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Bangalore University UNDERWRITING OF SHARES 2 marks Important Questions with Answers

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Corporate Accounting is a special branch of accounting which deals with the accounting for companies ,preparation of their final accounts and cash flow statements, analysis and interpretation of companies’s financial results and accounting for specific events like amalgamation, absorption, preparation of consolidated .

Unit 1.UNDERWRITING OF SHARES

1. Define  Underwriting.

Ans: Underwriting is an agreement entered into by the company with one or more persons or institutions called underwriters, Who undertake to take up the Whole or Certain Poetaion is such shares or debenture as are net subscribed for by the pubic in consideration os a certain remuneration called underwriting commission

2. Who Are underwriters?

Ans: Underwrites are those who underwrite the shares or debenture issued by companies

3. What is Underwriting commission?

The Consideration Payable to the underwriters by a company for underwriting the share/Debentures is called Underwriting Commission.

4. Mention the types of Underwriting.

Underwriting Contracts are classified into the following way:
1.ON the basis id the number of shares: (a) Compete for underwriting (b) Partial Underwriting

2. On the basis id liability of Underwriters (a) Open/Pure Underwriting (b) Firm Underwriting

5. What we complete Underwriting?

It is an arrangement under which the whole of the issue of shares or debentures of a company Is underwritten by the underwriters.

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6. What do you mean by Partial Underwriting

It is an arrangement under which only part of the issue of the shares/Debentures of a company is underwritten by the underwriters

 

7.Define open/Pure Underwriting

It is an arrangement under which an underwriter Agrees to take up the shares or debentures of a company only when the whole or part of the issues od shares/Debentures of the company underwritten by them is not fully subscribed for by the public.

 

8.Define Firm Underwriting

It is an arrangement under which an underwriter or Underwriters make a firm commitment to take up a specified number of shares or debentures od company, irrespective of the number od share or debentures subscribed for by the Public.

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9. What is a marked application?

The application received by the company through the underwriters and which contain the official stamp of the underwriters are called marked application

 

10. What us an Unmarked Application?

The application received bu a company directly from the public which does not bear the official stamp of the underwriters is called unmarked application.

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