Chapter 8 Correspondence with Depositors Textbook Exercise Questions and Answers.
1A. Select the correct answer from the options given below and rewrite the statements.
Question 1.
Depositors are ____________ of a company.
(a) members
(b) creditors
(c) debtors
Answer:
(b) creditors
Question 2.
Depositors provide ____________ capital to the company.
(a) short term
(b) long term
(c) medium-term
Answer:
(a) short term
Question 3.
A company cannot accept deposit for more than ____________ months.
(a) 24
(b) 36
(c) 45
Answer:
(b) 36
Question 4.
A company cannot accept deposit for less than ____________ months.
(a) 6
(b) 3
(c) 5
Answer:
(a) 6
Question 5.
Deposits are ____________ loans of the company.
(a) fixed
(b) short term
(c) long term
Answer:
(b) short term
Question 6.
Public deposits are accepted to meet the requirement of ____________ capital.
(a) fixed
(b) working
(c) owned
Answer:
(b) working
Question 7.
____________ has the power to invite deposits from public.
(a) Shareholders
(b) Auditors
(c) Board of Directors
Answer:
(c) Board of Directors
Question 8.
Rate of interest on deposits is ____________
(a) fixed
(b) fluctuating
(c) moderate
Answer:
(a) fixed
Question 9.
The return or income for the investment of money on deposits is called ____________
(a) dividend
(b) interest
(c) discount
Answer:
(b) interest
1B. Match the pairs.
Question 1.
| Group ‘A’ | Group ‘B’ |
| 1. Depositors | (a) Fixed |
| 2. Rate of Interest on deposits | (b) Evidence of Ownership |
| 3. Deposit receipt | (c) Debtors |
| (d) Creditors | |
| (e) Evidence of deposit | |
| (f) Fluctuating |
| Group ‘A’ | Group ‘B’ |
| 1. Depositors | (d) Creditors |
| 2. Rate of Interest on deposits | (a) Fixed |
| 3. Deposit receipt | (e) Evidence of deposit |
Question 1.
Return on investment on deposit.
Answer:
Interest
Question 2.
The instrument for payment of interest on the deposit.
Answer:
Interest Warrant
Question 3.
An acknowledgment of the fixed deposit accepted by a company.
Answer:
Fixed Deposit Receipt
Question 4.
Return of deposits on the maturity date.
Answer:
Repayment of deposit
Question 5.
The maximum period of deposits.
Answer:
36 months
1D. State whether the following statements are true or false.
Question 1.
Fixed deposit is a short-term source of finance for the company.
Answer:
True
Question 2.
Fixed deposit holder is a creditor of the company.
Answer:
True
Question 3.
Deposits are invited by the company without issuing statutory advertisement.
Answer:
False
Question 4.
Fixed deposit holders are entitled to receive dividends.
Answer:
False
Question 5.
A private company cannot accept deposits from the general public.
Answer:
True
Question 6.
Depositors are given voting rights.
Answer:
False
1E. Find the odd one.
Question 1.
Dividend, Depositor, Deposit Receipt
Answer:
Dividend
Question 2.
Trust Deed, Depository, Deposit Receipt
Answer:
Depository
1F. Complete the Sentences.
Question 1.
Depositors are the ____________ of the company.
Answer:
Creditors
Question 2.
The ____________ must be cautious and careful while writing letters to the depositors.
Answer:
Secretary
Question 3.
Deposit is a ____________ term source of finance of the company.
Answer:
Short
Question 4.
A company can accept deposits for the minimum period of ____________ months.
Answer:
6 months
Question 5.
Depositors are entitled to receive ____________ at fixed rate.
Answer:
Interest
1G. Select the correct option from the bracket.
Question 1.
| Group ‘A’ | Group ‘B’ |
| (1) Depositor | (a) ……………………. |
| (2) Return on Deposits | (b) ……………………. |
| (3) ……………………. | (c) Maximum period of Deposits |
| (4) Minimum Period of Deposits | (d) ……………………… |
Answer:
| Group ‘A’ | Group ‘B’ |
| (1) Depositor | (a) creditors of the company |
| (2) Return on Deposits | (b) interest |
| (3) 36 months | (c) Maximum period of Deposits |
| (4) Minimum Period of Deposits | (d) 6 months |
Question 1.
Who is the depositor?
Answer:
The person who keeps his/her money for a fixed period of time with the company is known as ‘Depositor’.
Question 2.
What is the return on deposit?
Answer:
Fixed-rate of interest is provided as the return on a deposit.
Question 3.
What is Interest Warrant?
Answer:
An interest warrant is an instrument of payment of interest.
Question 4.
What is a renewal of deposit?
Answer:
A process of continuing the deposit for an additional time period after maturity of investment (deposit) is called “Renewal of Deposit”.
Question 5.
Which document is enclosed along with the Renewal Letter?
Answer:
Renewal Deposit Receipt is enclosed along with the Renewal Letter.
Question 6.
When will the company return the deposits?
Answer:
The company will return the deposit amount at the time of maturity (after the expiry of the fixed period).
Question 7.
What is the minimum and maximum period of deposit?
Answer:
The deposit can be accepted for a minimum period of 6 months and a maximum period of 36 months.
1I. Correct the underlined words and rewrite the following sentence.
Question 1.
Depositors are owners of the company.
Answer:
Depositors are creditors of the company.
Question 2.
Deposits are the internal source of financing.
Answer:
Deposits are the external source of financing.
Question 3.
Deposit is a long-term source of capital.
Answer:
Deposit is a short-term source of capital.
Question 4.
Depositors are entitled to receive dividends.
Answer:
Depositors are entitled to receive interest.
1J. Arrange in proper order.
Question 1.
(a) Renewal of deposit
(b) Acceptance of deposit
(c) Deposit Receipt
Answer:
(a) Acceptance of deposit
(b) Deposit Receipt
(c) Renewal of deposit
Question 2.
(a) Payment of interest
(b) Deposit Receipt
(c) Acceptance of deposits
Answer:
(a) Acceptance of deposits
(b) Deposit Receipt
(c) Payment of interest
2. Explain the following terms/concepts.
Question 1.
Depositor
Answer:
The person who keeps deposits with the company for a fixed period of time is known as ‘Depositor’.
Question 2.
Deposit
Answer:
Deposit is a short-term source of finance of the company and it is used in order to satisfy the short-term working capital needs of the company.
Question 3.
Interest on deposit
Answer:
Interest on deposit refers to the return on the investment of money in deposits.
Question 4.
Deposit Receipt
Answer:
A deposit Receipt is an acknowledgment of deposit money accepted by the company.
Question 5.
Renewal of deposit
Answer:
Renewal of Deposit means accepting the same deposit for an additional period of time after its maturity.
Question 6.
Repayment of Deposit
Answer:
Refunding the amount of deposit on the maturity of tenure of deposits is known as ‘Repayment of Deposit’.
3. Answer in brief.
Question 1.
Which precautions are to be taken by the secretary while corresponding with depositors?
Answer:
Following precautions should be undertaken while drafting letters to the depositors:
(i) Courtesy:
While writing letters to the depositors, polite replies are essential. Rude and harsh words should be strictly avoided.
(ii) Quick response:
Being the creditors of the company, due respect should be given to the depositors of the company. Immediate replies to be given to the queries and complaints of the depositors without any delay.
(iii) Accuracy:
Letters written to the depositors should be accurate and precise. True and correct information should be provided to them.
(iv) Conciseness:
The letters to the depositors must be concise i.e. short, brief, and to the point. Unnecessary and irrelevant information should be avoided.
(v) Your Attitude:
The letters to the depositors must be written after taking into consideration the requirements of the depositors.
(vi) Secrecy:
As a confidential officer, the secretary has to maintain secrecy regarding correspondence with the depositors. Any secret information regarding the company must not be disclosed through correspondence.
(vii) Image and Goodwill:
Correspondence plays a very important role in maintaining the goodwill of the company. While corresponding, the secretary should take all necessary steps so that the goodwill of the company will not get affected.
(viii) Legal Provision:
The secretary should see to it that all provisions relating to invitation, acceptance, renewal, and repayment of deposits are duly followed by the company while corresponding with depositors.
Question 2.
What are the circumstances under which the Secretary makes correspondence with depositors?
Answer:
Following are the circumstances under which correspondence is done with the depositors:
4. Justify the following statements.
Question 1.
The Company Secretary should take certain precautions while corresponding with depositors.
Answer:
Question 2.
There are certain circumstances when a secretary has to correspond with depositors.
Answer:
5. Attempt the following.
Question 1.
Draft a letter of thanks to depositors of a company.
Answer:
RADHIKA INDUSTRIES LIMITED
501A, Bandra-Kurla Complex, Bandra (East), Mumbai: 400 051
CIN: L46001 MH2002 PLC 503433
Tel. No.: 022-24761524
Fax No.: 022-24881242
Ref. No.: D/DEP/05/2018-19
Website: www.radhikalimited.com
Email: [email protected]
Date: 15th May 2019
Mr. Deepak Ved
C/25, LIC Colony
L.J. Road, Mahim,
Mumbai – 400 096
Sub: Thanking Depositor For Fixed Deposit.
Dear Sir,
As per your application received for a fixed deposit of ₹ 1,00,000/- for a period of 1 year, dated 10th May 2019, we are thankful to you for showing faith and confidence in the company.
The details of deposits accepted are given in the following schedule:
| 1 | 2 | 3 | 4 | 5 | |
| Fixed Deposit Receipt No. | Amount of Deposit | Period of Deposit (years) | Rate of Interest (%) | Bank Details | |
| Name of the Bank | Bank Account No. | ||||
| 412 | ₹ 1,00,000 | 1 year | 10% | Bank of Baroda | 613234 |
We assure you the best of our services all the time.
Thanking you,
Yours faithfully
For Radhika Industries Limited,
Sign
Mr. Harshad Sagwekar
Encl: Fixed Deposit Receipt No. 412
Question 2.
Draft a letter to a depositor informing him about payment of interest through interest warrant.
Answer:
RADHIKA INDUSTRIES LIMITED
501A, Bandra-Kurla Complex, Bandra (East), Mumbai: 400 051
CIN: L46001 MH 2002 PLC 503433
Tel. No.: 022-24761524
Fax No.: 022-24881242
Ref. No.: D/DEP/25/2019-20
Email: [email protected]
Website: www.radhikalimited.com
Date: 18th April 2019
Mrs Ruchika Korgaonkar
A/23, BPT Colony,
N.K.Road, Mahim,
Mumbai:-400 096.
Sub: Payment of Interest on Fixed Deposits.
Dear Madam,
As per the board resolution passed in the Board Meeting held on 16th April 2019, this is to inform you that the interest @ 10% on your Fixed Deposit is due for payment.
Your company has complied with all the provisions relating to the payment of interest on deposits and the interest warrant drawn on ICICI Bank, Prabhadevi branch is enclosed herewith.
The details of your Fixed Deposit and interest payable on the deposit are given in the following schedule:
| 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| Interest Warrant No. | Fixed Deposit Receipt No. | Deposit amount | Rate of Interest (%) | Gross amount of interest | TDS @(10%) | The net amount of Interest Payable (₹) |
| 3325 | 1242 | ₹ 1,00,000 | 10% | ₹ 10,000 | ₹ 1,000 | ₹ 9,000 |
Thanking you,
Yours faithfully,
For Radhika Industries Limited
Sign
Mr. Fazal Shahzman
Encl:
Question 3.
Write a letter to the depositor for the renewal of his deposit.
OR
Draft a letter to the depositor for renewal of his deposit.
Answer:
SUNRISE INDUSTRIES LIMITED
50/A, Swami Narayan Road, Tunga Village, Mumbai: 400 072
CIN: L42105 MH2005 PLC 402512
Tel. No.: 022-23731242
Fax No.: 022-23738656
Ref. No.: S/DEP/51/2019-20
Website: www.sunriselimited.com
Email: [email protected]
Date: 17th Feb 2019
Mr. Rajesh Joshi
20, Hilton Complex,
Laxmi Road,
Solapur – 413 018
Sub: Renewal on Fixed Deposits.
Dear Sir,
We, hereby, acknowledge receipt of your application for the renewal of a deposit of ₹ 50,000/- for a further period
of one year. We have also received duly discharged deposit receipt No. 1242 and the same has been placed before the Board for consideration and approval.
As per the resolution passed at the Board meeting held on 15th Feb 2019, the Board has decided to renew the deposits for a further period of 1 year on the same terms and conditions.
A deposit receipt No 4424 is enclosed along with this letter.
Thanking you,
Yours faithfully,
For Sunrise Industries Ltd,
Sign
Miss Shalakha Suvarna
Company Secretary
Encl: Fixed Deposit receipt No 4424
Question 4.
Draft a letter to the depositor regarding redemption or repayment of his deposit.
Answer:
SWARG MARBLE LIMITED
40/B, C – Ramchandra Road, Khar (East), Mumbai: 400 053
CIN: L24308 MH2006 PLC 211388
Tel. No.: 022-4133242
Fax No.: 022-4215212
Ref. No.: S/DEP/15/19-20
Email: [email protected]
Website: www.swarglimited.com
Date: 21st April 2019
Mr. Santosh Vichare
A/21, Swastik Colony,
Bhadkamkar Marg,
Fort, Mumbai:-400 020
Sub: Repayment of Fixed Deposits.
Dear Sir,
This is to inform you that your Fixed Deposit Receipt No. 3225 dated 1st May 2018 for ₹ 1,00,000/- will be due for repayment on 30th April 2019.
We have received original Deposit Receipt No. 3225 duly discharged along with instruction for repayment. The Board of Directors in the meeting held on 20th April 2019 has passed a resolution for the redemption of the deposits.
The details of repayment of deposit are as under:
| 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 |
| Tenure of Deposit | Fixed Deposit Receipt No. | Deposit amount (₹) | Rate of Interest (10%) | Maturity amount (₹) | TDS (10%) | Net amount | Due Date of Deposit |
| 1 year | 3225 | ₹ 1,00,000 | ₹ 10,000 | ₹ 1,10,000 | ₹ 1,000 | ₹ 1,09,000 | 30th April 2019 |
Thanking you,
Yours faithfully,
For Sward Industries Ltd,
Sign
Mr. Sandesh Virkar
Company Secretary
Encl: Crossed Cheque No. 126224
Question 5.
Draft a letter to a depositor informing him about payment of interest through electronic mode.
Answer:
RADHIKA INDUSTRIES LIMITED
501 A, Bandra-Kurla Complex, Bandra (East), Mumbai: 400 051
CIN: L46001 MH2002 PLC 503433
Tel. No.: 022-24761524
Fax No.: 022-24881242
Ref. No.: D/DEP/25/2019-20
Email: [email protected]
Website: www.radhikalimited.com
Date: 18th April 2019
Mrs Anushka Khanvilkar
A/21, Mahindra Tower,
Tardeo Road, Mumbai Central,
Mumbai – 400 034
Sub: Payment of Interest on Fixed Deposits through ECS or NEFT.
Dear Madam,
As per the board resolution passed in the Board Meeting held on 16th April 2019, this is to inform you that the interest @ 10% on your Fixed Deposit is due for payment.
Your company has complied with all the provisions relating to the payment of interest on the deposits.
The details of your Fixed Deposit and interest payable on the deposit are given in the following schedule:
| 1 | 2 | 3 | 4 | 5 | 6 |
| Fixed Deposit Receipt No. | Deposit amount | Rate of Interest (%) | Gross amount of interest | TDS @ (10%) | The net amount of Interest Payable (₹) |
| 1242 | ₹ 1,00,000 | 10% | ₹ 10,000/- | ₹ 1,000 | ₹ 9,000 |
Thanking you,
Yours faithfully,
For Radhika Industries Limited,
Sign
Mr. Deepak Ved