Class 12 Accountancy - PUNJAB
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under the Punjab School Education Board (PSEB) deals with how a company raises capital by issuing shares to the public. You will learn the accounting treatment for the issue of shares at par, premium, and discount, as well as calls-in-arrears, calls-in-advance, and over-subscription. It also covers the crucial topics of forfeiture and reissue of shares. This chapter carries significant weight in the PSEB board exams, often featuring a mandatory 6-mark or 8-mark long-answer question on journal entries and balance sheet presentation, making it vital for scoring high marks.
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 is known as share capital.
Issue of Shares at Par and Premium
Shares can be issued at their face value (at par) or at a value higher than their face value (at premium). The extra amount received as premium is credited to the Securities Premium Account.
Oversubscription
A situation where applications for more shares are received than the number of shares actually offered to the public, requiring allotment to be adjusted or money refunded.
Calls-in-Arrears and Calls-in-Advance
Calls-in-arrears represent the amount not paid by shareholders when due, while calls-in-advance is the amount received from shareholders before it is officially called up by the company.
Forfeiture of Shares
The cancellation of shares due to the non-payment of allotment or call money by a shareholder, resulting in the forfeiture of the amount already paid.
Reissue of Forfeited Shares
The process by which a company reissues the shares it had previously forfeited to a new or existing buyer, either at par, premium, or discount.
Important Formulas
Board Exam Info
In the Punjab (PSEB) Class 12 Accountancy board exam, this chapter typically carries around 10 to 12 marks. Common question types include 1-mark objective questions, 3-mark short-answer questions on journal entries for forfeiture/reissue, and a major 6 or 8-mark long-answer numerical problem involving comprehensive journal entries from application to forfeiture and reissue.
Frequently Asked Questions
What is the difference between Pro-rata allotment and full allotment?
Under full allotment, applicants get the exact number of shares they applied for. Under pro-rata allotment, applicants receive a proportionate number of shares when the issue is oversubscribed.
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 already forfeited (received) on those specific shares.
Where is Calls-in-Arrears shown in the Balance Sheet?
Calls-in-arrears are deducted from the 'Called-up Capital' under the 'Subscribed Capital' head on the Liabilities (Equity and Liabilities) side of the company's Balance Sheet.
Learn Accounting for Share Capital with Your AI Tutor
10 different ways to study this chapter. Free for 3 chapters per day.
Lecture
Key Points
Interactive
Quiz
Flashcards