Which One of the Following Statements Regarding the Share Premium

question 10

Multiple Choice

Which one of the following statements regarding the share premium account is true?

• A) The share premium account represents part of the company's reserves.
• B) The share premium account arises when shares are issued at less than their nominal value.
• C) The share premium account can only exist when the company has issued preference shares.
• D) The share premium account increases when an existing shareholder sells their shares for more than they cost.

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Definitions:

Raw Material Costs

The total expense incurred for materials that are used in the production of goods or services.

Beginning Inventory

The value of the total goods available for sale at the start of an accounting period.

Ending Inventory

The worth of products ready for purchase at the conclusion of a financial period, determined by adding the initial inventory to acquisitions and subtracting the cost of goods sold.

Production Planning

The process of outlining the steps necessary for the efficient production of goods, including scheduling, materials procurement, and capacity planning.