company accounts

• A rights issue involves shares being offered to existing shareholders at a price a little below the market value but often above the nominal (par) value, which creates a share premium. A rights issue is used to raise additional funds for the company and affects both Cash and Cash equivalents and the Equity Section of the Statement of Financial Position.
• A bonus issue involves issuing free shares to existing shareholders out of the capital (share premium/revaluation reserve) or revenue reserves (retained earnings) of the company.  A bonus issue is used to restructure the Equity Section of the Statement of Financial Position and is always valued at PAR and so there will be no share premium. 

  A bonus issue does not affect the cash position of the company as NO FUNDS are raised.  It will affect the Statement of Changes in Equity, with the value of ordinary shares issued increasing and the value of the reserves (capital and revenue) decreasing