[amp_mcq option1=”When proposed dividend does not exceed 10%. It is not obligatory on the company to transfer any profit to its reserve” option2=”Capital redemption reserve can be utilised for writing off miscellaneous expenses and losses” option3=”Dividends is not payable on the calls paid in advance by shareholders” option4=”Reserves created by revaluation of fixed assets are not permitted to be capitalised” correct=”option2″]<\/p>\n
The correct answer is: B. Capital redemption reserve can be utilised for writing off miscellaneous expenses and losses.<\/p>\n
A capital redemption reserve is a reserve that is created when a company redeems its own shares. The purpose of this reserve is to protect the interests of the remaining shareholders by ensuring that the company has sufficient funds to pay out any future dividends.<\/p>\n
The capital redemption reserve cannot be used for writing off miscellaneous expenses and losses. This is because the purpose of this reserve is to protect the interests of the remaining shareholders, not to cover the costs of running the company.<\/p>\n
The other options are all correct.<\/p>\n
A. When proposed dividend does not exceed 10%. It is not obligatory on the company to transfer any profit to its reserve. This is because the company is only required to transfer a portion of its profits to its reserve if the proposed dividend exceeds 10%.<\/p>\n
C. Dividends is not payable on the calls paid in advance by shareholders. This is because dividends are only payable on the shares that are fully paid up.<\/p>\n
D. Reserves created by revaluation of fixed assets are not permitted to be capitalised. This is because reserves created by revaluation of fixed assets are not considered to be distributable profits.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”When proposed dividend does not exceed 10%. It is not obligatory on the company to transfer any profit to its reserve” option2=”Capital redemption reserve can be utilised for writing off miscellaneous expenses and losses” option3=”Dividends is not payable on the calls paid in advance by shareholders” option4=”Reserves created by revaluation of fixed assets are … <\/p>\n