Question

Which of the following accounts can be transferred to Capital Redemption Reserve account?

• A. General reserve account.
• B. Forfeited shares account.
• C. Profit prior to incorporation.
• D. Securities premium account.

Answer 1

The correct option is A General reserve account.

To the extent that the preference shares are redeemed out of profits, Capital Redemption Reserve Account must be credited with dividend equalization reserve that are by debiting the profit and loss Account, general reserve or other accounts showing profits otherwise available for distribution of dividends.