Issue of prospectus, receiving applications, allotment of shares are three basic steps of the procedure of issuing the shares. Minimum subscription a public limited company cannot make any allotment of share unless the amount of. Ideal cpt accounts issue, forfeiture and reissue of shares 207 calculation of profit on reissue of forfeited shares. Corporate accounting manonmaniam sundaranar university. Pdf this case was developed for learning the accounting concepts. A limited company issued 25,000 ordinary shares of rs.
It is the maximum amount of capital a company can issue. Define shares explain the different types of shares in. May 02, 2016 shares issued for consideration other than cash sometimes a company purchases some assets from the vendor and instead of paying the vendor in cash, the company may decide to issue shares to vendors is known as issue of shares for consideration other than cash shares can be issued to vendors at par, premium. The companies share capital and debentures rules, 2014 hereinafter referred to as rules provide that no company whether it is unlisted, listed or a public company limited by shares shall issue equity shares with differential rights as to dividend, voting or otherwise, unless it. Company accounts redemption of debentures that includes 7 video lectures, soft copy of study material, quick revision notes, free doubt session and many more. Employees stock option plan is the right granted to the employees of the company to purchases thew shares lower than the market prices. Issue of ordinary shares is accounted for by allocating the proceeds between the following accounts. Cbse class 12th company account issue of debentures q. Cbse class 12 accountancy accounting for share capital.
The issue of the shares at a discount must be authorized by resolution passed in the general meeting of the company and must be sanctioned by the authority. Accounting for share capital class 12 notes accountancy. The students should practice these question papers to gain perfection which will help him to get more marks. The following are some of the differences between equity shares and debentures. Important questions for cbse class 12 accountancy accounting. Accounts of banking, electricity and insurance company 82 92 5.
Mcq on issue of share and share capital 2020 marginal costing formulas. Forfetire and reissue of shares 11 against the entire issue including devolvement on underwriters in case of underwritten issue before making any allotment of shares or debentures to the public. It shall be lawful for a company to issue shares at a discount, provided that. In order to compensate the investors, such debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest. This document is highly rated by commerce students and has been viewed 21765 times.
In this way, shareholders will get additional shares without making any further payment. The companies share capital and debentures rules, 2014. Jul 01, 2019 ts grewal accountancy class 12 solutions chapter 9 issue of debentures. Mar 11, 2019 company accounts redemption of debentures class 12 notes accountancy in pdf are available for free download in mycbseguide mobile app. Application money cannot be less than 5% of the face value of shares. Holders of preference shares will have a right to vote if the dividend remains in arrears for a. It is incorporeal in nature and it consists merely of a bundle of rights and obligations. Types of share capital, issue of shares, under and over subscription of shares, forfeiture of shares. In this article we will discuss about the accounting entries for issue of debentures. This issue of debentures that happens can be of three kinds, just like an issue of shares, at par, at a discount, and at a premium. Jun 27, 2017 ts grewal solutions for class 12 accountancy company account redemption of debenture volume ii question 1. Meaning of issue of debentures expenses on issue of debentures account debenture redemption reserve issue of debentures as.
Equity share and preference share kinds of company. Final accounts of companies including managerial remuneration, disposal of profits and issue of bonus shares. This chapter deals with the accounting for share capital of companies. Jul 01, 2019 a issue 47, 500 equity shares at a premium of. Mar 27, 2020 chapter issue of share, important questions, accountancy, class 12 edurev notes is made by best teachers of commerce. 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. The cost of debt is lower than the cost of equity or preference shares as. Shares may be further subdivided into different types, as follows. A company cannot allot shares unless minimum subscription is received by the company. Company accounts section 284 of the companies act, 20 defines share as a share in the share capital of a company and it includes stock. A debenture is a written acknowledgment of a debt taken by the company as these are issues under the seal of the company. The interest paid to them is a charge against profit in the company s financial statements. A company can issue share at a discount if a one year have been elapsed since the date at which the company was allowed to commence business b sweat equity shares issued at a discount must belong to a class of shares already issued.
The certificate of incorporation of a company is issued by registrar of. Shares issued for consideration other than cash sometimes a company purchases some assets from the vendor and instead of paying the vendor in cash, the company may decide to issue shares to vendors is known as issue of shares for consideration other than cash shares can be issued to vendors at par, premium. The amount due on debentures may be paid in installments, such as, application, allotment and calls. There are basically two types of shares equity and preferential. Dec 07, 2019 accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares.
Accounting for share capit al share and share capital. Debentures shares equity shares sec 42, 62 preference shares sec 42, 55 debentures. For example, the issue of rs 100 debentures at rs 95, rs 5 being the amount of discount. Share capital and debentures cover institute of company. 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 important questions for cbse class 12 accountancy accounting treatment of issue shares 1. Issue of shares by cacma santosh kumar download chapter pdf. Let us see the two types of shares of a company and the procedure for issue of shares that a company must follow. 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. Ts grewal solutions for class 12 accountancy company. Issue and redemption of debentures important questions for cbse class 12 accountancy introduction, issue of debentures and various cases from the point of view of redemption 1.
The amount of capital that a company can issue at par value is called a authorised capital b share premium c issued capital d fixed capital 2. Thus, a company means an association of persons formed for some common purpose or object. The issue of bonus shares in payment of dividend is called capitalization of undistributed profit. Meaning of company and features the word company is derived from two latin words com and panis, where com means together and panis means bread. The issue of shares is done by the company to raise capital. How much amount of debenture redemption reserve is to be created before redemption of. When a company desires to borrow a considerable sum of money for its expansion, it invites the general public to subscribe to its debentures.
The companies share capital and debentures rules, 2014 hereinafter referred to as rules provide that no company whether it is unlisted, listed or a public company limited by shares shall issue equity shares with differential rights as to dividend, voting or otherwise, unless it complies with the following conditions. Chapter issue of share, important questions, accountancy. These include the meaning, formation and types of companies, accounting for issue and redemption of shares and debentures and preparation of companys. Cumulative preference shares are similar to preference shares, but if in any one year, because of the circumstances described above, the dividend is not paid it accumulates and is carried forward until such time as there are sufficient profits to cover both current dividends on the shares and the arrears. The persons who contribute money through shares are called shareholders. Guru, you can access to ts grewal book solutions in free pdf for accountancy for class 12 so that you can refer them as and when required.
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 par. You may define shares as a smaller part of capital that is known as share and a person, who owes shares is known as the shareholder. Difference between shares and debentures with similarities. Different types of shares and debentures by lawfarm team march 19, 2018 capital is needed by the companies, both private and public to increase their productivity or market reach or to purchase latest modern equipment and machines. Duties of company with respect to issue of certificates. According to section 230 of the companies act 20 debentures includes debenture stock, bonds and any other securities of the company whether. The term debenture is more descriptive than definitive.
Securities premium account is shown on the liabilities side of the balance sheet under the head. Such shares are transferable by its members except in case of a private limited company, which may have certain restrictions on such transferability. Company accounts redemption of debentures class 12 notes accountancy. Shares, refer to the units into which the total share capital of a company is divided. Business purchase and underwriting, profit prior and post incorporation. So let us take a look at all three and their respective accounting entries as well. The capital is contributed by the shareholders through the subscription of shares. Public applied for 4,50,000 shares and allotment was made to. Debentures in the general course of business are issued for cash. Accounting for share capital transactions issue of shares at par, at premium and at discount.
Company debenture is one of the important sources of finance for large companies, in addition to equity stocks, bank loans, and bonds. Mar 12, 2020 preference shares and debentures are two different types of financial instruments. The excess amount received over the face value is called share premium. Capital raised by issue of shares is called share capital. Ordinary share capital represents equity of a company and therefore its issuance is recorded as part of the equity reserves in the balance sheet. The company decided to issue 1,000, 6% debentures of. Visit a company and preparation of informative report on. A limited company may raise finance either by issuing shares or by raising loans.
The accounting entry for the issuance of bonus shares. According to section 86 of the companies act, a company can issue only two types of shares viz. For starting a large scale organization there is a need for huge amounts of capital. Nov 19, 2018 difference between shares and debentures last updated on november 19, 2018 by surbhi s nowadays, investment in shares and debentures has taken a dominant position in the society, as people of different ages, religion, sex, and race invest their hard earned money, with an aim of getting better returns. Company accounts redemption of debentures class 12 notes. Debentures are transferable from investor to investor. Pdf corporate accounting i kabir tahir hamid academia. Ts grewal accountancy class 12 solutions chapter 9 issue.
Meaning of debenture it means a document of companies indebtedness issued under the seal of the company and containing a contract for the repayment of the principal sum at. Companies need to follow certain procedures for issue of debentures to raise money. These debentures do not carry a specific rate of interest. Difference between shares and debentures last updated on november 19, 2018 by surbhi s nowadays, investment in shares and debentures has taken a dominant position in the society, as people of different ages, religion, sex, and race invest their. Every business requires capital for starting a business. General provisions as to contents and form of accounts. Cbse quick revision note for class12 chemistry physics maths, accountancy and other subject are very helpful to revise the whole syllabus during exam days. Accounting for debentures class 12 notes accountancy. Company accounts 70 marks lesson 1 share capital kinds of share capital 2 issue of shares 3 issue of shares at par 3 issue of shares at premium 6 issue of shares at discount 7 undersubscription of shares 7 oversubscription of shares 7 forfeiture of shares 10 re issue of forfeited shares 12.
Company accounts and analysis of financial statements. Ts grewal accountancy class 12 solutions chapter 9 issue of. Jun 03, 2019 accounting for share capital cbse notes for class 12 accountancy. Such commodities are not brought in to existence by legislation but a share in a company belongs to a totally different category of property. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. Credit balance of forfeited shares cannot be considered a surplus until the shares forfeited have been re issued, dr. Debentures are backed only by the general creditworthiness and reputation of the issuer. Ts grewal accountancy class 12 solutions chapter 10.
Company accounts redemption of debentures 12th accounts. Problem 1 issue of shares at parjournal, cash book and balance sheet. Corporate accounting 9 issue of shares at premium shares are said to be issued at premium when a shareholder is required to pay more than the face value to the company. One person company, private company, public company. Cbse class 12 accounting for share capital class 12 notes accountancy in pdf are available for free download in mycbseguide mobile app. Accounting for share capital 1 national council of. We may also define shares as one of the units in the company into which the total capital of the company is divided. Ordinary shares are also known as common stock and equity shares.
Cbse class 12 accountancy hots company accounts share. The issue procedure with regard to debentures is the same as that of shares. Aug 31, 2017 the first chapter in company accounts the issue of shares with introduction and understanding of shares and also an introduction to escrow account. Cash loaned to a company is called a dividends b debentures c shares d reserves 3. Thus, a share is a fractional part of the share capital and forms the basis of ownership interest in a company. Issue of debentures accounting treatment and procedures. Company accounts and analysis of financial statements 2. A company usually raises its capital in the form of shares called share capital and debentures debt capital. Transfer of shares and debentures, evidence of titles, etc.
The process of creating new shares is known as allocation or allotment. Preference sharesalso referred to as preferred sharesare an equity instrument known for giving owners. Redumption of preference shares 4 provisions of the companies act section 80 a company limited by shares if so authorised by its articles, may issue preference shares which at the option of the company, are liable to be. Accounting for share capital cbse notes for class 12. Download cbse class 12 accountancy hots company accounts share capital, cbse accountancy hots questions database with answers please refer to other links for answers to hots questions for class 12 of cbse exams for cbse students. Visit a company and preparation of an informative report on the procedure of issue of shares or debentures. Ts grewal solutions for class 12 accountancy company account accounting for share capital volume ii question 1. Jun 02, 2014 basics of company accounts and issue of shares 1. After evaluating these alternatives, the company decided to issue 1,00,000, 9% debentures on 1st april, 2008. Ts grewal accountancy class 12 solutions chapter 9 issue of debentures. The shares thus, issued, are known as bonus shares. Issue and redemption of debentures 77 b zero coupon rate debentures. Issue of shares equity shares and preference shares.
The ts grewal solutions to the questions after every unit of ts grewal textbooks aimed at helping students solving difficult questions. In case of company money is contributed by public and people who contributed money are called shareholders. In this article we will discuss about the issue of debentures. The revision notes covers all important formulas and concepts given in the chapter. A debenture is a type of debt instrument that is not secured by physical assets or collateral. 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.
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