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Standard XII
Principles and Practice of Accounting
Question

Which of the following is not source of Funds?
  1. Issue of share capital
  2. Sale of fixed assets
  3. Issue of bonus shares
  4. Issue of shares for consideration other than cash

A
Issue of share capital
B
Issue of bonus shares
C
Issue of shares for consideration other than cash
D
Sale of fixed assets
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Solution
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By source of funds we mean that money is coming in the business. In the given question all of them are sources of funds except issue of bonus shares. The company issues bonus shares out of its own reserves and hence there is no money received by the company for such shares. Rest all being sale of fixed assets, issue of share capital and issue of shares for consideration other than cash are a part of sources of funds.

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Q1

Shares issued for consideration other than cash means ___


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Q2
Consider the following statements:
1. The bonus shares shall not be issued in lieu of dividend,
2. A company may issue fully paid up bonus shares to its members out of its 'Capital Redemption Reserve Account'
3. A company may not issue bonus shares out of its 'Securities Premium Account'
Which of the above statement/s is are not correct?
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Q3

Assuming that Proprietary Ratio is 0.6 : 1, state giving reasons, whether the ratio will increase, decrease or will not change in each one of the following cases:

(i) Issue of new equity shares for cash.

(ii) Issue of equity shares against purchase of machinery.

(iii) Issue of debentures against purchase of machiney.

(iv) Redemption of debentures for cash.

(v) Conversion of debentures into preference shares.

(vi) Buy-back of its own shares by a company.

(vii) Purchase of a fixed asset for cash.

(viii) Purchase of a fixed asset on long-term deferred payment basis.

(ix) Sale of a fixed asset costing Rs. 1,00,000 for Rs. 80,000.

(x) Sale of a fixed asset costing Rs. 2,00,000 for Rs. 2,50,000.

(xi) Issue of Bonus Shares.

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Q4
Answer the question.
What do you mean by issue of shares for consideration other than cash?
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Q5
Under issue of shares for consideration other than cash, the number of shares to be issued to the vendor will be calculated as ___________________.
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