alleryStart learning →How can a credit balance in retained earnings be capitalised?
ABy repaying debentures
BBy raising a term loan
CBy issuing bonus shares
DBy buying back shares
Answer & Solution
Correct answer: C. By issuing bonus shares
Part of the credit balance can be converted into share capital by issuing bonus shares to existing holders.
Keep practising Sources of Finance
Browse all Sources of Finance questions for CA Inter, or explore more Financial Management topics.
Related questions
What is the usual outcome at the end of a finance lease, as in hire purchase?Under operating lease treatment, what happens to leverage ratios?Under the IFRS approach, when is a lease a finance lease?How does capitalising a finance lease affect the balance sheet?Who is typically the legal owner of the asset during a finance lease?Historically, how have many IPOs been priced relative to market demand?In a Dutch auction IPO, what do all successful bidders pay?A greenshoe option usually lets underwriters raise the offering by up to what percentage?