Accounting Multiple Choice Question – 8 July 2022

A company has issued shares at a premium.

For what purpose from the options below can the balance on the share premium account be used by a business?

Select ONE answer:

1. to provide for the premium on the redemption of shares which were issued at par
2. to provide for the discount on a new issue of shares
3. to write off the preliminary expenses incurred in forming the company
4. to write off a loss on the revaluation of fixed assets

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct
4. Not correct

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