Practice question
Question
There are two statements marked as Assertion (A) and Reason (R). Read the statements and choose the appropriate option from the options given below.
Assertion (A): The debt to equity ratio will increase at the time of issue of equity shares for cash.
Reason (R): Issue of equity shares will increase the shareholders’ funds but the long-term debts will remain the same.
Explanation
Assertion (A) is false, but Reason company accounts correct; share issue forfeiture pro-rata per Companies Act.
Discussion
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