Question

When a company issues fully paid shares to promoters for their services, the journal entry will be:

• A. Bank A/c Dr.
  To Share Capital A/c
• B. Incorporation Costs A/c Dr.
  To Share Capital A/c
• C. Promoters Personal A/c Dr.
  To Share Capital A/c
• D. Promotion Expenses A/c Dr.
  To Share Capital A/c

Hint:

Remember that "Promotion Expenses" is a broader term, but "Incorporation Costs" specifically refers to the legal and administrative fees of bringing a company into existence, which is the primary service provided by promoters.

Answer 1

The Correct Option is B