GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following reserves can be utilised only for issuing fully paid bonus shares and not for making partly paid shares fully paid shares?
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Capital redemption reserve account created at the time of redemption of redeemable preference shares out of the profits.
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Securities premium collected in cash only.
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Both (a) and (b)
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Capital reserve arising from profit on sale of fixed assets received in cash.
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Explanation:
Detailed explanation-1: -Fully paid bonus shares can be issued out of capital redemption reserve.
Detailed explanation-2: -The Company cannot issue bonus shares by capitalising reserves created by the revaluation of assets.
Detailed explanation-3: -Ensure that reserves created by revaluation of assets are not used for issue of Bonus Shares.
There is 1 question to complete.