Class 12 Accountancy - MAHARASHTRA
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under the Maharashtra State Board (MSBSHSE) introduces students to the formation of joint stock companies and the accounting treatment for the issue and forfeiture of shares. Students learn how companies raise capital from the public through applications, allotments, and calls, as well as the accounting entries for oversubscription, under-subscription, and calls-in-arrears. This is a high-weightage chapter in the board exams, frequently featuring long-answer practical problems that test your ability to pass journal entries and prepare balance sheet extracts.
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.
Pro-rata Allotment
Proportionate allotment of shares to applicants when an issue is oversubscribed, adjusting excess application money towards allotment.
Calls-in-Arrears
The amount called up by the company on shares which shareholders fail to pay by the due date.
Forfeiture of Shares
Cancellation of shares by the company due to non-payment of allotment or call money, resulting in the forfeiture of the amount already paid.
Reissue of Forfeited Shares
The process by which a company re-issues its forfeited shares to new or existing buyers at par, premium, or discount.
Important Formulas
Board Exam Info
In the Maharashtra (MSBSHSE) Class 12 Accountancy board exam, this chapter typically carries around 10 to 15 marks. Questions often include a compulsory 8 or 10-mark long-answer practical problem focusing on journal entries for issue, forfeiture, and reissue of shares, alongside objective questions.
Frequently Asked Questions
What is the difference between issued capital and subscribed capital?
Issued capital is the total face value of shares offered by the company to the public, whereas subscribed capital is only that part of issued capital which the public has actually applied for and accepted.
How do we treat excess application money in case of oversubscription?
Excess application money can either be refunded to the applicants or adjusted against allotment and subsequent calls if the company follows a pro-rata allotment basis.
Can forfeited shares be reissued at a discount?
Yes, forfeited shares can be reissued at a discount, but the discount given on reissue cannot exceed the amount that was originally forfeited on those shares.
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