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Debenture Redemption Investment

A company can...

Question

A company can pay dividends out of __________________.

A

The money provided by the government for such purpose

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B

Profit remaining after the re-issue of forfeited share

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C

Capital redemption reserve accunt

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D

Share premium account

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E

Any of the above

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F

None of the above

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Solution

The correct option is F The money provided by the government for such purpose
Dividend of the company can be declared only from the current year profits. No dividends can be paid out of capital reserves, capital redemption reserve, share premium account etc. Dividends can also be paid from the money that has been given by the government for dividend purpose.

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Q. A company wishes to redeem its preference shares amounting to Rs. 1,00,000 at a premium of 5% and for this purpose issues 5,000 equity shares of Rs. 10 each at a premium of 5%. The company also has a balance of Rs. 1,00,000 as General Reserves and Rs. 50,000 in profit and loss account. The amount to be transferred to Capital Redemption Reserve account for the purpose of redemption is ____________.

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Q. Consider the following statements:
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