NCERT Class 12 Accountancy Accounting for Share Capital

Read and download NCERT Class 12 Accountancy Accounting for Share Capital in NCERT book for Class 12 Accountancy. You can download latest NCERT eBooks chapter wise in PDF format free from Studiestoday.com. This Accountancy textbook for Class 12 is designed by NCERT and is very useful for students. Please also refer to the NCERT solutions for Class 12 Accountancy to understand the answers of the exercise questions given at the end of this chapter

NCERT Book for Class 12 Accountancy Part 2 Chapter 1 Accounting for Share Capital

Class 12 Accountancy students should refer to the following NCERT Book Part 2 Chapter 1 Accounting for Share Capital in Class 12. This NCERT Book for Class 12 Accountancy will be very useful for exams and help you to score good marks

Part 2 Chapter 1 Accounting for Share Capital NCERT Book Class 12

 

Accounting for Share Capital

A company form of organisation is the third stage in the evolution of forms of organisation. Its capital is contributed by a large number of persons called shareholders who are the real owners of the company. But neither it is possible for all of them to participate in the management of the company nor considered desirable. Therefore, they elect a Board of Directors as their representative to manage the affairs of the company. In fact, all the affairs of the company are governed by the provisions of the Companies Act, 1956. A company means a company incorporated or registered under the Companies Act, 1956 or under any other earlier Companies Acts.

According to Chief Justice Marshal, “a company is a person, artificial, invisible, intangible and existing only in the eyes of law. Being a mere creation of law, it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence”.A company usually raises its capital in the form of shares (called share capital) and debentures (debt capital.) This chapter deals with the accounting for share capital of companies.

1.1 Features of a Company

A company may be viewed as an association of person who contribute money or money’s worth to a common stock and use it for a common purpose. It is an artificial person having or corporate legal entity distinct from its members (shareholders) and has a common seal used for its signature. Thus, it has certain special features which distinguish it from the other forms of organisation. These are as follows:

1 Voluntary Association: persons who are willing to form a company can come together voluntarily for carrying on a business. Therefore, it is regarded as a voluntary association of persons.

2 Separate Legal Entity: A company has a separate legal entity which is distinct and separate from its members. It can hold and deal with any type of property. It can enter into contracts and even open a bank account in its own name. It can sue others as well as be sued by others.

3 Limited Liability: The liability of the members of the company is limited to the unpaid amount of the shares held by them. In the case of the companies limited by guarantee, the liability of its members is limited to the extent of the guarantee given by them in the event of the company being wound up.

4 Perpetual Succession: The company being an artificial person created by law continues to exist irrespactive of the changes in its membership. A company can be terminated only through law. The death or insanity or insolvency of any member of the company in no way affects the existence of the company. Members may come and go but the company continues.

5 Common Seal: The company being an artificial person, cannot sign its name by it self. Therefore, every company is required to have its own seal which acts as an official signatures of the company. Any document which does not carry the common seal of the company is not binding on the company.

6 Transferability of Shares: The shares of a public limited company are freely transferable. The permission of the company or the consent of any  member of the company is not necessary for the transfer of shares. Butthe Articles of the company can prescribe the manner in which the transfer of shares will be made.

7 May Sue or be Sued: A company being a legal person can enter intocontracts and can enforce the contractual rights against others. It can sue and be sued in its name if there is a breach of contract by the company.

1.2 Kinds of a Company

Companies can be classified either on the basis of the liability of its members or on the basis of the number of members. On the basis of liability of its members the companies can be classified into the following three categories:

(i) Companies Limited by Shares: In this case, the liability of its members is limited to the extent of the nominal value of shares held by them. If a member has paid the full amount of the shares, there is no liability on single paise from his private property. However, if there is any liability involved, it can be enforced during the existence of the company as wellas during the winding-up.

(ii) Companies Limited by Guarantee: In this case, the liability of its members is limited to the amount they undertake to contribute in the event of the company being wound up. Thus, the liability of the members will arise only in the event of its winding up.

(iii) Unlimited Companies: When there is no limit on the liability of its members, the company is called an unlimited company. When the company’s property is not sufficient to pay off its debts, the private  property of its members can be used for the purpose. In other words, thecreditors can claim their dues from its members. Such companies are not found in India even though permitted by the Companies Act, 1956. On the basis of the number of members, a company can be divided into two categories as follows:

(i) Public Company: A public company means a company which (a) is not a private company, (b) has minimum capital of Rs. 5 lakh on such higher paid-up capital may be prescribed, and (c) is a private company which is a subsidiary of which is not a private company. Private Company: A private company is one which has a minimum paid up capital of Rs. 1 Lakh or such higher paid-up capital as may be prescribed by its Articles :

(a) restricts the right to transfer its shares;

(b) limits the number of its members to fifty (excluding its employees);

(c) prohibits any invitation to the public to subscribe for any shares in or debentures of the company.

(d) prohihibits any invitation or acceptance of deposits from person other than its members, directors, and relatives.

Question for Practice

Short Answer Questions

1. What is public company?

2. What is private limited company.

3. Define Government Company?

4. What do you mean by a listed company?

5. What are the uses of securities premium?

6. What is buy-back of shares?

7. Write a brief note on ‘Minimum Subscription”.

Long Answer Questions

1. What is meant by the word ‘Company’? Describe its characteristics.

2. Explain in brief the main categories in which the share capital of a company is divided.

3. What do you mean by the term ‘share’? Discuss the type of shares, which can be issued under the Companies Act, 1956 as amended to date.

4. Discuss the process for the allotment of shares of a company in case of over subscription.

5. What is a ‘Preference Share’? Describe the different types of preference shares.

6. Describe the provisions of law relating to ‘Calls-in-Arrears’ and ‘Calls-in- Advance’.

7. Explain the terms ‘Over-subscription’ and ‘Under-subscription’. How are they dealt with in accounting records?

8. Describe the purposes for which a company can use ‘Securities Premium Account’.

9. State clearly the conditions under which a company can issue shares at a discount.

10. Explain the term ‘Forfeiture of Shares’ and give the accounting treatment on forfeiture.


Please refer to attached file for NCERT Class 12 Accountancy Accounting for Share Capital

Computerised Accounting System Chapter 01 Overview Of Computerised Accounting System
NCERT Class 12 Accountancy Computerised Accounting System Overview
Computerised Accounting System Chapter 02 Spreadsheet
NCERT Class 12 Accountancy Computerised Accounting Spreadsheet
Computerised Accounting System Chapter 03 Use Of Spreadsheet In Business Applications
NCERT Class 12 Accountancy Computerised Accounting Use Of Spreadsheet In Business Applications
Computerised Accounting System Chapter 04 Graphs and Charts For Business Data
NCERT Class 12 Accountancy Computerised Accounting Graphs and Charts For Business Data
Computerised Accounting System Chapter 05 Data Base Management System For Accounting
NCERT Class 12 Accountancy Computerised Accounting Spreadsheet Data Base Management System
Part 1 Chapter 01 Accounting for Not for Profit Organisation
NCERT Class 12 Accountancy Accounting For Not for Profit Organisation
Part 1 Chapter 02 Accounting for Partnership Basic Concepts
NCERT Class 12 Accountancy Accounting for Partnership Basic Concepts
Part 1 Chapter 03 Reconstitution of a Partnership Firm Admission of a Partner
NCERT Class 12 Accountancy Reconstitution of a Partnership Firm Admission of a Partner
Part 1 Chapter 04 Reconstitution of a Partnership Firm Retirement/Death of a Partner
NCERT Class 12 Accountancy Reconstitution of a Partnership Firm Retirement Death of a Partner
Part 1 Chapter 05 Dissolution of Partnership Firm
NCERT Class 12 Accountancy Dissolution of Partnership Firm
Part 2 Chapter 01 Accounting for Share Capital
NCERT Class 12 Accountancy Accounting for Share Capital
Part 2 Chapter 02 Issue and Redemption of Debentures
NCERT Class 12 Accountancy Issue and Redemption of Debentures
Part 2 Chapter 03 Financial Statements Of a Company
NCERT Class 12 Accountancy Financial Statements of a Company
Part 2 Chapter 04 Analysis of Financial Statements
NCERT Class 12 Accountancy Part 1 Analysis of Financial Statements
Part 2 Chapter 05 Accounting Ratios
NCERT Class 12 Accountancy Accounting Ratios
Part 2 Chapter 06 Cash Flow Statement
NCERT Class 12 Accountancy Cash Flow Statement

Accountancy NCERT Book Class 12 Part 2 Chapter 1 Accounting for Share Capital

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