Assertion and Reason.

MCQ 11 Mark

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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MCQ 21 Mark

Assertion (A): Partnership firm is an organisation where seven or more persons carry on some business activity on the basis of agreement among them.
Reason (R): The profit or loss arising from the partnership business is shared by the partners in the agreed ratio.

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:
A partnership firm is a form of organisation where two or more persons carry on some business activity on the basis of agreement among them.

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Accountancy Assertion and Reason.

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