Accounting · Components of Owner's Equity
Consider the following statements regarding accounting principles and components of Owner's Equity: Statement I: A company issuing bonus shares to its existing shareholders by capitalizing its general reserves will lead to an increase in the total capital component of the balance sheet equation. Statement II: The creation of a 'Provision for Doubtful Debts' reduces the net value of Sundry Debtors on the asset side and results in a corresponding reduction in the Equity of the firm. Statement III: Any gain arising from the revaluation of fixed assets is credited to a Revaluation Reserve, which increases total Equity without affecting the Profit and Loss Account of the current year. Which of the above statements are correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1I, II and III
- 2Only II and III✓
- 3Only I and II
- 4Only I
Correct answer
Only II and III
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