Commerce Exam > Commerce Questions > Which of the following statements is false?a)...
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Which of the following statements is false?
- a)Capital redemption reserve cannot be used for writing off miscellaneous expenses and losses
- b)Capital profit realized in cash can be used for payment of dividend
- c)Reserves created by revaluation of fixed assets are not permitted to be capitalized
- d)Dividend is payable on the calls paid in advance by shareholders.
Correct answer is option 'D'. Can you explain this answer?
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Which of the following statements is false?a)Capital redemption reserv...
Dividend Payable on Calls Paid in Advance
There is a misconception in option 'D' as dividend is not payable on calls paid in advance by shareholders. Dividend is only payable on fully paid-up shares. When shareholders pay calls in advance, they are essentially paying for their shares before the company has issued them. These funds are held by the company until the calls are officially due and payable.
Explanation of Other Options:
- Capital redemption reserve: This reserve is specifically created to redeem preference shares or buy back shares out of profits not available for distribution as dividends. It cannot be used for writing off miscellaneous expenses and losses.
- Capital profit for dividend payment: Capital profit realized in cash can be used for payment of dividends to shareholders. This profit is generated from the sale of capital assets or through revaluation of assets at a higher value.
- Revaluation reserves: Reserves created by revaluation of fixed assets are not permitted to be capitalized. These reserves are typically used to account for the increase in the value of fixed assets and cannot be converted into share capital.
In conclusion, option 'D' is false as dividend is not payable on calls paid in advance. The other statements are true and align with standard accounting principles.
There is a misconception in option 'D' as dividend is not payable on calls paid in advance by shareholders. Dividend is only payable on fully paid-up shares. When shareholders pay calls in advance, they are essentially paying for their shares before the company has issued them. These funds are held by the company until the calls are officially due and payable.
Explanation of Other Options:
- Capital redemption reserve: This reserve is specifically created to redeem preference shares or buy back shares out of profits not available for distribution as dividends. It cannot be used for writing off miscellaneous expenses and losses.
- Capital profit for dividend payment: Capital profit realized in cash can be used for payment of dividends to shareholders. This profit is generated from the sale of capital assets or through revaluation of assets at a higher value.
- Revaluation reserves: Reserves created by revaluation of fixed assets are not permitted to be capitalized. These reserves are typically used to account for the increase in the value of fixed assets and cannot be converted into share capital.
In conclusion, option 'D' is false as dividend is not payable on calls paid in advance. The other statements are true and align with standard accounting principles.
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Which of the following statements is false?a)Capital redemption reserv...
False Statement: D: Dividend is payable on the calls paid in advance by shareholders.
Explanation:
The false statement is D: Dividend is payable on the calls paid in advance by shareholders. Here's why:
- A: Capital redemption reserve cannot be used for writing off miscellaneous expenses and losses.
- This statement is true. The capital redemption reserve is created when a company redeems its own shares, and it cannot be used for writing off miscellaneous expenses and losses.
- B: Capital profit realized in cash can be used for payment of dividend.
- This statement is true. When a company realizes a profit from the sale of its fixed assets, that profit can be used for the payment of dividends to shareholders.
- C: Reserves created by revaluation of fixed assets are not permitted to be capitalized.
- This statement is true. Reserves created by revaluation of fixed assets cannot be capitalized. They are used to reflect the increase in the value of the assets and are not available for distribution as dividends.
- D: Dividend is payable on the calls paid in advance by shareholders.
- This statement is false. Dividends are not payable on the calls paid in advance by shareholders. Calls in advance are payments made by shareholders before the due date, and they are not considered as part of the distributable profits of the company.
In conclusion, the false statement is D: Dividend is payable on the calls paid in advance by shareholders.
Explanation:
The false statement is D: Dividend is payable on the calls paid in advance by shareholders. Here's why:
- A: Capital redemption reserve cannot be used for writing off miscellaneous expenses and losses.
- This statement is true. The capital redemption reserve is created when a company redeems its own shares, and it cannot be used for writing off miscellaneous expenses and losses.
- B: Capital profit realized in cash can be used for payment of dividend.
- This statement is true. When a company realizes a profit from the sale of its fixed assets, that profit can be used for the payment of dividends to shareholders.
- C: Reserves created by revaluation of fixed assets are not permitted to be capitalized.
- This statement is true. Reserves created by revaluation of fixed assets cannot be capitalized. They are used to reflect the increase in the value of the assets and are not available for distribution as dividends.
- D: Dividend is payable on the calls paid in advance by shareholders.
- This statement is false. Dividends are not payable on the calls paid in advance by shareholders. Calls in advance are payments made by shareholders before the due date, and they are not considered as part of the distributable profits of the company.
In conclusion, the false statement is D: Dividend is payable on the calls paid in advance by shareholders.
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Which of the following statements is false?a)Capital redemption reserve cannot be used for writing off miscellaneous expenses and lossesb)Capital profit realized in cash can be used for payment of dividendc)Reserves created by revaluation of fixed assets are not permitted to be capitalizedd)Dividend is payable on the calls paid in advance by shareholders.Correct answer is option 'D'. Can you explain this answer?
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Which of the following statements is false?a)Capital redemption reserve cannot be used for writing off miscellaneous expenses and lossesb)Capital profit realized in cash can be used for payment of dividendc)Reserves created by revaluation of fixed assets are not permitted to be capitalizedd)Dividend is payable on the calls paid in advance by shareholders.Correct answer is option 'D'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Which of the following statements is false?a)Capital redemption reserve cannot be used for writing off miscellaneous expenses and lossesb)Capital profit realized in cash can be used for payment of dividendc)Reserves created by revaluation of fixed assets are not permitted to be capitalizedd)Dividend is payable on the calls paid in advance by shareholders.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements is false?a)Capital redemption reserve cannot be used for writing off miscellaneous expenses and lossesb)Capital profit realized in cash can be used for payment of dividendc)Reserves created by revaluation of fixed assets are not permitted to be capitalizedd)Dividend is payable on the calls paid in advance by shareholders.Correct answer is option 'D'. Can you explain this answer?.
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