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      Question

      A company foreited certain equity shares. These were

      re-issued later in the year. The profit on Forfeiture of these shares would be transferred to which of the following accounts?
      A Securities Premium Reserve Correct Answer Incorrect Answer
      B Capital Redemption Reserve Correct Answer Incorrect Answer
      C Capital reserve Correct Answer Incorrect Answer
      D General reserve Correct Answer Incorrect Answer
      E Statutory Reserve Correct Answer Incorrect Answer

      Solution

      Forfeited shares can be re-issued. Any amount of profit on re-issue is a capital receipt and should be transferred to capital reserve account because this profit is a capital gain for the company.

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