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SSC Financial and Cost Accounting P-1 QUESTION #6115
Question 1

How is any premium on the issue of shares treated in the financial statements of a limited company?

  • Added to a capital reserve✔️
  • Added to a revenue reserve
  • Deducted from a capital reserve
  • Deducted from a revenue reserve
Correct Answer Explanation

Option A is correct.

Share premium is the excess above nominal value when shares are issued. It is recorded in the Share Premium Account, which is a capital reserve — it cannot be distributed as dividends.