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Classifying Items of Financial Statements

The term 'red...

Question

The term 'redeemable' is used for

(a) Preference shares

(b) Commercial paper

(c) Equity shares

(d) Public deposits

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Solution

The term ‘redeemable’ is related to preference shares. It implies the amount of preference shares which is repaid by a company after a certain specified period of time. Such repayment to preference shareholders is made in accordance with the terms specified in Section 80 of the Companies Act, 1956.

Hence, the correct answer is option (a).

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Similar questions

Q. From the following details calculate the number of equity shares of Rs.

10

each to be issued in order to redeem the preference shares.

11 %

Redeemable preference shares of Rs.

10

=

150, 000

Security premium A/c

=

15, 000

General Reserve A/c

=

15, 000

Profit and loss A/c

=

35, 000

Redeemable preference shares are to be redeemed at

10 %

5, 000

12 %

Redeemable Preference Shares of Rs.

100

each. The company decided to redeem them by issuing equity shares of Rs.

100

@

25 %

. The member of equity shares to be issued are ________.

Q. Consider the following statements:
(1) Preference shares can be redeemed either out of profit of the company or out of the proceeds of fresh issue.
(2) Preference shares are redeemed after equity shares.
(3) Preference shareholders have preference right as to dividend as well as return of capital.
(4) A company cannot issue preference shares redeemable after 20 years.
The correct statements are ________________.

Q. Preference shares of Rs. 9,00,000 are redeemable by issuing 3,000 equity shares of Rs. 100 each at Rs. 140. The amount to be transferred to Capital Redemption Reserve will be ______.

Q. Redeemable Preference shares of Rs.

1, 00, 000

are redeemed at par for which fresh equity shares of Rs.

80, 000

are issued at discount of

10 %

. The amount transferred to capital Redemption Reserve will be _______.

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