Q38
Over-capitalization results from __________.
A.
payment of excessive amount for goodwill
B.
underestimating the rate of capitalization
C.
raising more money than can be profitably used
AnswerD.
raising only the money
Answer: Option C
Solution
Answer: Option C
Solution:
Over-capitalization results from raising more money than can be profitably used. Over-capitalisation takes place when a company raises more money by the issue of shares and debentures than can be profitably used.