1. When two or more companies carrying on similar business decide to combine, a new
company is formed, it is known as ..................
(A) Amalgamation
(B) Absorption
(C) Internal reconstruction
(D) External reconstruction
2. When one of the existing companies take over business of another
company or
companies, it is known as ...........
(A) Amalgamation
(B) Absorption
(C) Internal reconstruction
(D) External reconstruction
3. While calculating purchase price, the following values of assets are considered
(A) Book value
(B) Revised Value
(C) Average values
(D) Market values
4. If the intrinsic values of shares exchanged are not equal, the difference is
paid in ...........
(A) Cash
(B) Debenture
(C) Pref. share
(D)Assets
5.When the purchasing company does not take over a particular liability and the vendor
company pays that liability, it will debit it to______
(A) Realisation Account
(B) Bank Account
(D) Liability Account
(D) Creditors Account
6. When liquidation expenses is paid and borne by seller company then it is debited to_____
(A) Bank A/c
(B) Goodwill A/c
(C) Realisation A/c
(D) Capital Reserve A/c.
7. The shares received from the new company is recorded at________
(A) Face value
(B) Market value
(C) Average price
(D) None of these
8.In amalgamation of two companies
(A) Both companies lose their existence
(B) Both companies continue
(C) Any one company continues
9. The original amount of preference share capital should be transferred to ............ account
in the time of amalgamation in the books of vendor co.
(A) Preference shareholders Account
(B) Capital Reserve Account
(C) Equity share capital Account
(D) Equity share capital Account
10. If the market price of the shares to be given for Purchase Consideration at the time of
absorption, ............ of the share is to be determined
(A) Fair Value
(B) Face Value
(C) Intrinsic Value
(D) Yield Value