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Friday, September 24, 2021

Quantitative techniques (QT) Mcqs

September 24, 2021 0
Quantitative techniques (QT) Mcqs

MCQS - JULY 2021

1. If the z table value is 2.58, what is the desired level of confidence? 

A. 99% 
B. 90% 
C. 95% 
D. 100%

2. There is no significance relationship between any two variables is known as

A. Null Hypothesis 
B. Simple Hypothesis 
C. Alternate Hypothesis 
D. One way Hypothesis

3. Combined mean is calculated when we have _________.

A. Information of two groups
B. Information if single group
C. Information of more than four groups
D. No information is available

4. If the null hypothesis is false then which of the subsequent is accepted? 

A. Null Hypothesis 
B. Positive Hypothesis
C. Negative Hypothesis 
D. Alternative Hypothesis

5. Alternative Hypothesis is also called as? 

A. Composite hypothesis
B. Research Hypothesis
C. Simple Hypothesis
D. Null Hypothesis 

6. Type 1 error occurs when?

A. We reject H0 if it is True 
B. We reject HO if it is False 
C. We accept H0 if it is True
D. We accept HO if it is False

7. If the sample size is less than 30, which test should be used?

A. t-test 
B. chi-square test 
C. z-test 
D. f-test

8. A statement made about a population for testing purpose is called? 

A. Statistic 
B. Hypothesis 
C. Test Statistic
D. Significance level

9. How many types of error may occur when testing the hypothesis?

A. Only 1 type 
B. 2 type 
C. 3 type 
D. 0 type

10. The rejection probability of Null Hypothesis when it is true is called as?

A. Level of Rejection
B. Level of Significance 
C. Level of Margin
D. Level of Confidence

11. The probability of committing a type 1 error is denoted by ________.

A. x 
B. E 
C. alpha 
D. bita 

12. In regression, the equation that describes how the response variable (y) is related to the explanatory variable (x) is:

A. the correlation model
B. the regression model
C. used to compute the correlation coefficient
D. None of these alternatives is correct

13. Find the correct statement.

A. Mean is positional average 
B. Median is positional average 
C. Median is arithmetic average
D. Mode is positional average

14. In regression analysis, the variable that's being predicted is the

A. response, or dependent, variable
B. independent variable 
C. is usually x
D. intervening variable 

15. For 90% desired level of confidence, what is the z table value? 

A. 1.65 
B. 1.96 
C. 2.56 
D. 1.57

16. When the population is heterogeneous and characteristics are unknown, which test should be used? 

A. Chi-square test
B. t-test
C. z-test
D. f-test

17. When the correlation is only studied between 2 variables it's known as

A. Positive correlation 
B. Negative correlation 
C. Multiple correlation 
D. Simple correlation 

18. If the proportion of success(p) is given, what is the proportion of failure(q)? 

A. 1-q 
B. 1-p 
C. p+1 
D. 1+q

19. Sample size is known as ______

A. n
B. N
C. s
D. S

20. Level of significance is 5% so, what is the level of confidence?

A. 95%
B. 5%
C. 50%
D. 105%

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Wednesday, September 15, 2021

Behaviourial Sciences in Management (BSM) Mcqs

September 15, 2021 0
Behaviourial Sciences in Management (BSM) Mcqs

MCQS : JULY 2021

1. _____ is a study of commonly shared values, beliefs, customs, traditions and rituals.

A. Cultural anthropology
B. Psychology
C. Biology
D. Economics

2. Which of the following is not a social science?

A. Sociology
B. Anthropology
C. Physics
D. Psychology

3. Who has suggested the need hierarchy Theory of motivation?

A. Abraham maslow
B. Fredrick Herzberg
C. David me clelland
D. Victor vroom

4. Group behaviour, power and conflict are central areas of study for 

A. Sociologist
B. Anthropologists
C. Psychologists
D. Operations analysts

5. An acquisition of power in a competitive environment is studied by _____ science.

A. Political
B. Anthropological
C. Social 
D. Psychological

6. If a specific behavior and gets strendthened and the probability of repeating the same increases, then it is know as __________.

A. Reinforcement
B. Punishment
C. Extinction
D. Attribution

7. If a specific behavior gets strengthened and the probability of a repeating the same increases, as a result of application of favorable consequences, then it is know as _________

A. Positive reinforcement
B. Negative reinforcement
C. Punishment
D. Extinction

8. Most of the learning that takes place in the class room through lecture method is called ______

A. Classical conditioning
B. Cognitive learning
C. Operant conditioning
D. Social learning

9. According to Fishbein Multi Attribute model, attitude towards object can be measured through __________.

A. Ao = Sum of bi ei 
B. Ao = Sum of bi ci
C. Ao = Sum of ai di 
D. Ao = Sum of ci ei 

10. Organization Behavior is

A. An interdisciplinary approach
B. A General approach 
C. A Tactical approach
D. A Specialized Approach

11. Psychology's major contributions to the field of organizational behavior have been primarily at what level of analysis?

A. The level of the group 
B. The level of the individual
C. The level of the culture 
D. The level of Nation

12. Who has propounded the Achievement Motivation Theory?

A. Abraham Maslow
B. Victor Vroom 
C. Mc Clelland
D. Fredrick Herzberg

13. Who has advocated the Two Factor theory of Motivation? 

A. Fredrick Herzberg 
B. Abraham Maslow 
C. F. W. Taylor
D. Victor Vroom 

14. Hawthorne Studies is related to which stage of the organizational behavior evolution

A. Industrial revolution
B. Scientific management
C. Organizational behavior
D. Human relations movement

15. If a specific behavior gets weakened and the probability of repeating the same decreases, as a result of withdrawal of favorable consequences, then it is known as ______

A. Positive Reinforcement
B. Extinction
C. Negative Reinforcement
D. Punishment

16. Which of the following is not true of classical conditioning? 

A. Classical conditioning is passive.
B. Classical conditioning can explain simple reflexive behaviors 
C. Learning a conditioned response involves building an association between a conditioned stimulus and an unconditioned stimulus 
D. An unconditioned stimulus takes on the properties of a conditioned stimulus

17. Attributing one's own characteristics to other people. 

A. Projection
B. Halo effect
C. Attribution 
D. Stereo type

18. Which of the following behavior is not a part of study of Consumer Behavior ?

A. Consumption Behavior
B. Disposal Behavior
C. Buying Behavior 
D. General Behavior

19. _____ Is a relatively permanent change in behaviour that occurs as a result of experiences, information processing and observations.

A. Learning
B. Perception
C. Motivation
D. Skills

20. ____ is to be considered as a like game people play.

A. Feeling
B. Behaviour
C. Perception
D. Attitude

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Tuesday, August 17, 2021

New enterprise and innovations management Mcqs

August 17, 2021 1
New enterprise and innovations management Mcqs


1. To get an external financing, an entrepreneur's plan must pass three tests: reality test, value test and __________.

a) Talent test 
b) Financial test 
c) Competitive test 
d) Investor test

2. Costs are managed and budgeted based on the percentage of __________.

a) Net sales 
b) Net profit 
c) Income
d) Fiscal deposit

3. Assuming the necessary __________ is one of the aspects of entreprenurship.

a) Financial aids 
b) Risks
c) Investors 
d) Employees

4. The ______ is one in which the entrepreneur involves others in decision making process. 

a) Mixed management style 
b) Participative management style 
c) Centralised management style 
d) Change catastrophe

5. Changes in _________ are a major reason for growth of entrepreneurship. 

a) Consumer tastes 
b) Governmental policy 
c) Political power 
d) Service sector

6. _________ is a process in which persons are injected with motivations operations of achieved and in right to fact fully tackle uncertain and risky situations especially in business undertakings. 

a) Financial process 
b) Liberalization 
c) Entrepreneurial support system 
d) Selection

7. The _________ principle requires an entrepreneur to focus on most important issues, even under pressure.

a) Analysis 
b) Effectiveness 
c) Desire 
d) Time

8. A __________ is an original, functional model of a new product that entrepreneurs can put in the hands of potential customers so that they can see it, test it, and use it. 

a) Forecasts 
b) Articles 
c) Prototype
d) Trade associations

9. Too much ________ to meet consumer demands can be a drain on cash flow since manufacturing, transportation and storage costs would be borne by the venture. 

a) Cash flow 
b) Capital 
c) Inventory 
d) Demand and supply

10. Building organizational knowledge is necessary, and it is known as __________

a) Storing 
b) Record keeping 
c) Manufacturing 
d) Tax consultation

11. __________ strategy attempts to penetrate this product or market further by encouraging existing customers to buy more of the firm's current products. 

a) Diversification 
b) Integration 
c) Penetration 
d) Product making

12. The shops that sell the ski accessories can sell tennis racquets and mountain bikes during summer. This kind of a strategy is known as  __________.

a) Investment strategy 
b) Product development strategy 
c) Vertical integration 
d) Diversification strategy

13. A ________ is privately held and usually achieves only modest growth due to the nature of the business, the objectives of the entrepreneur and the limited money devoted to research and development. 

a) Foundation company 
b) High potential venture
c) Lifestyle firm 
d) LLP

14. The ________ is one of the conduit for commercializing the results of the synthesis of social need and technology. 

a) Innovators 
b) Investors
c) Government
d) Founders

15. In-spite of the importance of investment and innovation in the economic development of an area, there is still lack of understanding of __________.

a) Talent management
b) Marketing management 
c) Product-evolution process 
d) Technological processes

16. A __________ that values an individual who successfully creates a new business will spawn more venture formations than one that does not. 

a) Culture
b) Sub-culture 
c) Family 
d) Peer

17. __________ strategy involves the new product use as a part of it.

a) Integration
b) Sales
c) Market development
d) Diversification

18. One of the pressures that an entrepreneur faces as a challenge is __________.

a) Pressure on entrepreneur's time 
b) Pressure on the demand creation 
c) Pressure of the technology 
d) Pressure of the contracts

19. The growth opportunities occurs at the same level of the value added chain but simply involves a different but complementary value added chain. This is known as __________.

a) Backward integration 
b) Forward integration 
c) Horizontal integration 
d) Vertical integration

20. A __________analysis determines the degree to which a product or service idea appeals to potential customers and identifies A the resources necessary to produce the product or provide the service. 

a) Remedial action research 
b) Product and service feasibility analysis
c) Pilot surveys 
d) Focus group study

21. Periodically reviewing time management process and revisiting potential opportunities for delegation comes under the principle of __________.

a) Team work 
b) Desire 
c) Prioritised planning 
d) Reanalysis 

22. The entrepreneurial process has __________ distinct phases. 

a) Two 
b) Four 
c) Three 
d) Five

23. Entrepreneurship is the process of creating something new with __________ by devoting the necessary time and effort. 

a) Creativity 
b) Value 
c) Devotion 
d) Principles

24. __________ strategy involve selling a new product to a new market. 

a) Diversification 
b) Market product development 
c) Product development
d) Penetration

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Wednesday, July 21, 2021

Elements Of Economics Theory - Mcqs

July 21, 2021 0
Elements Of Economics Theory - Mcqs


1) Which one of the following is NOT an aspect of the assumption of rationality?

A) Complexity in behavior
B) Consistency in behavior
C) Complete information
D) Clarity of purpose

2) Which of these does not line within the scope of Managerial Economics?

A) Profit management
B) Demand analysis
C) Cost and production analysis
D) Balance of Payments

3) Identify which of these does not satisfy the basic assumptions of economics.

A) A worker cannot work for 24 hours a day
B) Apples cannot grow in dessert region
C) A consumer aims at maximization of satisfaction
D) A businessman may maximize profits by trading in illegal goods.

4) __________ is also known as aggregative economics.

A) Managerial Economics
B) Micro Euonomics
C) Business Economics
D) Macro Economics

5) According to __________ Economics is a study of man's action in the ordinary business of life.

A) Alfred Marshall
B) Paul Samuelson
C) Adam Smith
D) Lionel Robbins

6) Which of these is the reason that makes Marshall's definition oí Economics classificatory in nature?

A) It classifies welfare into material and non material welfare
B) It classifies economics into microeconomics and macroeconomics
C) It classifies resources into scarce and abundant
D) None of the above

7) Economic growth is best depicted by ________.

A) Upward movement on the given PPC
B) Outward shift in PPC
C) Downward movement on the given PPC
D) Inward shift in PPC

8) Price mechanism works efficiently provided there is:

A) Stability in the value of money
B) Existence of perfect competition
C) Reasonable equality in the distribution of wealth
D) All of the above

9) Which of these statements is true?

A) All values can rise or fail together
B) All wealth is money
C) All prices can rise or fall together
D) Only economic goods possess utility

10) Under economic statics

A) All variables refer to different points of time.
B) The concern is only with the final outcome of the relationship between variables
C) The entire process of change is traced
D) Supply in time period t is a function of Price in time period t - 1.

11) Those goods whose supply is limited in relation to their demand is known as

A) Scattered goods 
B) Economic goods 
C) Abundant goods
D) Free goods

12) When an object after having been disturbed restore its original position, it is a case of

A) Static Equilibrium
B) Stable Equilibrium
C) Unstable Equilibrium
D) Neutral Equilibrium

13) Which of these factors can cause competition to become imperfect?

A) Product is homogeneous
B) Product is heterogeneous
C) Sellers are price makers
D) B and C

14) Economic forces do not get sufficient time to bring about complete adjustment in the case of __________ equilibrium.

A) Short tem
B) Long term
C) Partial
D) General

15) Under perfect competition, the shape of AR and MR curves is __________.

A) Horizontal straight line
B) Vertical straight line
C) Parallel to X-axis
D) Both Aand C

16) The shape of AR and MR curves under imperfect competition is __________.

A) Vertical straight line
B) Hovizontal straight line
C) Upward sloping
D) Downward sloping

17) Match list (a) with list (b)

List (a)

List (b)

i. Raw materials

1. Non durable good

ii. Air

2. Free good

iii. Roads

3. Intermediate good

iv. Toothpaste

4. Public good

A) i - 2, ii - 1, iii - 3, iv - 4
B) i - 3, ii - 2, iii - 4, iv - 1
C) i - 4, ii - 3, iii - 1, iv - 2
D) i - 3, ii - 4, iii - 2, iv - 1

18) Match list (a) with list (b)

List (a)

List (b)

i. L. Robbins

1. Welfare approach

ii. A. Marshall

2. Wealth approach

iii. A. Smith

3. Economics is what the economists do.

iv. J. Viner

4. Scarcity approach

A) i - 4, ii - 3, iii - 2, iv - 1
B) i - 1, ii - 2, iii - 3, iv - 4
C) i - 4, ii - 1, iii - 2, iv - 3
D) i - 4, ii - 2, iii - 1, iv - 3

19) The three basic propositions of the 'Scarcity' definition of economics are

A) Ends, Scare Means & Alternative Uses
B) Ends, Wealth and Welfare
C) Wealth, Welfare & Money
D) Utility, Scarcity and Transferability

20) Which one of the following is NOT a fundamental economic problem?

A) How to allocate resources
B) What technique of production of use
C) Population explosion
D) How to distribute National Income

21) Any combination of two goods lying inside the production possibility frontier represents _______ of resources.

A) Growth
B) Scarcity
C) Under utilization 
D) Full utilization

22) The underlying assumptions (s) for the Price Mechanism to function efficiently is/are

A) Perfect Competition 
B) Stable Monetary System 
C) Free Market
D) All of the above

23) Which of the following is NOT an area of Microeconomics?

A) Producer's equilibrium
B) Consumer's equilibrium
C) Theory of factor pricing
D) Inflation

24) Which of these is a limitation of 'Robbins' definition of Economics?

A) It classifies welfare into material and non material welfare
C) It is Universal in nature
C) It covers only microeconomics
D) All of the above

25) Utility means ___________.

A) Satisfaction derived from consumption
B) Usefulness of a good
C) Power of a good to satisfy a want
D) Pleasure derived from consuming a good

26) Luxury is defined as ___________ consumption.

A) Necessary
B) Subsistence
C) Comfort
D) Superfluous

27) Any commodity to have exchange value must possess three attributes:

A) Form, place, time
B) Utility, scarcity, transferability
C) Utility, abundance, marketability
D) Satisfaction, usefulness, pleasure

28) Increase in economic goods is synonymous with increase in __________.

A) Wealth
B) Welfare
C) Utility
D) Desire

29) Which of these statements is true with regard to Capital goods?

A) They are known as goods of the first order
B) They are used for final consumption
C) They are known as goods of he second order 
D) They give satisfaction directly

30) Which of these is a characteristic of durable goods?

A) They have single use
B) They are repairable
C) They are purchased repeatedly
D) They are perishable

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Thursday, July 15, 2021

Elements Of Economics Theory Mcqs

July 15, 2021 0
Elements Of Economics Theory Mcqs

MCQS = OCTOBER 2013 - 14

OCTOBER - 2013

1. Increase in economic goods is synonymous with increase in

A) Desire
B) Utility
C) Wealth
D) Welfare

2. Value of a commodity refers to its __________.

A) Purchasing power
B) Price
C) Utility
D) Usefulness

3. Producers goods are also known as __________.

A) Goods of the First Order
B) Goods of the Second Order
C) Goods of the Fourth Order
D) Goods of the Third Order

4. When a slight disturbance evokes further disturbance so that the original position is never restored, it is a case of _________ equilibrium.

A) Stable
B) Unstable
C) Partial
D) Neutral

5. Business economics is ________ in nature.

A) Managerial
B) International
C) Descriptive
D) Prescriptive

6. Marshall's definition of Economics has been criticized by

A) Ricardo
B) Ruskin
C) Adam Smith
D) Robbins

7. Another name for Production Possibility Curve is __________ Curve.

A) Transformation
B) Maximum
C) Growth
D) Utilization

8. In economics, we assume that there is _________ stability in the economy.

A) Political
B) Economic
C) Technological
D) Seasonal

9. Which theory is generally included under micro economics?

A) Income theory
B) Employment theory 
C) Development theory
D) Price theory

10. The price elasticity of firm's average revenue curve is equal to infinity in case of

A) Perfect Competition
B) Monopoly
C) Monopolistic Competition
D) Oligopoly



1. Which of the following is not an example of transferable goods?

A) Computer
B) Singer's talent
C) Land
D) Building

2. Theory of income and employment is a subject matter of __________.

A) Micro Economics
B) Macro Economics
C) Managerial Economics
D) Business Economics

3. According to Robbins, economics is ________ as regards ends.

A) Normative
B) Positive
C) Neutral
D) Negative

4. Economic forces do not get sufficient time to bring about complete adjustment in case of _________ equilibrium.

A) General
B) Partial
C) Short-term
D) Long-term

5. Any combination of two goods lying inside the production possibility frontier represents ________ of rosources.

A) Under - utilization 
B) Un - utilization
C) Fuller utilization
D) Growth

6. Under perfect competition, the shape of AR and MR curves is ________.

A) Horizontal straight line
B) Vertical straight line
C) Parallel to Y-axis
D) Both B and C

7. What among the following is not an economic problem?

A) Unlimited wants
B) Social justice
C) Choice between wants
D) Resources having alternative uses

8. Which of the following group comes under basic needs and necessities?

A) Food, Housing, Luxury
B) Food, Clothing, Shelter
C) Food, Shelter, Education
D) Food, Housing, Medication

9. Carlyle and Ruskin called Economics as a ________ Science.

A) Social
B) Physical
C) Dismal
D) Universal

10. Value-in-exchange of a commodity refers to its __________

A) Longevity
B) Scarcity
C) Purchasing power 
D) Utility

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Tuesday, July 13, 2021

Advanced Accounting - Accounting for Amalgamations

July 13, 2021 0
Advanced Accounting - Accounting for Amalgamations

UNIT - 1



The term amalgamation is used when two or more existing companies go in to liquidation and a new company is formed to take over their business. The term absorption is used when one or more existing companies go into liquidation & one existing company takes over or purchases their businesses. However this difference between amalgamation & absorption has been dispensed with the Accounting Standard (AS-14) ‘Accounting for Amalgamations’ issued by ICAI. Thus amalgamation means merging of one company with another company or merging of two or more companies to form a new company or one company is taken over by the other. Hence amalgamation includes absorption. In amalgamation the assets & liabilities of transferor company(ies) are amalgamated with the transferee company. 
AS-14 specifies the procedure of accounting for amalgamations and the treatment of any resultant goodwill or reserves. The following terms are used in this standard with reference to amalgamation of companies.

a) Amalgamation : means an amalgamation pursuant to the provisions of Companies Act, 1956 or any other statute, which may be applicable to companies.
b) Transferor : Company means the company which is amalgamated in to another co.
c) Transferee : Company means the company into which Transferor Company is amalgamated.
d) Reserve : Means the portion of earnings, receipts or other surplus of an enterprise (Whether (C) Capital or (R) Revenue) appropriated by the management for a general or a specific purpose other than a provision for depreciation or diminution in value of assets or for known liability.

Types of Amalgamation:

Amalgamation for accounting purpose can be classified into two categories.

1. Amalgamation in the nature of merger
2. Amalgamation in the nature of purchase.

Amalgamation in the nature of Merger:

This is a type of amalgamation which satisfies all the following conditions.

1. All the liabilities and assets of the transferor company become after amalgamation, The liabilities and assets of the transferee Company.
2. Shareholders holding not less than 90% of the face value of the equity shares of the transferor company become equity shareholders of transferee company by virtue of the amalgamation.
3. The consideration for the amalgamation receivable by those equity shareholders of transferor company who agree to become equity shareholders of the transferee company is discharged by the transferee company wholly by issue of equity shares in transferee company except that cash may be paid for in respect of any fractional shares.
4. The business of the transferor company is intended to be carried on by the transferee Company
5. No adjustment is intended to be made to the book value of the assets and liabilities of Transferor Company when they are incorporated in the accounts of Transferee Company, except to ensure that the accounting policies are uniform.

Amalgamation in the nature of Purchase: 

Amalgamation may be considered in the nature of purchase when any one or more of the five conditions specified for amalgamation in the nature of merger is not satisfied. These amalgamations which are in effect a mode by which one company acquires another company & hence the equity shareholders of the combining entities do not continue to have a proportionate share in the equity of the combined entity or the business of the acquired company is not intended to be continued after amalgamation.

Purchase Consideration:

According to AS-14, purchase consideration for the amalgamations means the aggregate of the shares & securities issued and the payment made in the form of cash or other assets by the transferee company to the shareholders of the transferor company. Purchase consideration does not include the amount of liabilities taken over by the transferee company or the amount paid directly to the creditors of the transferee company.

There are differented methods in which consideration may be calculated :

1. Lump Sum method :

This is the simplest method. The amount to be paid by Transferee Company as purchase consideration may be stated in the problem as lump sum. In such case no calculation is required. For example it may be stated that A Ltd. takes over the business of B Ltd. for Rs. 25,00,000. Hence the sum of Rs. 25,00,000 is purchase consideration.

2. Net Payment Method :

Under this method, the purchase consideration is ascertained adding up the total payments made by transferee in whatever form either in shares, debentures or in cash to the liquidator of the transferor company for payment to equity shareholders and preference shareholders of the transferor company. While ascertaining the purchase consideration, care should be taken of the following:

a) The value of assets and liabilities taken over by the transferee company are not to be considered.
b) The payments made by the transferee company for shareholders whether in cash or in shares or in debentures must be taken into account.
c) Where the liabilities are taken over by the transferee company & subsequently discharged such amount should not be added to purchase consideration.
d) When liabilities are taken over by transferee company they are neither deducted nor added to the amount arrived at as purchase consideration.
e) Any payments made by transferee company to some other party on behalf of the transferor company are to be ignored.
f) If the liquidation expenses of the transferor company are paid by the transferee company the same 
should not be taken as a part of the purchase consideration.
g) If any liability is not taken over by the transferee the same should be excluded.
h) The term business will always mean both the Assets and Liabilities of the company.

3. Net Assets Method :

Normally the net payment method is used to compute the purchase consideration. However, it cannot be used if details of all payments are not available e.g. in case where the purchasing company agrees to pay, say by way of 1,000 shares and the balance in cash, the purchase consideration is determined by adding up the ‘agreed values of all assets taken over’ and deducting the ‘agreed value of all liabilities taken over’. While determining the amount of purchase consideration under this method, care should be taken of the following:

a) The term ‘Assets’ will always include cash in hand and cash at bank, unless otherwise stated but shall not include any fictitious assets like preliminary expenses, underwriting commission, discount on issue of shares or debentures, profit and loss account (debit balance), etc. 
b) Asset not taken over by Transferee company should be excluded.
c) If there is goodwill or prepaid expenses, the same should be included in the assets taken over unless otherwise stated.
d) The term ‘liabilities’ will mean all liabilities to third parties.
e) The term ‘trade liabilities’ will mean trade creditors and bills payable. 
f) The term ‘liabilities’ shall not include any past accumulated profits and reserves such as general reserve, reserve fund, sinking fund, dividend equalization fund, capital reserve, share premium account, capital redemption reserve account, profit and loss account etc. These are payable to the shareholders and notto the third parties. 
g) If any fund or portion of any fund denotes liability to third parties the same must be included in Liabilities such as staff provident fund, workmen’s savings bank account, workmen’s profit sharing fund, workmen’s compensation fund (up to the amount of claim if any), etc.
h) If any liability is not taken over by the transferee the same should be excluded.
i) The term businesses will always means both the Assets and Liabilities of the Company.

4. Intrinsic worth/ Share Exchange Method :

In this method, purchase consideration is ascertained on the basis of the ratio in which the shares of the transferee company are to be exchanged for the shares of the transferor company. The exchange ratio is generally determined on the basis of the intrinsic value of each company shares.

Methods of Accounting for Amalgamations :

According to AS 14 there are two methods of accounting for amalgamations : 

1. Pooling of Interests Method : 

This method issued in case of amalgamation in nature of merger. The accounting is done in the following manner.
a. The assets, liabilities, profit & loss account and reserves (whether capital, revenue or revaluation reserves) of the transferor company are recorded in the books of the transferee company at the same values and in the same form as at the date of amalgamation. This reflects the fact that the entries are simply merged together. No goodwill account should be accounted for.
b. If at the time of amalgamation, the transferor and transferee companies have conflicting accounting policies, a uniform set of accounting policies should be adopted following amalgamation.
c. The difference between the amounts recorded as share capital issued (plus any additional consideration in the form of cash or other assets) and the amount of share capital of Transferor Company should be adjusted against reserves of Transferee Company.

2. Purchase Method :

This method is used for amalgamation in nature of purchase. The application of method involves the following:
a) The assets and liabilities of the transferor company should be incorporated in the books of transferee company on the basis of their agreed values (i.e. either book values or the fair values).
b) The reserves (whether capital, revenue or revaluation reserves) of the transferor company other than the statutory reserves should not be included in the financial statements of the transferee company. 
c) Any excess of the purchase consideration over the value of net assets of the transferor company should be treated as goodwill and debited to goodwill account. On the other hand if purchase consideration is lower than the value of net assets acquired, the difference should be credited to capital reserve. AS-14 recommends that goodwill arising on amalgamation should be amortized over a period of five years unless a somewhat longer period can be justified. 
d) No reserves, other than statutory reserves, of the transferor company should be incorporated in the financial statements of the Transferee Company. Statutory reserves of the transferor company should be incorporated in the balance sheet of the transferee company by way of the following journal entry.

Amalgamation Adjustment A/c             Dr.
               To Statutory Reserves A/c 

When the above statutory reserves will no longer be required to be maintained by transferee company, such reserves will be eliminated by reversing the above entry.

Journal Entries in the Books of Transferor Company:

1 Assets Transfer :

Realisation A/C                     Dr
                To Assets A/C

2. Transfer of Liabilities taken over by transferee company :

Liabilities A/C                       Dr
          To Realisation A/c

3. Transfer preference share capital to preference share holder :

Preference share capital A/C Dr
                 To preference share holder A/C

4. Transfer of Equity Capital & Reserves :

Equity Share Capital A/C Dr
Reserves & Surplus A/C Dr
               To Equity Share holder A/C

5. Transfer of Accumulated Losses or Fictitious Assets :

Equity Shareholders A/C Dr
                To Accumulated Loss/Ficti. Assets A/C

6. For Purchase Consideration Due :

Transferee Company A/c       Dr
           To Realisation A/C

7. For Purchase Consideration received :

Cash / Bank A/C                Dr
Equity Shares / Preference Shares / Deb.  In Transferee Co A/C         Dr
                To Transferee Co A/C

8. For Disposing assets not taken over by Transferee Co :

Cash / Bank A/C                   Dr
               To Realisation A/C

9. For payment of liabilities not taken over by Transferee company :

Liabilities A/c               Dr
                  To Cash / Bank A/C

10. For liquidation expenses : 

a. Paid by Transferor Company

Realisation A/C Dr
           To Cash / Bank A/C

b. Paid by Transferee Company

 No Entry

c. Paid first by Transferor and later recovered

 Transferee Co A/C                Dr.
                       To Cash A/C
 Cash A/C                              Dr.
                       To Transferee Co A/C

11. Payment of Preference shareholders :

Preference share holder A/C      Dr 
               To Equity/Pref Sh. in Transferee Co/ Cash /Bank A/C

12. To close Realisation Accounts :

a. In Case of Profit : 

Realisation A/C               Dr
             To Equity share holder A/C

b. In Case of Loss : 

Equity share holder A/C Dr
               To Realisation A/C 

13. Close Equity Share Holder Accounts :

Equity shareholders A/C Dr
              To Equity share / Preference Share / Cash / Bank A/C

Advanced Accounting

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