Accountancy Part BFinancial Statements of a Company

Under which Sub head, we show the Security Premium in Balance Sheet?

Answer & explanation

Correct answer: option 1

The correct answer is Option (1) → Reserve and Surplus

The premium received on shares is not share capital. It is credited to Securities Premium Account and shown under the head Reserves and Surplus in the balance sheet.

Why the other options are incorrect

Option (2) Share Capital — Incorrect. Share capital shows only the face value of shares.
Option (3) Equity Share Capital — Incorrect. It is a part of share capital, again at face value.
Option (4) Shares and Liabilities — Incorrect. There is no such sub-head; the main head is ‘Equity and Liabilities’.

NCERT (2026-27 edition):
Issue of Shares at a Premium – “… The premium amount is credited to a separate account called ‘Securities Premium Account’ and is shown under the title ‘Equity and Liabilities’ of the company’s balance sheet under the head ‘Reserves and Surpluses’.”