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The amount of sacrifice by shareholders on capital reduction is credited to which account?
AProfit & Loss A/c
BSecurities Premium
CCapital Reduction Account (also called Reconstruction Account)
DGeneral Reserve
Answer & Solution
Correct answer: C. Capital Reduction Account (also called Reconstruction Account)
1. Step 1: Per Ch 14, the sacrifice on capital reduction is credited to "Capital Reduction Account (or Reconstruction Account)".
2. Step 2: This account is then used to write off losses, intangibles, etc.
3. Step 3: Hence (B).
_Source: ICAI BoS CA Inter Paper 1, Ch 14 "Internal Reconstruction"_