Question

In case of issue of shares amount received above par value is credited to which account?

• A. Security Premium A/c
• B. Discount A/c
• C. Share forfeiture A/c
• D. None of these

Answer 1

The correct option is A Security Premium A/c

The issue of shares at par implies that the shares have been issued for an amount exactly equal to their face or nominal value.

In case shares are issued at a premium, i.e. at an amount more than the nominal or par value of shares, the amount of premium is credited to a separate account called ‘Securities Premium Reserve Account’ under the head Reserves and surplus in the balance sheet.