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Mind Map: Accounting for Share Capital | Accountancy Class 12 - Commerce PDF Download
The document Mind Map: Accounting for Share Capital | Accountancy Class 12 - Commerce is a part of the Commerce Course Accountancy Class 12.
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FAQs on Mind Map: Accounting for Share Capital - Accountancy Class 12 - Commerce
| 1. What is share capital in accounting? |  |
Ans.Share capital refers to the funds raised by a company in exchange for shares of stock. It represents the ownership interest of shareholders in a company and can be classified into various types such as authorized, issued, and paid-up capital.
| 2. How is share capital recorded in financial statements? | |
Ans.Share capital is recorded in the equity section of the balance sheet. It is typically divided into different categories based on the types of shares issued, such as common shares and preferred shares, along with the corresponding amounts.
| 3. What are the different types of share capital? | |
Ans.The primary types of share capital include:
1. Authorized Capital: The maximum amount of share capital that a company is authorized to issue.
2. Issued Capital: The portion of authorized capital that has been issued to shareholders.
3. Paid-Up Capital: The amount of money that shareholders have actually paid for the shares they own.
| 4. Why is share capital important for a company? | |
Ans.Share capital is crucial as it provides the necessary funds for a company to operate and grow. It also serves as a buffer against losses and helps in establishing the company's creditworthiness, making it easier to raise further funds in the future.
| 5. Can a company change its share capital? | |
Ans.Yes, a company can change its share capital through processes such as issuing new shares, reducing share capital, or consolidating shares. However, such changes usually require approval from shareholders and must comply with legal regulations.
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May 21, 2025
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Document Description: Mind Map: Accounting for Share Capital for Commerce 2025 is part of Accountancy Class 12 preparation.
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