Accounting for Shares and Debentures

Topics: Stock, Stock market, Shareholder Pages: 152 (29716 words) Published: June 24, 2012
|Company Accounts | |Accounting for Share Capital 1 | |  | |  | | |  |Syllabus | |  |Ø      Share capital: Meaning, nature and types | |Shares and Share |Ø      Accounting for share capital: issue and allotment of equity and preference shares, private placement of | |Capital |shares, meaning of employee stock option plan, public subscription of shares; over subscription and under | |Types of share |subscription; issue at par, premium and at discount; calls in advance, calls in arrears, issue of shares for | |capital |consideration other than cash | |Accounting for |Ø      Forfeiture of shares: accounting treatment, re-issue of forfeited shares | |share capit |Ø      Presentation of Share Capital and Debenture in company’s Balance Sheet    | |Authorized capital|  | |Issued capital |Joint Stock Company is the most practical form of organization for large scale business. In India the Indian | |Subscribed capital|Companies Act of 1956 governs joint stock companies. The capital of the company is divided into shares and the | |Called up capital |owners hold shares of capital. They are therefore known as shareholders of the company. | |Paid up capital |Share and Share Capital: Meaning, Nature and Types | |Reserve capital |The most striking feature of a joint stock company is its ownership structure. The capital of a joint stock | |  |company is divided into small shares of fixed value. This facilitates easy investment and easy transfer. | | |Shareholders do not directly mange the company. They elect directors who carry out management. The shareholders| | |have the safety of limited liability. In the event of extreme loss or liquidation with excessive outside | | |liability, the non invested wealth of a shareholder is not affected. The face value of the shares held by a | | |person is the maximum amount that he can lose in a joint stock company. If the shares are fully paid up he need| | |not pay anything further even if the company is liquidated with heavy unsettled claims. If the shares held are | | |partly paid up, a shareholder might be asked to pay the unpaid portion of the shares. | | |  | | |Shares can be sold and purchased through the stock exchange. By purchasing shares a person gets part ownership | | |of the business. A share holder does not attain an automatic right to manage the company. Directors are the | | |people who manage the business. They are elected by shareholders. Thus a shareholder can vote to elect | | |directors. He can also contest in the election to become director. | |...
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