Class 12 Accountancy - BIHAR
Accounting for Share Capital
Accounting for Share Capital is one of the most crucial and scoring chapters in Class 12 Accountancy for Bihar (BSEB) students. It introduces the fundamental concepts of how a joint-stock company raises capital by issuing shares to the public. You will learn the systematic journal entries for the issue of shares at par, premium, and discount, as well as complex scenarios like calls-in-arrears, calls-in-advance, over-subscription, and forfeiture and reissue of shares. Mastering this chapter is essential as it forms the base for company accounts and regularly features high-weightage numerical problems in board exams.
Start Learning FreeKey Concepts
Share Capital
The total capital of a company divided into small units of fixed denomination called shares, representing ownership in the company.
Over-subscription and Under-subscription
Over-subscription occurs when applications are received for more shares than offered, requiring pro-rata allotment or refund. Under-subscription is when applications are fewer than offered shares.
Calls-in-Arrears and Calls-in-Advance
Calls-in-arrears represent the amount not paid by shareholders when a call is made, while calls-in-advance is the money received before a call is officially made.
Forfeiture of Shares
The cancellation of shares due to non-payment of allotment or call money, resulting in the forfeiture of the amount already paid by the shareholder.
Reissue of Forfeited Shares
The process by which a company resells its forfeited shares to new or existing buyers, either at par, premium, or discount (up to the amount previously forfeited).
Important Formulas
Board Exam Info
In the Bihar (BSEB) Class 12 Accountancy board exam, this chapter typically carries a weight of 15 to 20 marks. Questions usually include objective type (MCQs), short-answer conceptual questions, and a compulsory long-answer numerical problem (often carrying 15 marks) focusing on the forfeiture and reissue of shares or pro-rata allotment.
Frequently Asked Questions
What is the difference between issued capital and subscribed capital?
Issued capital is the nominal value of shares actually offered to the public for subscription, whereas subscribed capital is that part of issued capital which has been actually subscribed and accepted by the public.
Can a company issue shares at a discount in BSEB exams?
According to Section 53 of the Companies Act, 2013, a company cannot issue shares at a discount, except for sweat equity shares. Therefore, numerical problems involving share discounts are generally avoided unless specifically testing exceptions.
How do we calculate the amount transferred to Capital Reserve upon reissue?
It is calculated as the total forfeited amount on the reissued shares minus the discount allowed (or loss on reissue) during their reissue.
Learn Accounting for Share Capital with Your AI Tutor
10 different ways to study this chapter. Free for 3 chapters per day.
Lecture
Key Points
Interactive
Quiz
Flashcards