Question

    When the equity shares are issued at a price above the

    face value, the excess price received over the face value of shares, is credited to which of the following account?
    A Share capital account Correct Answer Incorrect Answer
    B General Reserve account Correct Answer Incorrect Answer
    C Share Premium account Correct Answer Incorrect Answer
    D Revaluation Account Correct Answer Incorrect Answer
    E Credited to Profit & Loss A/c Correct Answer Incorrect Answer

    Solution

    Share premium is the excess of share price over the face value of the share. This excess amount is recorded under the Share Premium Account while the equity capital is recorded at the face value. Share premium forms a part of the shareholder equity.

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