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CBSE Class 12 Accounting for Share Capital Notes: Here, students can find revision notes of CBSE Class 12 Accountancy Chapter 1 Accounting for Share Capital along with a PDF download link for the same.
Accounting for Share Capital Class 12 Notes: This article hands out complete and detailed Revision Notes for CBSE Class 12 Accountancy Part 2 Chapter 1, Accounting for Share Capital. Here, Accounting for Share Capital class 12 notes pdf download link has been attached below. Students have free access to the PDF link so that they can save and download the CBSE Accounting for Share Capital Class 12 short notes for future reference.
Class 12 Accountancy Chapter 1 notes are for students of CBSE Class 12 with Commerce stream. These short and full revision notes will help you solve your doubts regarding the concepts present in the chapter. At the same time, notes are useful while revising for examination. Usually, it is recommended that students should prepare their own notes while reading the chapters. But, given the busy schedule of students in today’s day and age, they can look for the revision notes attached here.
Related:
CBSE Class 12 Accountancy Syllabus 2023-2024
CBSE Class 12 Accountancy MCQs
NCERT Solutions for Class 12 Accountancy
CBSE Class 12 Accountancy Chapter 2 Mind Maps
CBSE Class 12 Accountancy Chapter 1 Revision Notes
CBSE Class 12 Accountancy Chapter 2 Revision Notes
Revision Notes for CBSE Class 12 Accountancy Chapter 1 Accounting for Share Capital
What is a Company?
A company is an organization consisting of individuals called ‘shareholders’ who can act as legal persons through the board of directors. They are called shareholders since they hold the shares of the company.
What is a Share?
Share is a small contribution to the capital of the company that makes the share giver a partner in the business. It gives ownership to the shareholder. Nowadays, public companies offer shares to the general public, thus making the public the shareholders of the company.
What are the features of a company?
The features of a company are as follows:
- Can be formed only on the provisions of the Company law.
- Has a separate legal entity which is distinct and separate from its members
- The members of the company have a limited liability which extends to unpaid amount of shares.
- The company continues to exist and thrive irrespective of changes in the members.
- Every company is required to have its own seal which acts as official signatures of the company.
- The shares of the company are transferable
- A company being a legal entity can sue as well as be sued.
What are the kinds of companies?
The kinds of companies are presented below:
- Companies Limited by Shares– The liability of members is limited to the extent of the nominal value of shares held by them.
- Companies Limited by Guarantee– The liability of the members will arise only in the event of its winding up.
- Unlimited Companies– When there is no limit on the liability of its members, the company is called an unlimited company.
- Public Company– The company which is not a private company or not a subsidiary of a private company is called a public company.
- Private Company-The company that restricts its transfer of shares needs at least 2 members to start the company and does not exceed 200 members is called a private company.
- One Person Company– Company which has only one person as a member is called OPC.
Share capital of a company
People who offer shares to a company are called shareholders and the amount of capital contributed by them is called the share capital of the company. The common capital account that merges the identities of various shareholders is called a share capital account.
Categories of Share Capital
Share Capital can be categorized as following:
- Authorized Capital- The amount of share capital that a company is authorized to issue by its Memorandum of Association is called authorized capital. The company cannot raise more than the amount of capital as specified in the Memorandum of It is also called Nominal or Registered capital
- Issued Capital- The part of authorized capital that is offered to the public for subscription is called issued capital and the part of authorized capital that is not offered to the public for subscription is called unissued capital.
- Subscribed Capital- The part of issued capital that is actually subscribed by the public is called subscribed capital.
- Called Up Capital- The part of subscribed capital that has been asked from the public by the company is called up capital.
- Paid-Up Capital- The portion of the called-up capital which has been actually received from the shareholders is called paid-up capital.
- Uncalled Capital- The portion of the subscribed capital which has not yet been called up is called uncalled capital.
- Reserve Capital- The amount of capital saved by the company in the event of winding up of the company is called reserve capital.
Nature and Classes of Shares
The share which fulfills the following conditions is called a preference share.
a)That it carries a preferential right to a dividend to be paid either as a fixed amount payable to preference shareholders or an amount calculated by a fixed rate of the nominal value of each share before any dividend is paid to the equity shareholders.
b)That with respect to capital it carries or will carry, on the winding up of the company, the preferential right to the repayment of capital before anything is paid to equity shareholders.
The shares which do not enjoy any preferential right in the payment of dividends or repayment of capital, are termed as equity/ordinary shares.
Procedure of Issue of Shares
The below-mentioned steps are followed as the procedure for issuing of shares:
- Issue of Prospectus- The company issues a prospectus (official announcement that a company has been newly opened) to the public. Prospectus issues detailed information about the company and the money allocation procedure to be followed by it.
- Receipt of Applications– Whenprospectus is issued to the public, prospective investors intending to subscribe to the share capital of the company would make an application along with the application money and deposit the same with a scheduled bank as specified in the
- Allotment of Shares- If a minimum subscription has been received, the company may proceed with the allotment of shares after fulfilling certain other legal formalities. Letters of allotment are sent to those to whom the shares have been allotted, and letters of regret to those to whom no allotment has been made.
Accounting Treatment
- On Application- Initially, individual accounts are opened for each All money received along with the application is deposited with a scheduled bank in a separate account opened for the purpose.
To download the complete Revision Notes for CBSE Class 12 Accounting for Share Capital, click on the link below
Also Check:
CBSE Class 12 Commerce Study Materials
NCERT Solutions for Class 12 Commerce
CBSE Class 12 Business Studies MCQs
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