The 'Redemption of Preference Shares' can be made out of: MCQ with Answer and Explanation

Question

Share Report Error

The 'Redemption of Preference Shares' can be made out of:

A. Capital reserve

B. Profits available for distribution

C. Fresh issue of shares

D. Both A and B

Answer: Option D

Solution (By JKSSB Mock Tests)

Redemption can be out of profits or proceeds of fresh issue.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

The matching concept requires that:

A. Debits equal credits

B. Expenses should be matched with revenues of the same period

C. Profits should match cash

D. Assets should equal liabilities

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Correct Answer: Option B

Explanation:
Matching principle states that expenses incurred to earn revenues should be recognized in the same accounting period.

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Question #2

Under the Income Tax Act, the 'TDS' on payment of rent for land, building, or furniture exceeding ₹2,40,000 per annum is governed by which section, and what is the rate?

A. Section 194I at 2%

B. Section 194J at 10%

C. Section 194I at 10%

D. Section 194C at 2%

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Correct Answer: Option C

Explanation:
Section 194I(b) mandates TDS at 10% on rent paid for the use of land, building, or furniture, provided the rent exceeds ₹2,40,000 in a financial year.

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Question #3

An amount paid for 'Goodwill' on purchase of a business is classified as:

A. Deferred revenue expenditure

B. Current asset

C. Intangible asset

D. Fictitious asset

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Correct Answer: Option C

Explanation:
Purchased goodwill is an intangible asset.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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