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When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?
- a)Subscribed and fully paid up
- b)Subscribed but not fully paid up
- c)Subscribed and called up
- d)Subscribed but not called up
Correct answer is option 'A'. Can you explain this answer?
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When full nominal (face) value of a share is called by the company, bu...
Share Capital in Balance Sheet
Share capital is an important component of a company's balance sheet. It represents the amount of money raised by a company through the issuance of shares to investors. When a company issues shares, it is essentially selling ownership in the company to investors. The share capital is typically divided into two parts: subscribed capital and paid-up capital.
Subscribed Capital
Subscribed capital represents the total amount of capital that investors have agreed to subscribe to. It is the amount of money that the company is authorized to raise through the issuance of shares. Subscribed capital is further divided into two parts: called-up capital and uncalled capital.
Called-up Capital
Called-up capital is the portion of the subscribed capital that has been called up by the company for payment by the shareholders. When a company issues shares, it typically calls up only a portion of the subscribed capital, and this is the amount that the shareholders are required to pay.
Paid-up Capital
Paid-up capital represents the portion of the called-up capital that has been paid by the shareholders. When shareholders pay the amount due on their shares, the company records this as paid-up capital.
Forfeited Shares
When a shareholder fails to pay the amount due on their shares, the company may forfeit the shares. Forfeited shares are cancelled and the shareholder loses any rights and interests in the company. The company can then reissue the forfeited shares to new investors.
Effect on Balance Sheet
When forfeited shares are cancelled, the share capital of the company is reduced. This reduction is reflected in the balance sheet under the subscribed and fully paid-up capital section. The amount of the reduction is equal to the nominal value of the forfeited shares. This is because the company has received the face value of the forfeited shares, but has cancelled them and not reissued them. Therefore, the share capital is reduced by the amount of the forfeited shares.
Share capital is an important component of a company's balance sheet. It represents the amount of money raised by a company through the issuance of shares to investors. When a company issues shares, it is essentially selling ownership in the company to investors. The share capital is typically divided into two parts: subscribed capital and paid-up capital.
Subscribed Capital
Subscribed capital represents the total amount of capital that investors have agreed to subscribe to. It is the amount of money that the company is authorized to raise through the issuance of shares. Subscribed capital is further divided into two parts: called-up capital and uncalled capital.
Called-up Capital
Called-up capital is the portion of the subscribed capital that has been called up by the company for payment by the shareholders. When a company issues shares, it typically calls up only a portion of the subscribed capital, and this is the amount that the shareholders are required to pay.
Paid-up Capital
Paid-up capital represents the portion of the called-up capital that has been paid by the shareholders. When shareholders pay the amount due on their shares, the company records this as paid-up capital.
Forfeited Shares
When a shareholder fails to pay the amount due on their shares, the company may forfeit the shares. Forfeited shares are cancelled and the shareholder loses any rights and interests in the company. The company can then reissue the forfeited shares to new investors.
Effect on Balance Sheet
When forfeited shares are cancelled, the share capital of the company is reduced. This reduction is reflected in the balance sheet under the subscribed and fully paid-up capital section. The amount of the reduction is equal to the nominal value of the forfeited shares. This is because the company has received the face value of the forfeited shares, but has cancelled them and not reissued them. Therefore, the share capital is reduced by the amount of the forfeited shares.
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When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer?
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When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer?.
When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer?.
Solutions for When full nominal (face) value of a share is called by the company, but as some shareholders did not pay the money on due date, their shares are being forfeited by the company. How the share capital is shown in the balance sheet (notes to accounts) of a company?a)Subscribed and fully paid upb)Subscribed but not fully paid upc)Subscribed and called upd)Subscribed but not called upCorrect answer is option 'A'. Can you explain this answer? in English & in Hindi are available as part of our courses for Class 12.
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