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Question
The Profit on reissue of forfeited shares is transferred to ______.
Options
general reserve
capital redemption reserve
capital reserve
revenue reserve
MCQ
Fill in the Blanks
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Solution
The Profit on reissue of forfeited shares is transferred to capital reserve.
Explanation:
The profit earned on the reissue of forfeited shares is transferred to the capital reserve because it is a capital profit. Since this gain comes from corporate share transactions rather than regular daily trading, accounting rules require that this non-recurring surplus be transferred to the Capital Reserve, making it unavailable for dividend distribution.
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