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Question

Capital redemption reserve is created out of __________.


A
Dividend equilisation fund
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B
P/L 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
When shares are redeemed, company have to replenish the capital by issue of fresh share or to create a capital reserve equivalent to the amount of share capital redeemed. 
Capital redemption reserve can be created out of dividend equalization fund, profit & loss account and general reserve account. 

Accountancy

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