Question

If all the forfeited shares are reissued, the balance, if any, left in the Forfeited Shares Account is transferred to ______.

Options

• General Reserve Account

• Securities Premium Account

• Capital Reserve Account

• Statement of Profit and Loss

Answer 1

If all the forfeited shares are reissued, the balance, if any, left in the Forfeited Shares Account is transferred to Capital Reserve Account.

Explanation:

When forfeited shares are reissued, the proceeds from the initial forfeiture are credited to the Forfeited Shares Account. If there is any remaining balance in this account after the reissue (i.e., the amount not used to make up any discounts or other losses), it is moved to the Capital Reserve Account. This is because it is considered a capital gain and cannot be classified as revenue income.