)
·
None of these
17. Shares may be partly paid-up or they
may be subject to a right of lien by the company i.e. disabilities will the
Normal Rate.
·
Increase
·
Decrease
·
Both (Increase and
Decrease)
·
None of these
18. Under Yield Method stability in
dividend will __________ the Normal Rate.
·
Increase
·
Decrease
·
Both (Increase and
Decrease)
·
None of these
19. In the case of companies whose
management follow sound financial policies, an investor is prepared to accept a
________ Rate of Return.
·
Lower
·
Higher
·
Both (Lower and Higher)
·
None of these
20. Under Valuation based on productivity
factor, the productivity factor is found out _____________
·
Average Profit ÷ Average Net Worth x
100
·
Average Profit x Average
Net Worth ÷ 100
·
Average Profit x Average
Net Worth x 100
·
Average Profit ÷ Average
Net Worth ÷ 100
21. The ___________ factor is applied to
the Net Worth of the Business on the valuation date to ascertain the projected
income of the business in future.
·
Productivity
·
Earning
·
Dividend
·
Interest
22. The average profit is Rs. 50,000 and average net worth Rs. 2,50,000, Find out Productivity Factor?
·
20
·
50
·
100
·
125
23. The fair value of a share is the
average of the value obtained by the ________
·
Net Assets Method
·
Yield Method
·
Both (Net Assets Method and Yield
Method
·
None of these
24. Fair value of share method is
recognized in __________ foe valuing shares of investment companies for tax
purposes.
·
Government Circles
·
Private Circles
·
Both (Government Circles
and Private Circles
·
None of these
25. The Intrinsic value of shares is Rs.
280 and Yield value of shares is Rs. 220. Find out Fair value of a share?
·
Rs.250
·
Rs.220
·
Rs.280
·
Rs.500
26. Shares
are to be valued on ___________.
·
Mergers
·
Sale of shares
·
Gift tax
·
All
of the above
27. Quoted shares are those shares which
are ___________.
·
listed
on the stock exchange
·
quoted daily
·
quoted by the seller
·
quoted by the buyer
30. Under net asset method, value of a share depends on ___________.
·
net assets available to equity
shareholders
·
net assets available to
debentures holders
·
net assets available to
preference shareholders
·
none of the above
31. Net
asset value is also called as ___________.
·
asset backing value
·
intrinsic value
·
liquidation value
·
(asset backing value), (intrinsic
value) and (liquidation value)
32. While
deciding net asset value, fictitious assets ___________.
·
should be considered
·
should not be considered
·
added to total assets
·
none of the above
33. Net
asset value method is based on the assumption that the company is ___________.
·
A going concern
·
Going to be liquidated.
·
Both (A going concern and
Going to be liquidated)
·
None of the above
34. Yield value depends on ___________.
·
Future maintainable
profit
·
Paid-up equity capital
·
Normal rate of return
·
None of the above
35. F.M.P. for yield valuation is
___________.
·
future profit
·
profit that would be available to
equity shareholders
·
past profit
·
none of the above
36. Fair value of a share is equal to
___________.
·
Intrinsic value only
·
Yield value only
·
Average of intrinsic and yield value
·
None of the above
37. Value
of a partly paid equity share is equal to ___________.
·
Value of fully paid share - calls
unpaid per share
·
Calls in arrears per
share
·
Paid-up value per share
·
None of the above
38. Rate of Earning = _______________
·
Expected Profit ÷ Equity Capital x 100
·
Expected Profit + Equity
Capital x 100
·
Expected Profit - Equity
Capital x 100
·
Expected Loss + Equity
Capital x 100
39. Fair Value =
____________
· Intrinsic Value + Yield Value ÷ 2
·
Intrinsic Value - Yield
Value ÷ 2
·
Intrinsic Value x Yield
Value ÷ 2
·
Intrinsic Value ÷ Yield
Value ÷ 2
40. Fair Value
Method is also known as _______
·
Market Value Method
·
Earning Capacity Method
·
Income Basis Method
· Average of Asset – Backing Method
41. Net Asset
Method is also known as _______
·
Balance – Sheet Method
·
Market Value Method
·
Earning Capacity Method
·
Income Basis Method
42. Intrinsic
value of each share = ____________
·
Funds available to equity shareholders
÷ Number of equity Shares
·
Funds available to Preference
shareholders ÷ Number of equity Shares
·
Funds available to
Debentures holders ÷ Number of equity Shares
·
None of the above
43. Capitalized
Value of Profit = ____________
·
Maintainable Loss ÷
Normal Rate of Return
· Maintainable Profit ÷ Normal Rate of Return
·
Maintainable Profit -
Normal Rate of Return
·
Maintainable Loss -
Normal Rate of Return
44. Maintainable
Profit = ______________
· Average Profit – Transfer to General Reserves
·
Average Profit + Transfer
to General Reserves
·
Average Profit x Transfer
to General Reserves
·
Average Profit ÷ Transfer
to General Reserves
45. The Profit of
the company amounted to year 2012
Rs. 45,000 (Profit) 2013 Rs. 49,000
(Profit) 2014 Rs. 50,000 (Profit)
find out Average Profit.
·
Rs. 47,000
· Rs. 48,000
·
Rs. 46,000
·
Rs. 49,000
46. The Intrinsic value of shares is Rs.
140 and Yield value of shares is Rs. 150. Find out Fair value of a share?
·
Rs.145
·
Rs.146
·
Rs.147
·
Rs.148
47. Profit as per
Balance Sheet Rs. 65,000 (Cr.) the profit for the past three years have shown
an increase of Rs. 15,000 annually. Find out Average Profit?
·
51,000
· 50,000
·
49,000
·
47,000
48. Super Profit = ____________
·
Profit + Normal Profit
·
Average Profit + Normal
Profit
·
Average Profit - Normal Profit
·
Average Profit x Normal
Profit
49. If the total assets is Rs. 5,00,000,
Liabilities Rs. 2,00,000 and the number of shares is 20,000 then what will be
the value of each shares under Net Assets Method?
·
Rs. 15
·
Rs. 12.5
·
Rs. 13.60
·
Rs. 13.5
50. If the total assets is Rs. 3,60,000,
Liabilities Rs. 60,000 and the number of shares is 10,000 then what will be the
value of each shares under Net Assets Method?
·
Rs. 30
·
Rs. 25
·
Rs. 36
·
Rs. 35
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