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Question
Assertion (A): Premium received on issue of shares is credited to Securities Premium Account.
Reason (R): Securities Premium Account is shown under the main head 'Reserves and Surplus'.
In the context of above two statements, which of the below options is correct?
Options
Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
Assertion (A) is false but Reason (R) is true.
Both Assertion (A) and Reason (R) are false.
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Solution
Assertion (A) and Reason (R) are correct but Reason (R) is not the correct explanation of Assertion (A).
Explanation:
Premium received on issue of shares is credited to Securities Premium Account. Its presentation under Reserves and Surplus does not explain why the premium is credited to that account.
