Question

Q1. Equity shares cannot be issued for the purpose of :
a. Cash Receipts
b. Purchase of assets
C. Redemption of Debentures
d. Distribution of dividend​

Answer 1

Answer:

(d) Distribution of dividend

Explanation:

(a) Cash Receipts is a proof of purchase issued when the buyer has paid in cash. Cash receipts are the printed verified documents that are issued each and every time cash is received for a service or good. Equity shares can be issued for the purpose of cash receipts.

(b) Purchase of assets: It means when a transaction takes place for acquiring a long-term asset. Equity shares can be issued for the purpose of purchasing assets.

(c) Redemption of Debenture refers to the payment of the number of debentures by the business. Equity shares can be issued for the purpose of purchasing assets.

(d) Distribution of Dividend is a sum of money paid regularly by a company to its shareholders out of its profits (or reserves). Equity shares cannot be issued for the purpose of purchasing assets.

Answer 2

Answer:

Equity shares cannot be issued for the purpose of (d.) Distribution of dividend

Explanation:

• A cash receipt is a printed acknowledgement of the amount of cash given that proves that the cash has been deposited or credited. The  cash receipt is given to the customer.
• An asset purchase occurs when an acquirer only buys the assets of an acquiree.
• Redemption of Debentures- it is the process of repaying the principal  to debenture.
• A dividend is a distribution of profits by a company tothe its shareholders. When a company earns a profit, it pays a proportion of the profit to shareholders.

Hence,

Equity shares cannot be issued for the purpose of (d.) Distribution of dividend

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