Match List I with List II Choose the correct answer from the given below: List I List II Over Subscription (I) Minimum amount that must be raised by issue of shares Minimum Subscription (II) Application received is more than shares issued Under Subscription (III) Allotment of shares without issue of prospectus Private Placement (IV) Application received is less than shares issued
(A)-(II), (B)-(I), (C)-(IV), (D)-(III)
Understanding Share Issue Terms: Over Subscription, Minimum Subscription, Under Subscription, and Private Placement
This question asks us to match different terms related to the issue of shares by a company with their correct definitions. Let's analyze each term and its corresponding definition.
Analyzing List I and List II Terms
We have two lists:
- List I contains terms: Over Subscription, Minimum Subscription, Under Subscription, Private Placement.
- List II contains definitions related to share issues.
Matching Terms from List I to Definitions in List II
Let's examine each term in List I and find its best match in List II.
(A) Over Subscription:
Over subscription occurs when a company receives applications for more shares than the number of shares it has offered for public issue. This indicates high demand for the company's shares.
- Looking at List II, definition (II) says "Application received is more than shares issued". This perfectly matches the definition of over subscription.
So, (A) matches with (II).
(B) Minimum Subscription:
Minimum subscription is the minimum amount that a company must receive through share applications before it can proceed with the allotment of shares. This is a regulatory requirement to ensure the company has sufficient funds for its stated objectives. If the minimum subscription is not received, the company cannot allot shares and must return the application money.
- Looking at List II, definition (I) says "Minimum amount that must be raised by issue of shares". This accurately describes the minimum subscription requirement.
So, (B) matches with (I).
(C) Under Subscription:
Under subscription happens when a company receives applications for fewer shares than the number of shares it has offered for public issue. This means the public response to the share issue is not as strong as the company hoped.
- Looking at List II, definition (IV) says "Application received is less than shares issued". This is the definition of under subscription.
So, (C) matches with (IV).
(D) Private Placement:
Private placement is a method of issuing shares or securities directly to a selected group of investors (like institutions or wealthy individuals) rather than offering them to the general public through a public issue. This method typically does not involve issuing a detailed public prospectus.
- Looking at List II, definition (III) says "Allotment of shares without issue of prospectus". While a prospectus might be issued in some private placements (like a placement memorandum), this option describes the fundamental characteristic of not going through the full public issue process that requires a detailed public prospectus. Compared to the other options, this is the most fitting description for private placement in this context.
So, (D) matches with (III).
Summary of Matches
Based on our analysis, the matches are:
- (A) Over Subscription - (II) Application received is more than shares issued
- (B) Minimum Subscription - (I) Minimum amount that must be raised by issue of shares
- (C) Under Subscription - (IV) Application received is less than shares issued
- (D) Private Placement - (III) Allotment of shares without issue of prospectus
Final Matching Table
| List I (Term) | List II (Definition) | Match |
|---|---|---|
| (A) Over Subscription | (II) Application received is more than shares issued | (A)-(II) |
| (B) Minimum Subscription | (I) Minimum amount that must be raised by issue of shares | (B)-(I) |
| (C) Under Subscription | (IV) Application received is less than shares issued | (C)-(IV) |
| (D) Private Placement | (III) Allotment of shares without issue of prospectus | (D)-(III) |
The correct combination of matches is (A)-(II), (B)-(I), (C)-(IV), (D)-(III).
Revision Table: Key Share Issue Concepts
| Term | Simple Definition | Outcome |
|---|---|---|
| Over Subscription | More applications than shares offered | Shares allotted on pro-rata basis or by lottery |
| Minimum Subscription | Minimum amount required to allot shares | If not met, application money refunded |
| Under Subscription | Fewer applications than shares offered | Shares may be allotted fully to applicants or issue may fail |
| Private Placement | Selling shares directly to selected investors | Faster process, less regulatory burden than public issue |
Additional Information: Share Capital and Issue Methods
When a company needs funds, it can issue shares to the public or a selected group of investors. This process is governed by regulations to protect investors.
- Public Issue: Offering shares to the general public. This requires complying with regulations, issuing a prospectus, and listing on a stock exchange. Initial Public Offer (IPO) and Further Public Offer (FPO) are types of public issues.
- Prospectus: A legal document inviting the public to subscribe for shares or debentures of a company. It contains detailed information about the company, its business, risks, and the terms of the issue.
- Allotment of Shares: The process by which a company allocates shares to applicants after the subscription period closes and minimum subscription is met.
- Share Capital: The capital raised by a company by issuing shares. It can be equity share capital or preference share capital.
- Securities and Exchange Board of India (SEBI): The regulatory authority for the securities market in India, which lays down rules for share issues and other capital market activities. Minimum subscription is a crucial requirement mandated by SEBI regulations.
Important Questions from Accounting for Share Capital
Nawab, Shanaya, and Hritik are partners sharing profits and losses in the ratio of 5 : 3 : 2. The partnership deed provides for charging interest on drawings @10% p.a. The drawings of Nawab, Shanaya, and Hritik were ₹20,000, ₹15,000, and ₹10,000, respectively. After final accounts have been prepared, it was discovered that interest on drawings had not been charged. The adjusting entry will be:
Mr. Kunal withdrew ₹10,000 per month at the end of each month from a firm for his personal use during the year ending March 31, 2022. What will be the interest on drawings if charged @8% p.a.?
What are the accounting aspects that are involved at the time of retirement or death of a partner?
(A) Ascertainment of profit or loss up to the date of retirement or death of partner.
(B) Realisation of assets and liabilities that are shown in the books of Accounts only.
(C) Adjustment of capital.
(D) Calculation of new profit sharing ratio and gaining ratio.
(E) Treatment of Goodwill
Choose the correct answer from the options given below:
On retirement of a partner, the retiring partner’s capital account will be credited with:
Which of the following are shown in Revaluation A/c?
(A) Unrecorded Asset
(B) Workmen Compensation Reserve
(C) Decrease in fixed Asset
(D) Increase in Inventory
(E) Drawings of partner
Choose the correct answer from the options given below:
