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CBSE Class 12 — Notes, Chapters & Practice Quizzes

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Accountancy · 10 chapters
Summary, key terms, extra questions with answers and a practice quiz with AI diagnosis for each.

Chapter 1: Accounting for Share Capital Class 12 Accountancy — summary, notes, extra questions & MCQ quiz

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A company is best described as:

Summary

A company is an artificial person created by law, having a separate legal entity distinct from its members and a common seal, governed by the Companies Act 2013. Its capital is contributed by a large number of shareholders, who elect a Board of Directors to manage the company. A company raises capital mainly by issuing shares (share capital) and debentures (debt capital). Share capital is classified into authorised, issued, subscribed, called-up and paid-up capital, and companies issue mainly equity shares and preference shares. Shares may be issued for cash or for consideration other than cash, and at par or at a premium; the securities premium can be used only for purposes specified in the Act. The chapter explains the accounting for the receipt of application, allotment and call money, including the situations of oversubscription (where applications exceed shares offered) and undersubscription. It also covers calls-in-arrears, where a shareholder fails to pay a call, and calls-in-advance, where money is paid before a call is made. When shares are not paid for, the company may forfeit them, cancelling the membership and seizing the amount already paid; forfeited shares can later be reissued, often at a discount, with any surplus on the forfeited-shares account transferred to capital reserve.

Nature of a company and kinds of share capitalTypes of shares and issue at par or premiumAccounting for application, allotment and callsOversubscription, calls-in-arrears and calls-in-advanceForfeiture and reissue of shares

Key terms

Company
An artificial person created by law, having a separate legal entity, perpetual succession and a common seal, registered under the Companies Act 2013.
Share
A unit into which the share capital of a company is divided, representing part-ownership in the company.
Securities Premium
The amount received on a share over and above its face value, usable only for purposes specified in the Companies Act.
Calls-in-Arrears
The portion of called-up amount that a shareholder has failed to pay on the due date.
Forfeiture of Shares
The cancellation of shares and seizure of amounts already paid when a shareholder fails to pay the allotment or call money.
Reissue of Forfeited Shares
The re-allotment of previously forfeited shares, usually at a discount, with any surplus transferred to capital reserve.

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An artificial person created by law, having a separate legal entity, perpetual succession and a common seal, registered under the Companies Act 2013.
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Practice quiz · Accounting for Share Capital

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Accounting for Share Capital

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Accountancy, Business Studies, Economics + EnglishEvery subject, one purchase
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AccountancyRevise all of it in about an hour
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