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WAEC Financial Accounting 2012 Question 39

Question 39

Company Accounts

Shares of ₦3 nominal value were issued at a price of ₦4. The difference of ₦1 is a

  1. A.commission.
  2. B.discount.
  3. C.premium.
  4. D.bonus.
Show the answer and explanation

Answer: C (premium.)

Explanation

Issuing a share above its nominal value gives a share premium: 4 − 3 = ₦1.