🎴 Flashcard Mode
Commerce: Accounting, Foreign Trade & Business Management
Card1 / 25
Mastered0
Review0
QuestionClick to flip
Directions: Choose the correct option for the given question.What is Capital Redemption Reserve Account available for ?
AnswerClick to flip back
A
Issue of fully paid bonus shares
💡 Explanation:
Capital Redemption Reserve is created when a company redeems shares out of profits. This reserve can only be used for issuing fully paid bonus shares to shareholders, not for redemption of shares or debentures. This provision under the Companies Act protects capital and ensures shareholders receive benefits from the company's earnings used for redemption.