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JAIIB CAIIB STUDY MATERAILS

Unit – 17 & 18 : Company Accounts

Features of a Joint stock Company

  • Incorporated association
  • Artificial person
  • Perpetual succession
  • Common seal
  • Limited liability
  • Separation of management from ownership
  • Transferability of shares
  • Separate legal status
  • Large membership

Types of companies

On the basis of incorporation On the basis of ownership On the basis of liability
Chartered company Private company Co.limited by shares
Statutory company Public company Co. Ltd. by guarantee
Registered company Government company Co. with unlimited liability
Foreign company Holding company  

SHARE CAPITAL

  • EQUITY
  • PREFERENCE

–    CUMULATIVE

  • REDEEMABLE
  • PARTICIPATING

  • AUTHORISED CAPITAL
  • ISSUED CAPITAL
  • SUBSCRIBED CAPITAL
  • CALLED CAPITAL

-BANK – SHARE APPLICATION Debited – – credited SHARE APPLICATION SHARE CAPITAL Debited – – Credited Over subscription Debited – -share application – Credited -share capital – Credited -bank (refund) – Credited -share allotment        

PAID UP CAPITAL ISSUE OF SHARE AT PAR

SHARE ALLOTMENT/SHARE CALL

Share allotment a/c Share capital a/c Debited – – Credited
Bank a/c Share allotment a/c Debited – – Credited
Share call a/c Share capital a/c Debited – – Credited
Bank a/c Share call a/c Debited – – Credited
Calls in arrears a/c Share allotment a/c Share call a/c Debited – – – Credited Credited

Issue of shares at premium

Share application/ Debited
allotment a/c Credited
Share capital A/c Credited
Share premium A/c    

Issue of shares at discount

Share allotment A/c Debited
Discount on issue of shares A/c Debited
Share capital A/c Credited

Forfeiture of shares

Share capital A/c Debited
Call in arrears A/c Credited
Forfeited shares A/c Credited

Re-issue of shares

Bank A/c Debited
Forfeited shares A/c Debited
Share capital A/c Credited
Capital reserve A/c Credited

Issue of Bonus shares

Cap. Red. Reserve A/c Share premium A/c Capital reserve A/c Gen Reserve A/c Profit & Loss A/c Bonus to shareholders A/c Debited Debited Debited Debited Debited – – – – – – credited
Bonus to shareholders A/c Equity share capital A/c Debited – credited

Balance sheet equation

LIABILITIES ASSETS
Capital 300.00 Fixed assets 700.00
Reserves 200.00 Current assets 300.00
Term Loans 300.00    
Current Liabilities 300.00    
Total 1000.00 Total 1000.00

Balance sheet equation

Assets = Liabilities  
Assets = Liabilities (+) Capital
Liabilities = Assets (-) Capital
Capital = Assets (-) Liabilities

Assets = Liabilities

Assets = Capital + Liabilities Assets =Net worth + Liabilities

Net worth = Capital + Reserves& Surplus Net worth = Assets Less Liabilities

B/s Equation Example

If the net worth of the business is Rs.1100,fixed assets are Rs. 600, current assets Rs.400, nvestments Rs.300, current liabilities Rs. Nil, what is the amount of claim to outsiders?

  1. Rs. 1300l
  2. Rs. 500
  3. Rs.200
  4. Rs. Nil Ans – c

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