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Under which head the balance of share forfeiture account is shown in the balance sheet?
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Under which head the balance of share forfeiture account is shown in t...
**Balance of Share Forfeiture Account in the Balance Sheet**

The balance of the share forfeiture account is shown in the balance sheet under the heading of "Reserves and Surplus" or "Other Reserves." This is because the share forfeiture account represents an amount of money that has been forfeited by shareholders who failed to pay for their subscribed shares in full. It is a form of reserve or surplus that is created to account for the forfeited shares.

Here is a detailed explanation of how the balance of the share forfeiture account is reflected in the balance sheet:

**1. Share Forfeiture Account**
- The share forfeiture account is a nominal account that is created to record the amount of money received from shareholders as the initial payment for their shares, which has subsequently been forfeited due to non-payment of the remaining amount.
- It is created by debiting the shareholder's account and crediting the share forfeiture account.

**2. Treatment in the Balance Sheet**
- The balance of the share forfeiture account represents the total amount of money forfeited from shareholders who failed to pay for their shares.
- It is shown on the liabilities side of the balance sheet under the heading of "Reserves and Surplus" or "Other Reserves" because it is a reserve created out of the forfeited shares.
- The balance of the share forfeiture account reduces the total equity or net worth of the company as it represents the loss of potential capital.

**3. Disclosure**
- The balance sheet provides a snapshot of a company's financial position at a specific point in time.
- The amount shown in the share forfeiture account should be disclosed separately in the notes to the balance sheet to provide clarity and transparency regarding the nature and origin of the reserve.
- The disclosure should include details such as the amount of forfeited shares, the number of shareholders involved, and any specific regulations or terms related to the forfeiture.

In conclusion, the balance of the share forfeiture account is shown in the balance sheet under the heading of "Reserves and Surplus" or "Other Reserves." It represents the amount of money forfeited from shareholders who failed to pay for their subscribed shares in full. Proper disclosure in the notes to the balance sheet is necessary to provide transparency and clarity regarding the nature and origin of the reserve.
Community Answer
Under which head the balance of share forfeiture account is shown in t...
Under liabilites side of balance sheet heading *share capital*
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Under which head the balance of share forfeiture account is shown in the balance sheet?
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