Question

Which of the following statements is true with regard

Q: Answer- Which of the following statements is true with regard to declaring and issuing of Bonus Shares?

Explanation A Bonus issue involves issuing fully paid-up shares to existing shareholders out of free reserves or securities premium . It reduces reserves but doesnt affect the total capital employed or cash position. Its not the same as dividends , as it involves capitalizing profits, not distributing them.

to declaring and issuing of Bonus Shares?

A Assets are transferred from the company to the shareholders.

B A Bonus issue results in decrease in reserves and surplus.

C A Bonus issue is same as declaration of dividends.

D A Bonus issue affects cash and bank balances.

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Which of the following statements is true with regard

Solution