Question

Select the most appropriate answer from the alternatives given below and rewrite the sentence :
The excess price received over the par value of shares, should be ___________ to securities premium a/c.

Options

• debited

• credited

• adjusted

• none of these

Answer 1

The excess price received over the par value of shares should be credited to securities premium a/c.

Explanation: When shares are issued at a price above their par value, it is known as issuing of shares at premium. The excess amount received as premium is credited to a separate account known as Securities Premium Account. It is credited, as it is a gain for the company and is in the nature of nominal account.