Class 12 Accountancy - UP
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy is a cornerstone of corporate accounting under the UPMSP curriculum. It teaches how a joint-stock company raises capital by issuing shares to the public. Students learn the complete accounting treatment for the issue and forfeiture of shares, including shares issued at par, premium, and discount, as well as over-subscription and calls-in-arrears. This chapter is highly scoring and carries significant weight in the UPMSP board exams, often featuring long numerical questions on forfeiture and reissue of shares that test your journal entry skills.
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
A situation where applications for more shares are received than the number offered to the public, requiring pro-rata allotment or refund.
Calls-in-Arrears
The amount demanded by the company on shares but not paid by the shareholders when due.
Forfeiture of Shares
Cancellation of shares due to non-payment of allotment or call money, where the amount already paid is forfeited by the company.
Reissue of Forfeited Shares
The process of selling shares that were previously forfeited to new or existing buyers, usually at a discount not exceeding the forfeited amount.
Important Formulas
Board Exam Info
In the Uttar Pradesh (UPMSP) Class 12 Accountancy board exam, this chapter typically carries around 10 to 15 marks. Common question types include short-answer questions on journal entries for issue of shares and long-answer numerical problems combining forfeiture and reissue of shares.
Frequently Asked Questions
What is the difference between issued capital and subscribed capital?
Issued capital is the nominal value of shares offered to the public for subscription, while subscribed capital is the portion of issued capital that has actually been subscribed and accepted by the public.
How do we treat Securities Premium in journal entries?
Securities Premium is credited at the time of Allotment (or Call, depending on terms) as it is a capital gain, and it is shown under Reserves and Surplus in the Balance Sheet.
What happens to the balance of the Forfeited Shares Account after reissue?
The remaining balance in the Forfeited Shares Account after reissue is transferred to the Capital Reserve account.
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