Principles & Practice of Accounting
Company Accounts
5% weightage

Share Capital

Complete study guide with 6 practice questions, detailed explanations, and expert solutions for Share Capital in CA Foundation Principles & Practice of Accounting.

Practice Questions

6
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2
Medium
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Hard
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Study Notes: Share Capital

Free study material for CA Foundation Principles & Practice of AccountingCompany Accounts

Share Capital represents the amount of money invested by shareholders (members) in the company. Types: Authorized Capital (maximum amount company is permitted to issue per Memorandum), Issued Capital (amount actually issued to shareholders), Called-Up Capital (amount demanded from shareholders), Paid-Up Capital (amount actually received in cash). Share Capital Equation: Authorized ≥ Issued; Issued ≥ Called-Up; Called-Up ≥ Paid-Up. Equity Shares: Ordinary shares with voting rights, dividend rights, residual claims on liquidation. Preference Shares: Fixed dividend rights, preferential claims, limited voting rights (unless default). Classification in Balance Sheet: Share Capital shown under Equity (Shareholders' Funds); segregated by class (Equity, Preference). Disclosure Requirements: Number of shares, par value, details of changes during period, percentage held by promoters/government. Calls in Arrears: Amounts called but not yet received from shareholders; shown as deduction from Share Capital in Balance Sheet. Calls in Advance: Amounts received in advance of calling; shown as liability. Journal Entries: Issue of Shares at Par: Debit Bank, Credit Share Capital. Issue at Premium: Debit Bank, Credit Share Capital (par value), Credit Securities Premium Reserve (premium amount). Calls: Debit Call Receivable, Credit Called-Up Capital; later Debit Bank, Credit Call Receivable. Exam tip: Master the share capital hierarchy (authorized, issued, called, paid-up); understand preference vs equity shares; practice journal entries for various share capital transactions; know disclosure requirements.

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