S1: Under the Companies Act 2013, a company can buy back its shares up to 25% of its total paid-up equity capital in a financial year. S2: The debt-equity ratio should not exceed 2:1 after a buyback of shares. Which statement(s) is/are correct? MCQ with Answer and Explanation
S1: Under the Companies Act 2013, a company can buy back its shares up to 25% of its total paid-up equity capital in a financial year. S2: The debt-equity ratio should not exceed 2:1 after a buyback of shares. Which statement(s) is/are correct?
A. S2 only
B. Neither S1 nor S2
C. S1 only
D. Both S1 and S2
Answer: Option D
Solution (By JKSSB Mock Tests)
Section 68 of the Companies Act 2013 limits buyback to 25% of total paid-up equity capital in a year and mandates that the post-buyback debt-to-equity ratio must not exceed 2:1. Both are correct.
Explanation:
Article 279A dictates that every decision of the GST Council must be supported by a minimum of 75% (three-fourths) weighted majority of the members present and voting.
Assertion (A): Under Ind AS 2, inventories are measured at the lower of cost and net realizable value (NRV). Reason (R): This ensures that assets are not overstated and losses are recognized in the period they occur, adhering to the prudence concept. Choose the correct option.
A.A is false but R is true
B.A is true but R is false
C.Both A and R are true but R is NOT the correct explanation of A
D.Both A and R are true and R is the correct explanation of A
Explanation:
Ind AS 2 mandates the lower of cost and NRV rule. This is a direct application of the prudence (conservatism) concept, ensuring assets aren't overstated and potential losses are recognized immediately. R correctly explains A.
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