Accounting Multiple Choice Question – 9 August 2024

Which of the following general journals correctly records a bonus issue of shares?

Select ONE answer:

1. Debit Cash at bank, Credit Share capital
2. Debit Share capital, Credit Share premium
3. Debit Share premium, Credit Share capital
4. Debit Investments, Credit Cash at bank

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 –> A bonus issue does not involve cash being exchanged but can be financed from the existing share premium account.
4. Not correct

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