Top 50+ Solved Accounting for Amalgamation, Absorption and External MCQ Questions Answer
Q. Shares received from the new company are recorded at –
a. Face value
b. Average price
c. Market value
d. None of the above
Q. When two or more companies carrying on similar business decide to combine, a newcompany is formed, it is known as ..................
a. Amalgamation
b. Absorption
c. Internal reconstruction
d. External reconstruction
Q. When one of the existing companies take over business of another company orcompanies, it is known as ...........
a. Amalgamation
b. Absorption
c. Internal reconstruction
d. External reconstruction
Q. While calculating purchase price, the following values of assets are considered
a. Book value
b. New values fixed
c. Average values
d. Market values
Q. While calculating purchase price, the following values of assets are considered
a. Book value
b. New values fixed
c. Average values
d. Market values
Q. Which of the following statement is correct?
a. The amount of Goodwill or Capital Reserve is found out in the books of purchasing company only
b. The amount of Goodwill or Capital Reserve is found out in the books of vendor company only.
c. Goodwill = Net Assets – Purchase price
d. The face value of shares of purchasing company will be taken in to account while calculating purchase consideration.
Q. If the two companies have different accounting policies in respect of the same item,then they make necessary changes to adopt .............. accounting policies.
a. LIFO method
b. FIFO method
c. Weighted method
d. Uniform
Q. The Amalgamation Adjustment Account appears in the books, it is shown under theheading of ......... in the balance sheet.
a. Reserve and Surplus
b. Fixed Assets
c. Investments
d. Miscellaneous expenditure
Q. If amalgamation is in the ..............., the General Reserve or Profit and Loss A/cbalance will not be shown in the balance sheet.
a. Form of Merger
b. Form of purchase
c. Net assets method
d. Consideration method
Q. If the intrinsic values of shares exchanged are not equal, the difference is paid in...........
a. Cash
b. Debenture
c. Pref. share
d. Assets
Q. In case of .............., one existing company takes over the business of anothercompany and no new company is formed.
a. Amalgamation
b. Absorption
c. Reconstruction
d. None of the Above
Q. In amalgamation of two companies
a. Both companies lose their existence
b. Both companies continue
c. Any one company continues
d. none
Q. When purchasing company pays purchase consideration, it will be debited to
a. Business purchase account
b. Assets account
c. Liquidator of selling company’s account
d. none
Q. When the purchasing company bears the liquidation expenses, it will debit theexpenses to
a. Vendor Company’s Account
b. Bank Account
c. Goodwill Account
d. none
Q. When the Vendor (seller) company agrees to bear liquidation expenses, it will debit
a. Realisation Account
b. Bank Account
c. Goodwill Account
d. none