Accounts of banking, electricity and insurance company 82 92 5. Nature and types a company is an artificial person created by law, having separate entity with a perpetual succession and a common seal. It is incorporeal in nature and it consists merely of a bundle of rights and obligations. According to section 86 of the companies act, a company can issue only two types of shares viz. Meaning of company and features the word company is derived from two latin words com and panis, where com means together and panis means bread. Jun 27, 2017 ts grewal solutions for class 12 accountancy company account redemption of debenture volume ii question 1. Accounting for share capital 1 national council of. The issue of bonus shares in payment of dividend is called capitalization of undistributed profit. Debentures shares equity shares sec 42, 62 preference shares sec 42, 55 debentures. Visit a company and preparation of informative report on. Such shares are transferable by its members except in case of a private limited company, which may have certain restrictions on such transferability. Meaning of issue of debentures expenses on issue of debentures account debenture redemption reserve issue of debentures as. Mar 11, 2019 company accounts redemption of debentures class 12 notes accountancy in pdf are available for free download in mycbseguide mobile app. Ts grewal accountancy class 12 solutions chapter 9 issue of debentures.
Ts grewal accountancy class 12 solutions chapter 9 issue. The issue of shares is done by the company to raise capital. For example, the issue of rs 100 debentures at rs 95, rs 5 being the amount of discount. Mar 12, 2020 preference shares and debentures are two different types of financial instruments. Cbse class 12th company account issue of debentures q. Companies need to follow certain procedures for issue of debentures to raise money. Credit balance of forfeited shares cannot be considered a surplus until the shares forfeited have been re issued, dr. These include the meaning, formation and types of companies, accounting for issue and redemption of shares and debentures and preparation of companys. Dec 07, 2019 accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares. Difference between shares and debentures last updated on november 19, 2018 by surbhi s nowadays, investment in shares and debentures has taken a dominant position in the society, as people of different ages, religion, sex, and race invest their.
Employees stock option plan is the right granted to the employees of the company to purchases thew shares lower than the market prices. Ordinary share capital represents equity of a company and therefore its issuance is recorded as part of the equity reserves in the balance sheet. Let us see the two types of shares of a company and the procedure for issue of shares that a company must follow. A debenture is a written acknowledgment of a debt taken by the company as these are issues under the seal of the company. Cumulative preference shares are similar to preference shares, but if in any one year, because of the circumstances described above, the dividend is not paid it accumulates and is carried forward until such time as there are sufficient profits to cover both current dividends on the shares and the arrears. Cbse class 12 accounting for share capital class 12 notes accountancy in pdf are available for free download in mycbseguide mobile app.
Company debenture is one of the important sources of finance for large companies, in addition to equity stocks, bank loans, and bonds. Here is a compilation of top six accounting problems on issue of shares with its relevant solutions. Issue of ordinary shares is accounted for by allocating the proceeds between the following accounts. Company accounts redemption of debentures class 12 notes.
Securities premium account is shown on the liabilities side of the balance sheet under the head. The best app for cbse students now provides accounting for partnership firms fundamentals class 12 notes latest chapter wise notes for quick preparation of cbse board exams and schoolbased annual examinations. Company accounts and analysis of financial statements 2. You may define shares as a smaller part of capital that is known as share and a person, who owes shares is known as the shareholder. Shares, refer to the units into which the total share capital of a company is divided. Problem 1 issue of shares at parjournal, cash book and balance sheet. Debentures are transferable from investor to investor. Accounting for share capital cbse notes for class 12. Duties of company with respect to issue of certificates. Pdf corporate accounting i kabir tahir hamid academia. Business purchase and underwriting, profit prior and post incorporation. Redumption of preference shares 4 provisions of the companies act section 80 a company limited by shares if so authorised by its articles, may issue preference shares which at the option of the company, are liable to be. In order to compensate the investors, such debentures are issued at substantial discount and the difference between the nominal value and the issue price is treated as the amount of interest.
The amount of capital that a company can issue at par value is called a authorised capital b share premium c issued capital d fixed capital 2. Issue and redemption of debentures 77 b zero coupon rate debentures. Company accounts redemption of debentures class 12 notes accountancy. Chapter issue of share, important questions, accountancy. When a company desires to borrow a considerable sum of money for its expansion, it invites the general public to subscribe to its debentures. Thus, a share is a fractional part of the share capital and forms the basis of ownership interest in a company.
Accounting for share capit al share and share capital. Visit a company and preparation of an informative report on the procedure of issue of shares or debentures. For starting a large scale organization there is a need for huge amounts of capital. Thus, a company means an association of persons formed for some common purpose or object. Accounting for debentures class 12 notes accountancy. The issue procedure with regard to debentures is the same as that of shares. So let us take a look at all three and their respective accounting entries as well. These debentures do not carry a specific rate of interest. The shares thus, issued, are known as bonus shares.
Accounting for share capital important questions for cbse class 12 accountancy accounting treatment of issue shares 1. Jun 02, 2014 basics of company accounts and issue of shares 1. The ts grewal solutions to the questions after every unit of ts grewal textbooks aimed at helping students solving difficult questions. Every business requires capital for starting a business. The term debenture is more descriptive than definitive. A company cannot allot shares unless minimum subscription is received by the company.
Company accounts section 284 of the companies act, 20 defines share as a share in the share capital of a company and it includes stock. Cbse class 12 accountancy hots company accounts share. Jun 03, 2019 accounting for share capital cbse notes for class 12 accountancy. Issue of shares by cacma santosh kumar download chapter pdf. A company can issue share at a discount if a one year have been elapsed since the date at which the company was allowed to commence business b sweat equity shares issued at a discount must belong to a class of shares already issued. In this article we will discuss about the accounting entries for issue of debentures. Mar 27, 2020 chapter issue of share, important questions, accountancy, class 12 edurev notes is made by best teachers of commerce. Final accounts of companies including managerial remuneration, disposal of profits and issue of bonus shares.
Terms of issue of shares i issue of shares at par when shares are issued at their face value, the shares are said to have been issued at par. General provisions as to contents and form of accounts. Equity share and preference share kinds of company. The persons who contribute money through shares are called shareholders. Such commodities are not brought in to existence by legislation but a share in a company belongs to a totally different category of property. Preference sharesalso referred to as preferred sharesare an equity instrument known for giving owners. How much amount of debenture redemption reserve is to be created before redemption of.
A limited company may raise finance either by issuing shares or by raising loans. Company accounts redemption of debentures 12th accounts. In this way, shareholders will get additional shares without making any further payment. Shares issued for consideration other than cash sometimes a company purchases some assets from the vendor and instead of paying the vendor in cash, the company may decide to issue shares to vendors is known as issue of shares for consideration other than cash shares can be issued to vendors at par, premium. Ts grewal accountancy class 12 solutions chapter 10. Debentures in the general course of business are issued for cash. Application money cannot be less than 5% of the face value of shares. Forfetire and reissue of shares 11 against the entire issue including devolvement on underwriters in case of underwritten issue before making any allotment of shares or debentures to the public. A company usually raises its capital in the form of shares called share capital and debentures debt capital. The cost of debt is lower than the cost of equity or preference shares as. Download cbse class 12 accountancy hots company accounts share capital, cbse accountancy hots questions database with answers please refer to other links for answers to hots questions for class 12 of cbse exams for cbse students. Jul 01, 2019 ts grewal accountancy class 12 solutions chapter 9 issue of debentures.
Share capital and debentures cover institute of company. The company decided to issue 1,000, 6% debentures of. The companies share capital and debentures rules, 2014. Ts grewal accountancy class 12 solutions chapter 9 issue of. Cbse quick revision note for class12 chemistry physics maths, accountancy and other subject are very helpful to revise the whole syllabus during exam days. A debenture is a type of debt instrument that is not secured by physical assets or collateral. For raising a capital company uses various sources of funds like share capital by issuing shares to public, debt capital by issuing debentures, term loans from banks, etc. The issue of the shares at a discount must be authorized by resolution passed in the general meeting of the company and must be sanctioned by the authority.
Shares may be further subdivided into different types, as follows. According to section 230 of the companies act 20 debentures includes debenture stock, bonds and any other securities of the company whether. Mcq on issue of share and share capital 2020 marginal costing formulas. Ts grewal solutions for class 12 accountancy company. One person company, private company, public company. Company accounts 70 marks lesson 1 share capital kinds of share capital 2 issue of shares 3 issue of shares at par 3 issue of shares at premium 6 issue of shares at discount 7 undersubscription of shares 7 oversubscription of shares 7 forfeiture of shares 10 re issue of forfeited shares 12. The accounting entry for the issuance of bonus shares. Define shares explain the different types of shares in. Company accounts and analysis of financial statements. The amount due on debentures may be paid in installments, such as, application, allotment and calls. The revision notes covers all important formulas and concepts given in the chapter. It shall be lawful for a company to issue shares at a discount, provided that. The companies share capital and debentures rules, 2014 hereinafter referred to as rules provide that no company whether it is unlisted, listed or a public company limited by shares shall issue equity shares with differential rights as to dividend, voting or otherwise, unless it. Mar 11, 2019 accounting for debentures class 12 notes accountancy in pdf are available for free download in mycbseguide mobile app.
Types of share capital, issue of shares, under and over subscription of shares, forfeiture of shares. Meaning of debenture it means a document of companies indebtedness issued under the seal of the company and containing a contract for the repayment of the principal sum at. Corporate accounting 9 issue of shares at premium shares are said to be issued at premium when a shareholder is required to pay more than the face value to the company. Cbse class 12 accountancy accounting for share capital. Debentures are backed only by the general creditworthiness and reputation of the issuer. In case of company money is contributed by public and people who contributed money are called shareholders. Pdf this case was developed for learning the accounting concepts. It is the maximum amount of capital a company can issue. Issue and redemption of debentures important questions for cbse class 12 accountancy introduction, issue of debentures and various cases from the point of view of redemption 1.
Company a joint stock company is an artificial person, created by law, having separate entity distinct from its members with a perpetual succession and a common seal. This document is highly rated by commerce students and has been viewed 21765 times. Aug 31, 2017 the first chapter in company accounts the issue of shares with introduction and understanding of shares and also an introduction to escrow account. Issue of debentures accounting treatment and procedures. Cash loaned to a company is called a dividends b debentures c shares d reserves 3. Transfer of shares and debentures, evidence of titles, etc. The companies share capital and debentures rules, 2014 hereinafter referred to as rules provide that no company whether it is unlisted, listed or a public company limited by shares shall issue equity shares with differential rights as to dividend, voting or otherwise, unless it complies with the following conditions. Issue of prospectus, receiving applications, allotment of shares are three basic steps of the procedure of issuing the shares. Important questions for cbse class 12 accountancy accounting. The excess amount received over the face value is called share premium.
Capital raised by issue of shares is called share capital. Company accounts redemption of debentures that includes 7 video lectures, soft copy of study material, quick revision notes, free doubt session and many more. Minimum subscription a public limited company cannot make any allotment of share unless the amount of. After evaluating these alternatives, the company decided to issue 1,00,000, 9% debentures on 1st april, 2008. The process of creating new shares is known as allocation or allotment. The company offered for public subscription all the shares.
Nov 19, 2018 difference between shares and debentures last updated on november 19, 2018 by surbhi s nowadays, investment in shares and debentures has taken a dominant position in the society, as people of different ages, religion, sex, and race invest their hard earned money, with an aim of getting better returns. A limited company issued 25,000 ordinary shares of rs. Issue of shares equity shares and preference shares. Ordinary shares are also known as common stock and equity shares. Difference between shares and debentures with similarities. Guru, you can access to ts grewal book solutions in free pdf for accountancy for class 12 so that you can refer them as and when required. There are basically two types of shares equity and preferential. In this article we will discuss about the issue of debentures.
The capital is contributed by the shareholders through the subscription of shares. The certificate of incorporation of a company is issued by registrar of. This chapter deals with the accounting for share capital of companies. Jul 01, 2019 a issue 47, 500 equity shares at a premium of.
Accounting for share capital transactions issue of shares at par, at premium and at discount. This issue of debentures that happens can be of three kinds, just like an issue of shares, at par, at a discount, and at a premium. May 02, 2016 shares issued for consideration other than cash sometimes a company purchases some assets from the vendor and instead of paying the vendor in cash, the company may decide to issue shares to vendors is known as issue of shares for consideration other than cash shares can be issued to vendors at par, premium. The following are some of the differences between equity shares and debentures. Accounting for share capital class 12 notes accountancy. Holders of preference shares will have a right to vote if the dividend remains in arrears for a. Different types of shares and debentures by lawfarm team march 19, 2018 capital is needed by the companies, both private and public to increase their productivity or market reach or to purchase latest modern equipment and machines. Ideal cpt accounts issue, forfeiture and reissue of shares 207 calculation of profit on reissue of forfeited shares.
Ts grewal solutions for class 12 accountancy company account accounting for share capital volume ii question 1. Public applied for 4,50,000 shares and allotment was made to. The students should practice these question papers to gain perfection which will help him to get more marks. Corporate accounting manonmaniam sundaranar university. The interest paid to them is a charge against profit in the company s financial statements.
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