In case a company does not have sufficient funds for the purchase of fixed assets or for payment to creditors it may offer and allot its shares to vendor/ creditors in lieu of cash. In such a case, which account is debited ?

Goodwill account

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Share application account

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Share capital account

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Vendor/ Creditor`s account

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Solution

The correct option is D
Vendor/ Creditor`s account

Vendor/ Creditor`s account is debited in such a case.

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Similar questions

Q. The company may allot debentures to the vendors for acquiring some assets as payment or purchase consideration, such issue of debentures to vendors is known as issue of debentures for_____.

Q. The company may allot debentures to the vendors for a acquiring some assets as payment for purchase consideration, such issue of debentures to vendors is known as issue of debentures for _______.

Q. Assuming That the Debt to Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio:

(i) Issue of new shares for cash.
(ii) Conversion of debentures into equity shares
(iii) Sale of a fixed asset at profit.
(iv) Purchase of a fixed asset on long-term deferred payment basis.
(v) Payment to creditors.

Assuming that Proprietary Ratio is 0.6 : 1, state giving reasons, whether the ratio will increase, decrease or will not change in each one of the following cases:

(i) Issue of new equity shares for cash.

(ii) Issue of equity shares against purchase of machinery.

(iii) Issue of debentures against purchase of machiney.

(iv) Redemption of debentures for cash.

(v) Conversion of debentures into preference shares.

(vi) Buy-back of its own shares by a company.

(vii) Purchase of a fixed asset for cash.

(viii) Purchase of a fixed asset on long-term deferred payment basis.

(ix) Sale of a fixed asset costing Rs. 1,00,000 for Rs. 80,000.

(x) Sale of a fixed asset costing Rs. 2,00,000 for Rs. 2,50,000.

(xi) Issue of Bonus Shares.

Q. If the value of debentures allotted to vendors for acquiring some assets as payment for purchase consideration is less than the agreed purchase price, the difference is debited to ______.

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In case a company does not have sufficient funds for the purchase of fixed assets or for payment to creditors it may offer and allot its shares to vendor/ creditors in lieu of cash. In such a case, which account is debited ?

The correct option is D Vendor/ Creditor`s account Vendor/ Creditor`s account is debited in such a case.

The correct option is D
Vendor/ Creditor`s account

Vendor/ Creditor`s account is debited in such a case.