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Classifying Items of Financial Statements

When preferen...

Question

When preference shares are redeemed the redemption money is paid from _________.

A

Capital account

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B

Profits of the company

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C

Securities premium account

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D

Both b & c

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Solution

The correct option is D Both b & c
A company can redeem only fully paid-up preference shares out of the profits available for out of the profits or out of the securities premium account of the company. Transfer of the redeemable preference share capital to shareholders A/c.

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