Practicing Success
If the loss on reissue of shares is less than the amount forfeited, the ‘surplus’ or profit is transferred to which account? |
Capital Reserve Revenue Reserve P and L a/c None of the above |
Capital Reserve |
If the loss on reissue of shares is less than the amount forfeited, the 'surplus' or profit is typically transferred to the "Capital Reserve" account. Capital Reserve is a type of reserve account used to record profits or surpluses that are not distributable as dividends to shareholders. In this case, the profit generated from the reissue of shares helps offset the loss incurred from the forfeiture, and the resulting surplus is often treated as a capital reserve. This reserve is usually not available for distribution as dividends and is maintained for various capital-related purposes, such as future investments or financial stability. |