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    Question

    A company issues 10,000 shares at ₹100 each at a

    premium of ₹20. ₹80 (including premium) is received on application. How is the premium accounted?
    A Credited to capital reserve Correct Answer Incorrect Answer
    B Added to share capital Correct Answer Incorrect Answer
    C Credited to securities premium Correct Answer Incorrect Answer
    D Adjusted against preliminary expenses Correct Answer Incorrect Answer

    Solution

    Securities premium is recorded in a separate reserve and cannot be added to share capital.

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