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?
- Rs. 1300l
- Rs. 500
- Rs.200
- Rs. Nil Ans – c