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Business Studies

Retained Earnings

Bonus shares ...

Question

Bonus shares can be issued out of :

A

Profit and Loss account

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B

Securities Premium account

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C

General Reserve account

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D

All of the above

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Solution

The correct option is D All of the above
Bonus shares are issued by cashing in on the free reserves of the company. The assets of a company also consist of cash reserves. A company builds up its reserves by retaining part of its profit over the years (the part that is not paid out as dividend).

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Q. Consider the following statements:
1. The bonus shares shall not be issued in lieu of dividend,
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