A-AS Level (CIE) Accounting Paper-3: Specimen Questions with Answers 36 - 37 of 50

Question 36

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Question

MCQ▾

Max ltd. Decided to issue 30,000 stock of $10 each to finance a new project of expansion in the financial year 2019 - 2020. The company also borrows a sum of $2,00,000 from the bank for 1 year for the same purpose. It paid a total dividend of $50,000 in that year and had to incur an interest of $45,000. It also spent $3lakh for repaying the existing loan.

How much will be the cash flow from investing activities?

Choices

Choice (4)
a.1,25,000
b.104,000
c.2,05,000
d.1,05,000

Answer

d.

Explanation

How much will be the cash flow from investing activities? How much will be the cash flow from investing activities?
ParticularsAmount
New Shares Short term borrowing Repayment of existing loan Dividend payment Interest payment Cash flow from financing activities3,00,000 2,00,000 (3,00,000) (50,000) (45,000) 1,05,000

Question 37

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Question

MCQ▾

Share issued to promoters for their services is debited to account

Choices

Choice (4)
a.Goodwill account
b.Promotion expenses account
c.Promoters account
d.Question does not provide sufficient data or is vague

Answer

a.

Explanation

Share is issued to promoters when they provide service to the company in the present or for the future. Goodwill account is debited when shares issued to promoter for their services because promoters are not the shareholders of the company. Services can be in the form of engineering services, guidance, layout, designing of plant, technical assistance etc.

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