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Question
Which of the following is not a Capital profit?
Options
Profit on Forfeiture and reissue of shares
Securities Premium on issue of shares
Profit on sale of fixed assets
Profit earned by a Company after its incorporation
MCQ
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Solution
Profit earned by a Company after its incorporation
Explanation:
Capital earnings are those that result from capital transactions rather than being earned during regular business operations. Among the examples are:
- Profit from share forfeiture and reissue
- premium for securities when shares are issued
- Profit from the selling of fixed assets
Profits made after incorporation, however, are revenue profits rather than capital profits. They can be distributed as dividends and occur naturally in the course of business.
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