{"id":57445,"date":"2024-04-16T01:02:08","date_gmt":"2024-04-16T01:02:08","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=57445"},"modified":"2024-04-16T01:02:08","modified_gmt":"2024-04-16T01:02:08","slug":"if-the-fully-paid-up-shares-of-rs-80000-are-issued-to-sellers-in-consideration-of-net-assts-of-rs-60000-the-balance-of-rs-20000-will-be","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/if-the-fully-paid-up-shares-of-rs-80000-are-issued-to-sellers-in-consideration-of-net-assts-of-rs-60000-the-balance-of-rs-20000-will-be\/","title":{"rendered":"If the fully paid-up shares of Rs. 80,000 are issued to sellers in consideration of net assts of Rs. 60,000 the balance of Rs. 20,000 will be"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;Debited to profit and loss account&#8221; option2=&#8221;Debited to Goodwill account&#8221; option3=&#8221;Credited to capital reserve account&#8221; option4=&#8221;Eradiated to security premium account&#8221; correct=&#8221;option3&#8243;]<!--more--><\/p>\n<p>The correct answer is C. Credited to capital reserve account.<\/p>\n<p>When a company issues shares for a consideration in excess of the fair value of the net assets acquired, the excess is credited to a capital reserve account. This account is a non-distributable reserve, which means that the company cannot distribute the amount in the account to shareholders as dividends.<\/p>\n<p>The other options are incorrect.<\/p>\n<p>Option A is incorrect because the balance of Rs. 20,000 should not be debited to the profit and loss account. The profit and loss account is used to record the company&#8217;s income and expenses for a period of time. The balance of Rs. 20,000 is not an expense, so it should not be recorded in the profit and loss account.<\/p>\n<p>Option B is incorrect because the balance of Rs. 20,000 should not be debited to the goodwill account. The goodwill account is used to record the amount paid for an asset that is in excess of its fair value. In this case, the company is not acquiring an asset, so the goodwill account should not be used.<\/p>\n<p>Option D is incorrect because the balance of Rs. 20,000 should not be eradicated to the security premium account. The security premium account is used to record the amount of money that is received by a company in excess of the par value of its shares. In this case, the company is not issuing shares with a par value, so the security premium account should not be used.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;Debited to profit and loss account&#8221; option2=&#8221;Debited to Goodwill account&#8221; option3=&#8221;Credited to capital reserve account&#8221; option4=&#8221;Eradiated to security premium account&#8221; correct=&#8221;option3&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[],"class_list":["post-57445","post","type-post","status-publish","format-standard","hentry","category-accounting","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>If the fully paid-up shares of Rs. 80,000 are issued to sellers in consideration of net assts of Rs. 60,000 the balance of Rs. 20,000 will be<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/if-the-fully-paid-up-shares-of-rs-80000-are-issued-to-sellers-in-consideration-of-net-assts-of-rs-60000-the-balance-of-rs-20000-will-be\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"If the fully paid-up shares of Rs. 80,000 are issued to sellers in consideration of net assts of Rs. 60,000 the balance of Rs. 20,000 will be\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;Debited to profit and loss account&#8221; 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