Q.Explain the types of issue of shares.

Based on price, shares are issued in three ways — at par (price = face value), at a premium (price above face value), and at a discount (price below face value). Premium is credited to a Securities Premium Account; issue at a discount is now largely prohibited except for sweat equity shares.

This is a standard AP Inter 2nd-year (Commerce) company-accounts theory question, aligned with the NCERT/CBSE commerce curriculum.

1. Issue of shares at par — The shares are issued at a price exactly equal to their face (nominal) value. For example, a share of ₹10 face value issued for ₹10. No premium or discount arises, and the whole amount is credited to Share Capital.

2. Issue of shares at a premium — The shares are issued at a price higher than their face value. A ₹10 share issued at ₹13 carries a premium of ₹3. The premium is not part of capital; it is credited to the Securities Premium Account and can be used only for purposes allowed by the Companies Act (such as issuing bonus shares, writing off preliminary expenses, or buy-back of shares).

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A company's shares can be issued in three ways depending on the price charged against face value: at par (price = face value), at a premium (price above face value) and at a discount (price below face value). The premium is credited to the Securities Premium Account; a discount (now rarely allowed) is a loss shown separately.

This is a company-accounts theory question from the AP Inter 2nd-year (Class 12) Accountancy previous-year paper; the AP commerce syllabus aligns with the NCERT/CBSE treatment of share issues.

Types of issue of shares (based on issue price)

1. Issue of shares at par: Shares are issued at a price exactly equal to their face (nominal) value. For example, a share of face value 10 is issued for 10. The whole amount received is credited to the Share Capital Account.

2. Issue of shares at premium: Shares are issued at a price higher than their face value. The excess of the issue price over the face value is the premium, credited to the Securities Premium Account. For example, a 10 share issued at 13 carries a premium of 3. The premium can be used only for the purposes allowed by law (e.g. issuing bonus shares, writing off preliminary expenses, buy-back).

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