Class 12 Accountancy - KERALA
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under the Kerala SCERT syllabus introduces students to the fundamental concepts of corporate accounting. It covers the formation of a joint-stock company, types of shares, and the systematic recording of share capital transactions. You will learn how to pass journal entries for the issue of shares at par, premium, and discount, as well as accounting treatments for oversubscription, calls-in-arrears, calls-in-advance, and forfeiture and reissue of shares. This is a high-weightage chapter crucial for scoring high marks in your board examinations.
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 Par, Premium, and Discount
Shares can be issued at their face value (par), at a value higher than face value (premium), or below face value (discount, generally restricted for companies).
Oversubscription of Shares
A situation where applications are received for more shares than the company has offered to the public, requiring pro-rata allotment or refund.
Calls-in-Arrears and Calls-in-Advance
Calls-in-arrears is the amount not paid by shareholders when called upon, while calls-in-advance is the amount received prematurely for future calls.
Forfeiture and Reissue of Shares
The cancellation of shares due to non-payment of call money and their subsequent resale to new buyers by the company.
Important Formulas
Board Exam Info
In the Kerala SCERT Class 12 Accountancy board examination, this chapter typically carries a significant weightage of around 12 to 15 marks. Common question types include 8-mark or 5-mark comprehensive problems on journal entries for issue, forfeiture, and reissue of shares, alongside 2-mark theoretical and short-answer questions.
Frequently Asked Questions
What is the difference between Authorized Capital and Paid-up Capital?
Authorized capital is the maximum amount of capital a company is legally allowed to raise, whereas paid-up capital is the actual amount paid by the shareholders.
How is Securities Premium Reserve shown in the Balance Sheet?
Securities Premium Reserve is presented under the head 'Reserves and Surplus' in the Equity and Liabilities part of the Balance Sheet.
What happens to the balance in the Forfeited Shares Account after the reissued shares are fully accounted for?
The remaining balance in the Forfeited Shares Account relating to the reissued shares is transferred to the Capital Reserve account.
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