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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