Class 12 Accountancy - TAMILNADU
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under Tamil Nadu Samacheer Kalvi explores how joint-stock companies raise capital by issuing shares to the public. Students learn the systematic accounting treatment for the issuance of equity and preference shares, handling applications, allotments, and calls. Crucially, the chapter covers the forfeiture and reissue of shares when shareholders default on calls. This is a high-weightage core accounting chapter essential for mastering company accounts and scoring high marks in the Tamil Nadu 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.
Over-subscription and Under-subscription
Over-subscription occurs when applications for more shares are received than offered, requiring a pro-rata allotment. Under-subscription happens when applications are fewer than the offered shares.
Calls-in-Arrears
The amount called up by the company on shares but not yet paid by the shareholders.
Forfeiture of Shares
The cancellation of shares due to the 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 its previously forfeited shares to new or existing buyers, usually at a discount not exceeding the amount forfeited.
Important Formulas
Board Exam Info
In the Tamil Nadu (Samacheer Kalvi) Class 12 Accountancy board exam, this chapter is extremely important and typically carries around 15 to 20 marks. Questions frequently include 1-mark objective questions, 3-mark short answers, and major 5-mark or 10-mark practical problems involving journal entries for issue, forfeiture, and reissue of shares.
Frequently Asked Questions
What is the difference between equity shares and preference shares?
Equity shareholders have voting rights and variable dividends, whereas preference shareholders have a preferential right to receive dividends and repayment of capital during winding up, but generally no voting rights.
How do we calculate the balance transferred to Capital Reserve after reissuing forfeited shares?
It is calculated as the total profit made on the forfeited shares that were reissued, minus any loss (discount) allowed on their reissue.
Is it mandatory to open a 'Calls-in-Arrears' account when shareholders fail to pay?
No, it is optional. Shareholders can either record defaults by debiting 'Calls-in-Arrears A/c' or simply omit opening the account and keep the call money unpaid directly in the respective call accounts.
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