Question

Which of the following statements is true with regard to

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.

declaring and issuing of Bonus Shares? 

A A Bonus issue is same as declaration of dividends.

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

C A Bonus issue affects cash and bank balances.

D Assets are transferred from the company to the shareholders.

E A and B

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Which of the following statements is true with regard to

Solution