Payment of dividend to Members
Issue of bonus shares to members
Writing off pre-liminary expenses of company
Writing off discount on issue of debenture
Answer is Wrong!
Answer is Right!
The correct answer is: A. Payment of dividend to Members
Security premium reserve is a reserve created out of the excess amount received by a company on issue of shares above the face value of the shares. It is a part of the company’s capital and cannot be used for payment of dividend to members.
The other options are incorrect because:
- B. Issue of bonus shares to members: Security premium reserve can be used for issue of bonus shares to members.
- C. Writing off preliminary expenses of company: Security premium reserve can be used for writing off preliminary expenses of company.
- D. Writing off discount on issue of debenture: Security premium reserve can be used for writing off discount on issue of debenture.
Please let me know if you have any other questions.