Advantages of Right Issue.
For any discrepancies in this question, email contact@cadada.in
Company AccountsQ-2 | Bonus Issue and Right IssueQuestion 5243 of 112
All Questions Ad
Detailed Solution & Explanation
Advantages of Right Issue are as follows:
1. Right shares ensure reduction in dilution of financial and governance rights of
existing shareholders & maintain their proportional holding in the company.
2. It is a cost-effective way of raising capital since issue of prospectus is not required.
3. Right issue is a better method of raising capital than a public issue since it is
logistically much easier to handle.
4. The additional shares can be acquired by the existing shareholders at a lesser
(discounted) price than the market price of the existing shares.
About This Chapter: Partnership & Companies
Paper
Paper 1: Accounting
Weightage
15-20%
Key Topics
Admission, Retirement, Death, Shares, Debentures
This chapter covers Admission, Retirement, Death, Shares, Debentures and is part of Paper 1: Accounting in the CA Foundation exam.
View Official ICAI SyllabusExam Strategy Tip
This topic carries 15-20% weightage. Focus on understanding core concepts rather than memorizing.
Related Comparison Tables
More Questions from Company Accounts
Reserve Capital
Cumulative preference shares
Minimum subscription
Reserve Capital and Capital Reserve carry the same meaning.
As per Table F, the Minimum rate of interest that can be charged on calls- in-Arrear and that can be allowed on calls-in-advance are 10% p.m. and 12% p.m. respectively.
Re-issue of forfeited shares is allotment of shares but not a sale. [May 2018, 2 Marks]
Ready to Master Company Accounts?
Practice all 112 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.
Start Practicing — It's Free