When shares are issued above their nominal value, the excess above the nominal value is?

A. credited to profit and loss account
B. debited to share premium account
C. credited to share capital account
D. credited to share premium account

Correct Answer: Option B

B. debited to share premium account

Explanation

A company issues its shares at a premium when the price at which it sells the shares is higher than their par value. The amount of the premium is the difference between the par value and the selling price and will be debited to the share premium account.