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When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________
- a)Paid-up capital of shares forfeited; Called up capital of shares forfeited
- b)Called up capital of shares forfeited; Calls in arrear of shares forfeited
- c)Called up capital of shares forfeited; Amount received on shares forfeited
- d)Calls in arrears of shares forfeited; Amount received on shares forfeited
Correct answer is option 'C'. Can you explain this answer?
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Most Upvoted Answer
When shares are forfeited, the share capital account is debited with__...
Explanation:
When shares are forfeited, there are two accounts that are affected: the share capital account and the share forfeiture account.
The share capital account represents the capital invested by the shareholders. It is a part of the company's equity and reflects the value of the shares issued.
The share forfeiture account is created to record the forfeiture of shares. Forfeiture occurs when a shareholder fails to pay the amount due on their shares and the company decides to cancel their shares.
To account for the forfeiture of shares, the following entries are made:
1. The share capital account is debited:
- The debited amount represents the called-up capital of the shares forfeited.
- This reduces the value of the share capital account, reflecting the cancellation of the forfeited shares.
2. The share forfeiture account is credited:
- The credited amount represents the amount received on the forfeited shares, which is typically less than the called-up capital.
- This account is used to record the forfeiture and any subsequent actions related to the forfeited shares.
Therefore, the correct answer is:
- The share capital account is debited with the called up capital of shares forfeited.
- The share forfeiture account is credited with the amount received on shares forfeited.
When shares are forfeited, there are two accounts that are affected: the share capital account and the share forfeiture account.
The share capital account represents the capital invested by the shareholders. It is a part of the company's equity and reflects the value of the shares issued.
The share forfeiture account is created to record the forfeiture of shares. Forfeiture occurs when a shareholder fails to pay the amount due on their shares and the company decides to cancel their shares.
To account for the forfeiture of shares, the following entries are made:
1. The share capital account is debited:
- The debited amount represents the called-up capital of the shares forfeited.
- This reduces the value of the share capital account, reflecting the cancellation of the forfeited shares.
2. The share forfeiture account is credited:
- The credited amount represents the amount received on the forfeited shares, which is typically less than the called-up capital.
- This account is used to record the forfeiture and any subsequent actions related to the forfeited shares.
Therefore, the correct answer is:
- The share capital account is debited with the called up capital of shares forfeited.
- The share forfeiture account is credited with the amount received on shares forfeited.
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Community Answer
When shares are forfeited, the share capital account is debited with__...
Explanation:
Debit to Share Capital Account:
- When shares are forfeited, the share capital account is debited with the called-up capital of shares forfeited. This is because the company no longer owes the shareholder the called-up amount on the forfeited shares.
Credit to Share Forfeiture Account:
- The share forfeiture account is credited with the amount received on shares forfeited. This is to record the amount received by the company from the forfeited shares, which can be used to offset any outstanding liabilities or expenses.
Therefore, the correct entries to make when shares are forfeited are:
- Debit to Share Capital Account (Called-up capital of shares forfeited)
- Credit to Share Forfeiture Account (Amount received on shares forfeited)
Debit to Share Capital Account:
- When shares are forfeited, the share capital account is debited with the called-up capital of shares forfeited. This is because the company no longer owes the shareholder the called-up amount on the forfeited shares.
Credit to Share Forfeiture Account:
- The share forfeiture account is credited with the amount received on shares forfeited. This is to record the amount received by the company from the forfeited shares, which can be used to offset any outstanding liabilities or expenses.
Therefore, the correct entries to make when shares are forfeited are:
- Debit to Share Capital Account (Called-up capital of shares forfeited)
- Credit to Share Forfeiture Account (Amount received on shares forfeited)
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When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer?
Question Description
When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer?.
When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer?.
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When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice When shares are forfeited, the share capital account is debited with______ and the share forfeiture account is credited with_________a)Paid-up capital of shares forfeited; Called up capital of shares forfeitedb)Called up capital of shares forfeited; Calls in arrear of shares forfeitedc)Called up capital of shares forfeited; Amount received on shares forfeitedd)Calls in arrears of shares forfeited; Amount received on shares forfeitedCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
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