Question

Securities premium account must be shown separately on the liabilities side of the balance sheet in _______ under the heading ______.

• A. Share Capital; Shareholders Funds
• B. Reserves & Surplus; Shareholders Funds
• C. Secured Loan; Reserves & Surplus
• D. Unsecured Loan; Profit & Loss

Answer 1

Answer: (B)

Reserves & Surplus; Shareholders Funds

The share premium account is an equity account found on a company's balance sheet. The amount in the account represents the additional amount shareholders paid for their issued shares that was in excess of the par value of those shares. It is shown under liabilities side in the balance sheet as Reserve or surplus and shows up in the shareholders' equity portion of the balance sheet. The shareholders' equity portion of the balance sheet represents the initial amount of money invested in the business.