JAMB Commerce 2007 Question 39

Question 39

Business Finance

A share premium is an example of

  1. A.issued capital
  2. B.capital stock
  3. C.equity capital
  4. D.capital reserve.
Show the answer and explanation

Answer: D (capital reserve.)

Explanation

Share premium (the amount above nominal value) is kept as a capital reserve and cannot be paid out as dividend.