GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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By the issue of free fully paid shares known as bonus shares
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By making partly paid shares as fully paid without getting cash from the shareholders
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Both (a) and (b)
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By cash payment to shareholders
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Detailed explanation-1: -Bonus issue of shares refers to a company allocating additional shares from earnings or existing reserves to stockholders. A bonus issue increases a company’s outstanding shares but not its market capitalization, as the stock price adjusts proportionally to the additional shares issued.
Detailed explanation-2: -Divide the bonus payment between the group of workers according to the percentage of total revenue contributed by each employee.
Detailed explanation-3: -Bonus shares are fully paid shares issued free of cost to the existing equity shareholders in proportion to their shareholdings. So, the company cannot raise capital by offering bonus shares. Company can enter into an agreement with underwriters by paying them a commission.