Class 12 Accountancy - KARNATAKA
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under the Karnataka (KSEEB) syllabus introduces students to how joint-stock companies raise capital by issuing shares. It covers the entire lifecycle of shares, from initial public offering (IPO) and journal entries for application, allotment, and calls, to the crucial treatments of over-subscription, under-subscription, calls-in-arrears, calls-in-advance, and forfeiture and reissue of shares. This chapter is vital for board exams as it carries high weightage and frequently features long 6-mark or 8-mark numerical problems that test your practical understanding of corporate accounting.
Start Learning FreeKey Concepts
Share Capital
The total capital of a company divided into small denominations of equal value called shares, categorized into authorized, issued, subscribed, called-up, and paid-up capital.
Over-subscription and Pro-rata Allotment
A situation where applications are received for more shares than offered to the public, requiring the company to allot shares proportionately (pro-rata) and adjust excess money.
Calls-in-Arrears
The amount called by the company on shares but not paid by the shareholders, which is debited to the Calls-in-Arrears account or treated as unpaid calls.
Forfeiture of Shares
The cancellation of shares due to the non-payment of allotment or call money by shareholders, resulting in the forfeiture of the amount already paid.
Reissue of Forfeited Shares
The process by which a company re-issues the shares it had previously forfeited, either at par, premium, or discount (up to the amount forfeited).
Important Formulas
Board Exam Info
In the Karnataka (KSEEB) Class 12 Accountancy board exam, this chapter typically carries around 15 to 20 marks. Questions usually include 1-mark or 2-mark theoretical questions, a 6-mark or 12-mark practical problem focusing on journal entries for issue of shares, over-subscription, forfeiture, and reissue.
Frequently Asked Questions
How do we adjust excess application money in case of pro-rata allotment?
Excess application money received is first adjusted against the amount due on allotment. If any surplus remains, it is either refunded to the applicants or adjusted against future calls if authorized by the Articles of Association.
What is the maximum discount allowed when reissuing forfeited shares?
The maximum discount allowed on the reissue of forfeited shares cannot exceed the amount that was originally forfeited on those specific shares.
Where is the balance of the Forfeited Shares Account transferred after all forfeited shares are reissued?
The remaining balance in the Forfeited Shares Account relating to reissued shares is transferred to the Capital Reserve Account.
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