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Accountancy · Class 12 Commerce

Ch 7Company Accounts — Class 12 Accountancy, concept-first.

A company is an artificial person, created by law and registered under the Companies Act, 2013, having a separate legal identity distinct from its members, perpetual succession, a common seal (or authorised signatures), limited liability for its shareholders, and freely transferable shares (in the case of a public comp…

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Key concepts

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Meaning of a Company and Kinds of Share Capital

A company is a separate legal person with perpetual succession and limited liability, created under the Companies Act, 2013.

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Chapter contents

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Meaning of a Company and Kinds of Share Capital

A company is an artificial person, created by law and registered under the Companies Act, 2013, having a separate legal identity distinct from its members, perpetual succession, a common seal (or auth…

2

Issue of Shares

A company may issue two broad classes of shares: Equity shares, which carry voting rights and a variable, residual claim on profits (dividend only after preference dividend, if any, is paid), and Pref…

3

Forfeiture and Reissue of Shares

If a shareholder fails to pay allotment money or a call when due, the Board of Directors — if the Articles of Association permit — may forfeit the shares after giving the required notice.

4

Issue of Debentures

A debenture is a certificate acknowledging a debt — it makes the holder a creditor of the company, entitled to a fixed rate of interest regardless of whether the company earns a profit, and usually to…

5

Interest on Debentures and Writing Off Discount on Issue

Interest on debentures is a fixed, contractual charge against profit — it must be paid to debenture holders whether or not the company has earned a profit in the year, unlike a dividend, which can be…

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Redemption of Debentures

Redemption of debentures means the repayment of the amount borrowed from debenture holders, according to the terms of issue. It may be carried out by:

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Questions for Practice

This set of questions checks your understanding of company share capital and its issue, forfeiture and reissue of shares, issue of debentures (at par, premium, discount, as collateral security), inter…

Sample & Board Papers

Sample papers and previous-year board questions for this subject.

+Show 28 questions28 questions
  1. Q1When shares are issued for purchase of assets, the amount should be credited to : (a) Bank Account (b) Vendors Account (c) Sundry Assets Acc…Preview
  2. Q2That part of share capital which can be called up only on the winding up of a company is called : (a) Reserve capital (b) Authorised capital…Preview
  3. Q3Match the following : (1) Under subscription — (i) Amount prepaid for calls (2) Over subscription — (ii) Subscription above the offered shar…Preview
  4. Q4Sara Company issues 10,000 equity shares of ₹ 10 at a premium of ₹ 2 each payable fully on application. Pass journal entries.Preview
  5. Q5Aruna Mills Ltd. with a registered capital of ₹ 5,00,000 in equity shares of ₹ 10 each, issued 40,000 of such shares payable as follows : ₹…Preview
  6. Q6(a) Nivetha Ltd. forfeited 1000 equity shares of ₹ 10 each for non payment of call of ₹ 4 per share. Of these, 800 shares were re-issued @ ₹…Preview
  7. Q7Which of the following statement is false ? (a) Reserve capital can be called at the time of winding up. (b) Issued capital can never be mor…Preview
  8. Q8That part of share capital which can be called up only on the winding up of a company is called : (a) Capital reserve (b) Authorised capital…Preview
  9. Q9The amount received over and above the par value is credited to ________. (a) Share capital account (b) Securities premium account (c) Forfe…Preview
  10. Q10Abdul Ltd, issues 50,000 equity shares of ₹ 10 each payable fully on application. Pass journal entries if shares are issued at a premium of…Preview
  11. Q11Rajan Ltd. purchased machinery of ₹ 6,00,000 from Jagan Traders. It issued equity shares of ₹ 10 each fully paid in satisfaction of their cl…Preview
  12. Q12After the Forfeited shares are Reissued, the balance in the Forfeited shares account should be transferred to : (a) Securities Premium accou…Preview
  13. Q13What is over-subscription ?Preview
  14. Q14Write a brief note on calls in advance.Preview
  15. Q15(a) Progress Ltd., issued 30,000 ordinary shares of ₹ 10 each, payable ₹ 2 on application, ₹ 4 on allotment, ₹ 2 on first call and ₹ 2 on se…Preview
  16. Q16The amount received over and above the par value is credited to : (a) Share capital account (b) Securities premium account (c) Forfeited sha…Preview
  17. Q17That part of share capital which can be called up only on the winding up of a company is called as : (a) Capital Reserve (b) Authorised capi…Preview
  18. Q18Why are the shares forfeited ?Preview
  19. Q19State the differences between Preference shares and Equity shares.Preview
  20. Q20When shares are issued for purchase of assets, the amount should be credited to : (a) Vendor's A/c (b) Sundry Assets A/c (c) Share Capital A…Preview
  21. Q21At the time of forfeiture, share capital account is debited with : (a) Called up amount (b) Face value (c) Paid up amount (d) Nominal valuePreview
  22. Q22What is Over Subscription ?Preview
  23. Q23Nivetha Ltd., forfeited 100 shares of ₹ 10 each, ₹ 8 called up, on which Mayuri had paid application and allotment money of ₹ 6 per share. O…Preview
  24. Q24(a) Vairam Ltd. purchased furniture worth of ₹ 5,50,000 from Ravi Furniture Ltd. It issued equity shares of ₹ 10 each fully paid in satisfac…Preview
  25. Q25The amount received over and above the par value is credited to : (a) Share capital account (b) Securities premium account (c) Forfeited sha…Preview
  26. Q26If a share of ₹ 10 on which ₹ 8 has been paid up is forfeited, Minimum reissue price is : (a) ₹ 5 per share (b) ₹ 10 per share (c) ₹ 2 per s…Preview
  27. Q27Why are the shares forfeited ?Preview
  28. Q28Write a brief note on calls in advance.Preview

More questions

+Show 12 questions12 questions
  1. Q1Explain the different kinds of share capital of a company, with their meaning.Free
  2. Q2XYZ Ltd. issued 20,000 equity shares of ₹10 each at a premium of ₹2 per share, payable as ₹3 on application, ₹5 (including premium) on allot…Free
  3. Q3Distinguish between Equity Shares and Preference Shares.Free
  4. Q4ABC Ltd. purchased a running business from Mehta Bros. for ₹4,50,000, payable by the issue of fully paid equity shares of ₹10 each at a prem…Preview
  5. Q5A Ltd. forfeited 500 equity shares of ₹10 each, fully called-up, for non-payment of the allotment money of ₹3 per share and the first and fi…Preview
  6. Q6What happens to the balance remaining in the Share Forfeited Account after the forfeited shares have been reissued? Illustrate using Questio…Preview
  7. Q7Pass journal entries for the issue of 5,000, 9% Debentures of ₹100 each by A Ltd., assuming (a) they are issued at par, (b) they are issued…Preview
  8. Q8Distinguish between Shares and Debentures.Preview
  9. Q9A company obtained a loan of ₹2,00,000 from a bank and issued, as collateral security, 2,500, 9% Debentures of ₹100 each. Show how this tran…Preview
  10. Q10A Ltd. has 5,000, 9% Debentures of ₹100 each outstanding throughout the year. Interest is payable half-yearly on 30th September and 31st Mar…Preview
  11. Q11State the different methods by which a company may redeem its debentures.Preview
  12. Q12A Ltd. decided to redeem its 2,000, 8% Debentures of ₹100 each, at a premium of 5%, out of profits. Before redemption, an equal nominal amou…Preview