Class 12 Accountancy - GUJARAT
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under GSEB explores how joint-stock companies raise capital by issuing shares to the public. You will learn the entire accounting treatment for the issuance and forfeiture of equity and preference shares, including applications, allotments, and various calls. Understanding this chapter is crucial because it forms the foundation of corporate accounting and consistently carries high weightage in the Gujarat Board examinations, often featuring practical journal entry problems and forfeiture-reissue scenarios.
Start Learning FreeKey Concepts
Share Capital
The total capital of a company is divided into small units called shares, and the aggregate value of these shares constitutes the share capital.
Calls-in-Arrears
The amount demanded by the company on shares but not paid by the shareholders when due, treated as a deduction from called-up capital.
Calls-in-Advance
The amount received from shareholders before it is actually called up by the company, which carries an interest liability as per the articles.
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 defaulter.
Reissue of Forfeited Shares
The process where a company reissues the shares it had previously forfeited, either at par, premium, or discount (up to the amount forfeited).
Important Formulas
Board Exam Info
In the Gujarat (GSEB) Class 12 Accountancy board exam, this chapter typically carries around 10 to 12 marks. Common question types include long practical problems on journal entries for issue, forfeiture, and reissue of shares, as well as short objective or theory questions regarding types of share capital.
Frequently Asked Questions
What is the difference between shares issued at par, premium, and discount?
How do we calculate the balance in the Forfeited Shares Account after reissue?
The proportionate amount relating to shares that are still not reissued remains in the Forfeited Shares Account and is shown under Share Capital in the Balance Sheet.
Are journal entries mandatory for every installment in share capital problems?
Yes, separate journal entries for bank receipt and capital transfer must be passed for Application, Allotment, First Call, and Final Call sequentially.
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