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Model Paper 2 — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyModel Paper 21 Mark
MCQ
Assertion (A): The security premium amount can be used to issue partially paid up bonus shares.
Reason (R): According to Section 52(2) of the Companies Act, 2013, the amount of Securities Premium Reserve can be used only for some specific purposes.
  • A
    Both A and R are true and R is the correct explanation of A.
  • B
    Both A and R are true but R is not the correct explanation of A.
  • C
    A is true but R is false.
  • D
    A is false but R is true.
✓

Answer

(d) A is false but R is true.
Explanation:
According to Section 52(2) of the Companies Act, 2013, the amount of Securities Premium
Reserve can be used only for the following purposes:
i. To issue fully paid-up bonus shares to the shareholders.
ii. To write off preliminary expenses of the companies.
iii. To write off the commission paid or expenses on issue of shares/debentures.
iv. To pay premium on the redemption of preference shares or debentures of the company.
v. Buy-back of equity shares and other securities as per Section 68.

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