Class 12 Accountancy - WEST-BENGAL
Accounting for Share Capital
The chapter 'Accounting for Share Capital' in Class 12 Accountancy under WBBSE introduces students to how joint-stock companies raise capital by issuing shares to the public. It covers the entire accounting lifecycle of shares, from initial application, allotment, and various calls, to the crucial treatments of over-subscription, under-subscription, calls-in-arrears, calls-in-advance, and the forfeiture and reissue of shares. Mastering this chapter is essential for scoring high in board exams, as it forms the foundation of company accounts and consistently features long-answer numerical problems carrying substantial weight in the final examination.
Start Learning FreeKey Concepts
Authorized Capital
The maximum amount of capital that a company is authorized to raise by issuing shares, as stated in its Memorandum of Association.
Over-subscription
A situation where the public applies for more shares than the number offered by the company, requiring pro-rata allotment or refund of excess application money.
Calls-in-Arrears
The amount called up by the company on shares but not yet paid by the shareholders, treated as a reduction from called-up capital.
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 where a company re-issues its previously forfeited shares to new or existing buyers at par, premium, or discount.
Important Formulas
Board Exam Info
In the West Bengal Council of Higher Secondary Education (WBBSE) Class 12 Accountancy examination, 'Accounting for Share Capital' typically carries around 10 to 15 marks. Questions commonly include a mandatory 8-10 mark long numerical problem on journal entries for issue, forfeiture, and reissue of shares, alongside short-answer objective or theory questions.
Frequently Asked Questions
In pro-rata allotment, excess application money received from applicants is adjusted against allotment and subsequent calls due from them. In a refund, the excess money is directly returned to the applicants and no shares are allotted.
Pro-rata allotment adjusts excess application money towards future dues, whereas a refund returns the money.
How do we calculate the balance of the Forfeited Shares Account to be transferred to Capital Reserve?
Once all forfeited shares are reissued, the entire credit balance remaining in the Forfeited Shares Account is transferred to the Capital Reserve Account. If only a portion of the shares is reissued, only the proportionate amount relating to the reissued shares is transferred.
Can shares be issued at a discount under the Companies Act?
No, according to Section 53 of the Companies Act, 2013, a company cannot issue shares at a discount, except in the case of issuing sweat equity shares to employees or directors.
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