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WAEC Financial Accounting 2017 Question 38

Question 38

Company Accounts

Share premium is classified in the balance sheet as

  1. A.fixed capital.
  2. B.capital reserve.
  3. C.revenue reserve.
  4. D.short-term capital.
Show the answer and explanation

Answer: B (capital reserve.)

Explanation

Share premium cannot be paid out as dividend, so it is a capital reserve.