Class 12 Accountancy - ANDHRA-PRADESH
Accounting for Share Capital
Accounting for Share Capital is a foundational chapter in Class 12 Accountancy under the Andhra Pradesh (BSEAP) curriculum. It explores how joint-stock companies raise capital by issuing shares to the public. You will learn the systematic accounting treatment for the issue of shares at par, premium, and discount, as well as calls-in-arrears, calls-in-advance, over-subscription, and forfeiture and reissue of shares. This chapter carries significant weightage in the board examinations, often featuring practical numerical problems ranging from 6 to 10 marks, making it essential for securing high scores.
Start Learning FreeKey Concepts
Share Capital
The total capital of a company divided into small units called shares, representing ownership in the company.
Issue of Shares at Premium
When shares are issued at a price higher than their face value, the excess amount is credited to the Securities Premium Account.
Calls-in-Arrears
The amount called by the company on shares but not paid by the shareholders on or before the due date.
Forfeiture of Shares
The cancellation of shares due to the non-payment of allotment or call money by shareholders, resulting in the forfeiture of previously paid amounts.
Reissue of Forfeited Shares
The process by which a company reissues its forfeited shares to new or existing buyers, either at par, premium, or discount.
Important Formulas
Board Exam Info
In the Andhra Pradesh (BSEAP) Class 12 Board Exam, this chapter typically carries around 10 to 15 marks. Questions generally include one short-answer question (2-4 marks) regarding theory or journal entries, and a mandatory long-answer numerical problem (8-10 marks) based on the forfeiture and reissue of shares or pro-rata allotment.
Frequently Asked Questions
What is the difference between calls-in-arrears and calls-in-advance?
Calls-in-arrears represent the unpaid money called by the company on shares, whereas calls-in-advance is the amount received from shareholders before it is actually called up.
Can shares be issued at a discount under the Companies Act?
According to Section 53 of the Companies Act, 2013, a company cannot issue shares at a discount, except for sweat equity shares issued to employees or directors.
How is the balance of the Forfeited Shares Account treated after all forfeited shares are reissued?
The remaining balance in the Forfeited Shares Account is transferred to the Capital Reserve Account because it represents a capital gain for the company.
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