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JAMB Principles of Accounts 2004 Question 47

Question 47

Company Accounts

Share premium is an example of

  1. A.revenue reserves
  2. B.capital reserves
  3. C.general reserves
  4. D.loan capital
Show the answer and explanation

Answer: B (capital reserves)

Explanation

Share premium comes from issuing shares above par, not from trading profit, so it is a capital reserve.