Question

The amount received over and above face value of shares is called:

• A. Discount on Issue of Shares
• B. Calls in Arrears
• C. Securities Premium
• D. Capital Reserve

Hint:

Amount received above nominal value of shares is called Securities Premium.

Answer 1

The Correct Option is C

Concept: When shares are issued at a price higher than face value: \[ \text{Excess amount} = \text{Premium} \] This amount is credited to Securities Premium Account.

Step 1: Understanding issue at premium.
Suppose: \[ \text{Face Value} = ₹10 \] \[ \text{Issue Price} = ₹12 \] Then: \[ ₹2 \] is Securities Premium.

Step 2: Accounting treatment.
Journal entry: \[ \text{Bank A/c Dr.} \] \[ \text{To Share Capital A/c} \] \[ \text{To Securities Premium A/c} \]

Step 3: Final answer.
Hence: \[ \boxed{\text{Securities Premium}} \] Correct option: \[ \boxed{(C)} \]