Question

Assertion (A): Premium received on issue of debentures is credited to Securities Premium Account.

Reason (R): Premium received is a capital receipt and Companies Act, 2013 prescribes that securities premium is to be credited to Securities Premium Account.

In the context of above two statements, which of the following is correct?

Options

• Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).

• Both Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).

• Only Reason (R) is correct.

• Both Assertion (A) and Reason (R) are wrong.

Answer 1

Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).