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Issue of bonu...

Question

Issue of bonus shares out of reserves will result in __________.

A

increase in working capital

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B

decrease in working capital

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C

no change in the working capital

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D

none of these

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Solution

The correct option is D no change in the working capital
Bonus shares are issued by the company to the existing shareholders out of the profits or from the available reserves and surpluses.
Issue of Bonus shares does not involve any cash movement, hence there will be no change in the working capital of the company.

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Similar questions

Q. Consider the following statements:
1. The bonus shares shall not be issued in lieu of dividend,
2. A company may issue fully paid up bonus shares to its members out of its 'Capital Redemption Reserve Account'
3. A company may not issue bonus shares out of its 'Securities Premium Account'
Which of the above statement/s is are not correct?

Q. ___________ is used to writing off capital losses or issue of bonus shares in case of a company.

Q. Assertion :Under the provisions of new Company Act 2013, a company may issue fully paid-up bonus shares out of its free reserves, security premium account and the capital redemption reserve account. Reason: According to the new provisions of Company Act, 2013, no issue of bonus shares shall be made by capitalising reserves created by the revaluation of assets.

Q. Match the following:

List - I	List - II
(a) Matching approach	$1.$ Dividend Policy
(b) Structural ratios	$2.$ Inventory Management
(c) Ordering quantity	$3.$ Financing Working Capital
(d) Bonus shares	$4.$ Capital Structure

Q. Anmol Ltd. has share capital of

R s .1, 00, 000

and general reserve of

R s .1, 20, 000

. It proposes to issue share out of general reserve in such a way that after issue of shares the remaining balance in general reserve should be equal to

25 %

of the total capital (new). Find the remaining reserve.

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