Accounting for share capit al share and share capital. Accounting for notforprofit organisations and companies. Share capital consists of all funds raised by a company in exchange for shares of either common or preferred shares of stock. Traditionally, the government issued bonds, but these days, bonds are also being issued by semigovernment and nongovernmental organisations. Private placement of shares implies issue and allotment of shares to a selected groups of persons privately and not to public in general through public issue. This is part of authorized capital which is offered to public for subscription. The accounting of such transactions is special and involves the share capital account. Ts grewal solutions for class 12 accountancy company account accounting for share capital volume ii question 1. Shares, capital and debentures debenture preferred stock. Shares are the marketable instruments issued by the. Terms of issue of shares i issue of shares at par when shares are issued at their face value, the shares are said to have been issued at. Share capital means the money paid into the company or legally promised as being available on call by members for shares in the company. Ts grewal double entry book keeping class 12 solutions volume 2.
Meaning and types of share capital and shares, issue of share capital. The following are some of the differences between equity shares and debentures. For starting a large scale organization there is a need for huge amounts of capital. Definition a corporation or company generally borrow money by means of issuing debentures or bonds. Download chapterwise class 12 ncert textbooks pdf for accountancy for english medium. For raising a capital company uses various sources of funds like share capital by issuing shares to public, debt capital by issuing debentures, term loans from banks, etc. Preference shares are known as preferred stock while ordinary shares are known as common stock. The current rules relating to share capital require companies having a share. Share capital and debentures 5 total post issue equity share capital with differential rights issued at any point of time and percentage of voting rights which the equity share capital with differential voting right shall carry to the total voting right of the aggregate equity share capital. This chapter deals with the accounting for share capital of companies. Which of the following is not a statutory book of a company. A company usually raises its capital in the form of shares called share capital and debentures debt capital.
Redemption of debentures methods of redemption of debentures. In laymans term, a debenture is the acknowledgment of the debt the organization has taken from the public at large. Redemption of debentures out of accumulated profits and sinking fund. Share capital of the company can be explained as a fund or sum with which a company is formed to carry on the business and which is raised by the issue of shares. Senior debentures get paid before subordinate debentures, and there are varying rates of risk and payoff for these categories. Transfer equity share capital, accumulated profits and reserves shown in the balance sheet just before date of amalgamation to equity shareholders account. There are two general types of share capital, which are common stock and preferred stock. Preference sharesalso referred to as preferred sharesare an equity instrument known for. Ncert accounting subject is divided into two parts. By investing in a debenture, you are lending your money to a business, with all the risks that this involves. Bank account is debited with the amount received on reissue. On the other hand, part ii has topics like share capital, debentures, and cash flow statement, etc.
It is normally a loan that should be repaid on a specific date, but some debentures are irredeemable securities sometimes referred to as perpetual debentures. These shareholders are issued shares of the company. Cbse class 12 accounting for share capital class 12 notes accountancy in pdf are available for free download in mycbseguide mobile app. Therefore, a consolidated capital account called share capital account is. Sweat equity shares means easily shares issued by the company to its employees or whole time directors at a discount or for consideration other then cash. In other words, a share in a company is one of the units in which the total capital of the company is divided. Share capital class 12 notes edurev is made by best teachers of class 12.
The companies share capital and debentures rules, 2014 hereinafter referred. Public applied for 4,50,000 shares and allotment was made to. View pdf cbse class 12 accountancy accounting for share. Capital raised by issue of shares is called share capital. It is issued to money lenders under the seal of the corporation. Alteration of share capital and internal reconstruction. The return on shares is known as dividend while the return on debentures is called interest. The debentures of both companies are to be converted into equivalent number of 12% debentures in rs ltd. On 1st april, 2004 the company informed the debentureholders to redeem the debentures on 1st october, 2004, either by payment in cash or by allotment of 8% preference shares of rs 100 each at rs per share or 7% 2nd debentures of rs 100 each at rs 96 per debenture. In this video, i will teach you about accounting for share capital. Here is a compilation of top four accounting problems on alteration of share capital and internal reconstruction with its relevant solutions. Bond is also an instrument of acknowledgement of debt. Although the money raised by the debentures becomes a part of the companys capital structure, it does not become share capital. Nature and types a company is an artificial person created by law, having separate entity with a perpetual succession and a common seal.
Accounting for share capital cbse notes for class 12. Issue of debentures at par, premium and discount 6. Accounting for share capital cbse notes for class 12 accountancy. Accounting for shares and debentures share and discover. Free ncert solutions for class 12 commerce accountancy, chapter 1 accounting for share capital from ncert textbook company accounts and analysis of. Cbse class 12 accountancy syllabus 20192020 pdf new. A share is a part of the owned capital whereas a debenture is a part of borrowed capital. Thus, the application of accounting in the business sector has become an indispensable factor. Mcq on issue of share and share capital 2020 facebook. Part i is based on basic concepts like partnership, contract, or organisational dissolution, etc. The certificate of incorporation of a company is issued by registrar of. It may or may not create a charge on the assets of a company as security.
Such uncalled amount is called reserve capital of the company. Ts grewal solutions for class 12 accountancy company. The students should read these basic concepts to gain perfection which will. Ts grewal solutions double entry book keeping class 12 accounting volume ii free pdf download. A company may reserve a portion of its uncalled capital to be called only in the event of winding up of the company. Fast track notes on income under the head house property. According to section 744 of the companys act, 20 and rule 187 of the companies share capital and debentures rules, 2014, a company is required to transfer an amount equal to at least 25% of the value of debentures to the debenture redemption reserve ac before redemption of debentures. Accounting treatment reissue of forfeited shares 5. Share capital refers to the funds that a company raises in exchange for issuing an ownership interest in the company in the form of shares. A thorough knowledge about the differences between the shares and debentures will help you to understand these two terms in a better way. The best app for cbse students now provides accounting for partnership firms fundamentals class 12 notes latest chapter wise notes for quick preparation of cbse board exams and schoolbased annual examinations. That part of the authorized capital which is offered to the public for subscription is called. Redumption of preference shares 6 been available for dividends, be transferred to a reserve account to be called capital redemption reserve account, a sum equal to the nominal amount of the shares redeemed. In a strict accounting sense, share capital is the nominal value of.
No default in payment of dividend, debentures, deposit, preference shares, loan from. A company can raise funds through the issue of debentures, which has a fixed rate of interest on it. Accounting for share capital class 12 notes accountancy. Preference shares and debentures are two different types of financial instruments. Drr is a reserve created out of profits for redeeming debentures. They are very crucial for raising longterm debt capital. Download chapter wise important exam questions and answers assignments of ncert accountancy, cbse class 12 accountancy accounting for share capital and debenture.
Harold averkamp cpa, mba has worked as a university accounting instructor, accountant, and consultant for more than 25 years. Ncert solutions for class 12 commerce accountancy chapter 1 accounting for share capital. Accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares. The students should read these basic concepts to gain perfection which will help him to get more marks in cbse examination. This document is highly rated by class 12 students and has been viewed 20094 times. Company a joint stock company is an artificial person, created by law, having separate entity distinct from its members with a perpetual succession and a common seal. Every business requires capital for starting a business. It can generally be bought or sold through the stock exchange at a rice above or below its face value. The company offered for public subscription all the shares. It is available only for the creditors on winding up of the company.
The investor should consider the ratio in which debt is used to finance projects and capital compared to that used for. Differences between a share certificate and a share warrant. Ts grewal solutions class 11 and 12 accounting free pdf. A debenture is one of the most typical forms of long term loans that a company can take. Cbse class 12 accountancy accounting for share capital. Chapter 7 company accounts financial statements of notforprofit organisations. Accounting for share capital class 12 accountancy extra. Accounting for share capital, introduction accounts class. Debentures are said to have been issued at a premiumwhen the issue price is more than their face value thatis an issue of. Share capital is credited with face value of shares reissued and share forfeiture account. Pdf this paper examines the economic case for rules of company law. It is the maximum amount of capital a company can issue. Learning objectives to understand the meaning and essential characteristics of a company to explain different kinds of companies to enumerate steps required for formation and commencement of business by a company to identify the sources of funds to be raised by a company.
The characteristics of common stock are defined by the state within which a company incorporates. Procedure for increasing share capital of a company. Ncert solutions for class 12 commerce accountancy chapter. It contains a contract for the repayment of the debentures or bonds and its types read more. A share represents ownership of the company whereas a debenture is only acknowledgement of debt. A debenture or bond is a written acknowledgment by a company or corporation of a loan made to it. Pdf corporate accounting i kabir tahir hamid academia. Executive programme company accounts and auditing practices finance and accounting have assumed much importance in todays competitive world of business wherein corporate organisations have to show the true and fair view of their financial position. The original sum is repaid at a specified future date or it is converted into shares or other debentures.
435 883 878 209 60 753 1294 1239 110 43 1471 749 912 518 468 1177 1334 1067 1160 526 1255 1341 1428 565 438 1258 723 446 269 1079 794 329 1187 415 1120 213 413 742 1317 1042 145 613 293 542 285 1047