Class 12 Accountancy - ODISHA
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under the Odisha (BSE) board introduces students to how a joint-stock company raises capital by issuing shares. It covers the entire lifecycle of shares from issue, subscription, and calls to forfeiture and reissue. Students learn the systematic journal entries required for treating application, allotment, and call money, as well as accounting treatment for shares issued at par, premium, and discount. Mastering this chapter is crucial as it forms the foundation for company accounts and carries substantial weightage in board examinations through practical long-answer problems.
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 price higher than face value (premium), or below face value (discount, though restricted by the Companies Act).
Calls in Arrears and Calls in Advance
Calls in arrears represent the unpaid amount called up by the company on shares, while calls in advance is the money received before it is officially called.
Forfeiture of Shares
The cancellation of shares due to non-payment of allotment or call money by shareholders, resulting in the forfeiture of amounts 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.
Important Formulas
Board Exam Info
In the Odisha (BSE) Class 12 Accountancy exam, this chapter typically carries 12 to 15 marks. Questions usually include one long-term practical problem (6-8 marks) covering forfeiture and reissue of shares, alongside short-answer conceptual questions and journal entry problems.
Frequently Asked Questions
What is the difference between Authorized Capital and Paid-up Capital?
Authorized capital is the maximum capital a company is allowed to raise by its memorandum, whereas paid-up capital is the actual amount shareholders have paid against the shares subscribed.
How do we treat Calls in Arrears in the journal entries?
Calls in arrears can be recorded either by opening a 'Calls in Arrears Account' to track unpaid amounts or simply by debiting the unpaid call amount directly when passing the call entry.
Can forfeited shares be reissued at a discount?
Yes, forfeited shares can be reissued at a discount, but the maximum discount allowed cannot exceed the amount that was previously forfeited (received) on those specific shares.
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