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WAEC Financial Accounting 1998 Question 36

Question 36

Company Accounts

When a share is sold for less than its nominal value, the difference is debited to

  1. A.Share Premium Account
  2. B.Share Discount Account
  3. C.Profit and Loss Account
  4. D.Capital Reserve Account
  5. E.General Reserve Account.
Show the answer and explanation

Answer: B (Share Discount Account)

Explanation

The shortfall below nominal value is debited to a share discount account.