Question

At the time of forfeiture of shares originally issued at premium, Securities Premium Account is:

• A. Credited
• B. Debited only if premium is unpaid
• C. Always debited
• D. Not affected

Hint:

In share forfeiture: \[ \text{Premium unpaid} \Rightarrow \text{Debit Securities Premium A/c} \]

Answer 1

The Correct Option is B

Concept: Securities Premium Account represents premium collected from shareholders over face value. During forfeiture:
• If premium has already been received, no adjustment is needed.
• If premium is unpaid, Securities Premium Account must be debited.

Step 1: Understanding forfeiture.
Share forfeiture occurs when shareholder fails to pay allotment or calls.

Step 2: Case when premium is unpaid.
Suppose premium was due but not received: \[ \text{Securities Premium A/c Dr.} \] because unrealized premium must be cancelled.

Step 3: Case when premium already received.
If premium was already received earlier: \[ \text{No adjustment required} \]

Step 4: Selecting correct option.
Hence: \[ \boxed{\text{Debited only if premium is unpaid}} \] Therefore correct option is: \[ \boxed{(B)} \]