share application account is: CBSE Class 12 Accountancy Accounting For Share Capital MCQs Set A, Multiple Choice Questions

reissued at rs

Generally, the capital of a company is divided into small parts known shares, the ownership of which is transferable subject to certain terms s conditions. Answer Listed companies are those companies whose shares are listed on a recognised stock exchange for public trading. If a Share of Rs. 10 on which Rs. 8 is called-up and Rs. 6 is paid is forfeited.

Borrowing money and issuing shares of stock are a. None of these answer choices are correct. Pass necessary journal entries for the following. 1.Goods supplied by surjit for rs were entred in sales book. Iam working with tally ERP.9,but iam dont prepared reconciliation,trial balance,profit&loss,balance sheet etc.bcoz all these activicties done in head office.plz give me citeria where iam prepared.

2) Share Forfeiture, Capital Reserve and Securities premium, all are nominal accounts as they represent loss and gain to the business concern. Contributed Surplus is an accounting item that’s created when a company issues shares above their par value or issues shares with no par value. If a company raised $1 million from shares that had a par value of $100,000 it would have a contributed surplus of $900,000. The par value of shares is essentially an arbitrary number, as shares cannot be redeemed for their par value. One applicant, whom shares had been allotted on pro-rata basis, did not pay the amount due on allotment and on the call, and his 400 shares were forfeited.

capital reserve

Non-Redeemable Preference Shares These are the preference shares, which do not carry with them the arrangement regarding redemption. According to Section 80 , no company limited by shares shall issue irredeemable preference shares or preference shares redeemable after the expiry of 20 years from the date of issue. Redeemable Preference Shares When shares are repaid after some specified time in accordance with the terms of issue they are called redeemable preference shares. It is noted that the company should pay dividend out of profits only.

To pay premium on the redemption of preference shares or debentures of the company. If the Applicant are made Partially Allotment (or Pro-rata Basis) In case of over-subscription, when a company allots shares rateable to all the applicants, it is called as pro-rata allotment. In such a case the main problem is what to do with the excess amount received on application.

Short Answer Type Questions

Therefore, its incorporation under the share application account is Act is must. Without such registration, no company can come into existence. Being created by law, it is regarded as an artificial legal person. The buy-back of the shares should be completed within 12 months from the date of passing the special the resolution.


Securities premium account is shown on the assets side of the balance sheet. A) Declared dividend should be classified in the balance sheet as a current liability. B) Sweat Equity Shares issued at a discount must belong to a class of shares already issued. D) All companies having share capital is required to obtain certificate of commencement of business.

Share Application Account is in the nature of:

The discount was adjusted on allotment. Give journal entries and prepare balance sheet. Software solution India Ltd inviting application for 20,000 equity share of Rs.100 each, payable Rs.40 on application, Rs.30 on allotment and Rs.30 on call.


Share allotment is the creation and issuing of new shares, by a company. New shares can be issued to either new or existing shareholders. Share allotment can have implications for any existing shareholders share proportion.

Allotment was made on pro-rata basis. Excess money on application was adjusted against the amount due on allotment. Give journal and cash book entries to record these transactions of the company. Also prepare the Balance Sheet of the company.

What is the nature of share application account?

1 on applications, Rs. 2 on allotment and Rs. 3 on first call. They all failed to pay their arrears and second call of Rs. 4 per share as well. All the shares of A, B and C were forfeited and subsequently reissued at Rs. 11 per share as fully Paid-up. Allhuwalia Ltd. issued 1,000 equity shares of Rs. 100 each as fully paid-up in consideration of the purchase of plant and machinery worth Rs. 1,00,000.

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Understand what a nominal account and a real account are. Know about real account vs nominal account with the help of real and nominal account examples. B) Declared dividend should be classified in the balance sheet as a current liability. A Building was purchased for ₹9,00,000 and payment was made in ? Securities Premium Reserve A/c will be ……………….

As Equity

A personal account is an account for use by an individual for that person’s own needs. It is a relative term to differentiate them from those accounts for business or corporate use. Application were received for 50,000 shares and allotment was made on prorata basis. Excess money on application was adjusted on sums due on allotment. The shares are reissued subsequently for Rs.11 per share as fully paid. Applications were received for 1,60,000 shares.

  • Share your current account with others without revealing your password, securely.
  • If some applications are rejected by the directors, the money received on such applications is refunded to the applicants.
  • A personal account is an account for use by an individual for that person’s own needs.
  • C) Issued capital is that part of authorised capital which is applied by the public and allotted by company.

D) Issued capital is that part of authorised capital which is applied by the public and allotted by company. According to Sec. 43 of the Companies Act 2013 „an equity share is share which is not preference share“. An equity share does not carry any preferential right.

Issue Of Shares MCQs with Solved answer (Question 6 to

The total subscription is divided into application, allotment money, and call money. The total application money is then shown in current liability until the allotment. Metacaf Ltd. issued 50,000 shares of ₹100 each payable ₹20 on application ; ₹30 on allotment ; ₹20 on first call and the balance on final call . Shankar, a shareholder holding 5,000 shares did not pay the first call on the due date. The second call was made and Shankar paid the first call amount along with the second call.

Thus, this share does not carry any preferential right or in other words, equity share is one which is entitled to dividend and repayment of capital after the claim of preference shares is satisfied. Usually the equity shareholders control the affairs of the company and hence right to all the profits after the preference dividend has been paid. X, the holder of 400 shares did not pay the call money and his shares were forfeited. Two hundred of the forfeited shares were reissued as fully paid at Rs.8 per share.

Excess application money is adjusted towards amount due on allotment and calls. Through the fundamental equation where assets equal liabilities plus equity, we can see that assets must be funded through one of the two. One method for a company to fund its assets is to create liabilities and, therefore, create obligations that must be paid back. The other option is to issue equity through common shares or preferred shares. In exchange for an ownership interest claim to the company, the company receives cash from investors and shareholders. Share capital is separate from other types of equity accounts.