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WAEC Financial Accounting 1991 (August) Question 1

Question 1

Company Accounts

When shares are oversubscribed, the promoter may decide to scale down the number of shareholding. When this is done, the shares are being

  1. A.forfeited
  2. B.issued at a discount
  3. C.issued on prorata
  4. D.issued at par
  5. E.issued at a premium.
Show the answer and explanation

Answer: C (issued on prorata)

Explanation

Scaling down means each applicant gets a proportion (pro rata) of the shares applied for.