Such borrowings may take the form of both shortterm and longterm borrowings. There are various types of debentures that a company can issue, based on security, tenure, convertibility etc. Share capital refers to the funds that a company raises in exchange for issuing an ownership interest in the company in the form of shares. In this lecture i have explained few basic provisions relating to formation of a company and explained the journal entries relating to issue of shares of a company. Shortterm borrowings by way of promissory notes, bills of exchange, bank overdrafts, cash credits, public deposits, etc. This video going to explain the basic terms related to issue of shares in malayalam. The shares represent ownership of the shareholders in the company. If a corporation wants funds for extension and development purposes while not increasing its share capital, it will borrow from the final public by issuance certificates for a hard and fast amount of your time and at a hard and fast rate of interest. Shares 2 a share is the interest of the share holder in a company. When an asset is acquired by a company, the payment of asset price can be made by the issue of shares or in cash to the vendor. In this video we discussed about what is authorized capital, issued capital, unissued capital.
Issue of shares by cacma santosh kumar download chapter pdf from description. Section 284 of the companies act, 20 defines share as a share in the share capital of a company and it includes stock. Let us make an indepth study of the meaning, importance and measurement of cost of capital. Company accounts issue of shares video3 introduction.
The capital is contributed by the shareholders through the subscription of shares. Let us take a look at some of these types of debentures. Capital, debentures, final accounts of companies, corporate restructuring, consolidation of accounts, valuation of shares and intangible assets, liquidation. There are two general types of share capital, which are common stock and preferred stock. Ordinary share capital represents equity of a company and therefore its issuance is recorded as part of the equity reserves in the balance sheet. The payment of dividend can be made only out of current profits of the business and not otherwise. Company accounts issue of shares video3 introduction of issue of shares. Nature and types a company is an artificial person created by law, having separate entity with a perpetual succession and a common seal. Accounting for share capit al share and share capital. Share capital of the company can be explained as a fund or sum with which a company is formed to carry on the business and which is raised by the issue of shares. We are discuss authorised capital, issued capital,unissued capital, subscribed capital, unsubscribed capital. In the words of justice james, a company is an association of persons united for a common object.
These are very popular investments which are traded every day in the. In this case, shares are not open to the general public. As per as3, financing activities are activities that result in changes in the size and composition of the owners capital including preference share capital in case of a company and borrowings of the. Moreover, when shares are given against the purchase price, it is known as issue of shares for consideration other than cash. Company accounts issue of shares video1 introduction. Browse more topics under introduction to company accounts. Preference, or preferred shares give owners preferential dividend payments and equity rights in liquidation. Share, debentures or other interest of any member in a company shall be movable property. Debenture holders are, therefore, creditors of the company. Profits available for dividend to shareholders are known as divisible profits. The only thing they do in either ipo or fpo is to sell the shares or debentures to investors the term investor here represents retail investors, financial institutions, government, high net worth individuals, banks etc. Different modes ipo, private placements, preferential. Shares are a unit of ownership of a company that may be purchased by an investor. A company can raise funds through the issue of debentures, which has a fixed rate of interest on it.
Pdf corporate accounting i kabir tahir hamid academia. A broker is one who finds buyers for the shares or debentures of the company and gets the brokerage on the number of shares or debentures subscribed by the public through him. Transfer of shares in the case of public company is a prohibited b restricted c freely transferable d none of these 34. View essay about shares and debentures from commerce 1 at andhra loyola college autonomous, krishna. This chapter deals with the accounting for share capital of companies. Capital redemption reserve and debenture redemption reserve this arises as a result of a company redeeming its shares or debentures by using its retained. Issue of ordinary shares is accounted for by allocating the proceeds between the following accounts.
Corporations and governments may use both a debenture and a bond to raise capital. Company accounts issue of shares video3 introduction of issue of shares part 3. From the strict accountancy point of view, it is essential that dividends should be declared, unless there are compelling reasons otherwise, only if profits remain after meeting all expenses, losses, depreciation on fixed as well as on fluctuating assets, taxation, writing off past losses and after transferring at. Thus, a company means an association of persons formed for some common purpose or object.
This document is highly rated by b com students and has been viewed 59 times. Shares are the marketable instruments issued by the companies in order to raise the required capital. Capital redemption reserve account 40 underwriting of shares 56 underwriting commission 56 marked and unmarked applications 57 determining the liability of underwriters 57 accounting treatment relating to underwriting of shares or debentures 59 lesson roundup 67 selftest questions 68 lesson 2 debentures introduction 74 issue of debentures 74. Forfetire and reissue of shares 4 share capital total capital of the company is divided into a number of small indivisible units of a fixed amount and each such unit is called a share. Company accounts and analysis of financial statements important features of revised schedule vi 1. These are debentures that are secured against an assetassets of the company. It entitles the holder to ownership in the company. Excess of issue price over face value is the amount of premium. Ordinary shares are also known as common stock and equity shares. When shares are issued at a price higher than the face value also called par value or nominal value, it is called an issue of shares at a premium. Abc plc requires the equity injection to finance a new project. The characteristics of common stock are defined by the state within which a company incorporates.
A share certificate is issued by a company under its common seal. Whether they issue shares or debentures totally depends upon the concerned company. Ts grewal solutions class 11 and 12 accounting free pdf. Prohibition of private companies to offer shares or debentures or invite to deposit money.
Introduction to issue of shares, company lawlegal provisions including related restrictions, power, transfer to capital redemption reserve account and. A share is an indivisible unit of capital, expressing the ownership relationship between the company and the shareholder. Introduction to company accounts or introduction to corporate accounts with an example problem. About shares and debentures introduction in corporate. Corporate accounting 5 module 1 accounting for share capital a company is an association of persons who contribute money or moneys worth to a common stock and uses it for a common purpose. Shareholders whose shares are in a locked account with the cds due to a statutory. The certificate of incorporation of a company is issued by registrar of. It does not apply to i insurance or banking company, ii company for. Introduction to debentures share and discover knowledge. The ordinary shareholders have voting rights in the meetings of the company. They are entitled to receive dividend as are declared by the board of directors. Meaning of company and features the word company is derived from two latin words com and panis, where com means together and panis means bread. An underwriter is a person who agrees to take a specified number of shares or debentures, in case, not subscribed by the public. Types of companies, nature and formation of companies, shares, debentures, share capital, reserves and surplus, types of assets and liabilities, dividen, format of balance sheet only theory issue of shares.
The income earned on shares is the dividend, but the income earned on debentures is interest. Xyz co, is having 10% share capital held by another public company and 35% held by. The owner of shares in the company is a shareholder or stockholder of the corporation. The fixed value of a share, printed on the share certificate, is called nominal par face value of a share. Public company and public sector company both the companies are same. Introduction every company limited by shares must have a share capital. Provided that the issue of debentures with an option to convert. Debenture is issued under the common seal of the company acknowledging the receipt of money. Ts grewal solutions class 11 and 12 accounting free pdf download april, 2020 by kishen leave a comment when it comes to accounts than what immediately strikes the mind is the textbook by professor ts grewal. It applies to all indian companies preparing financial statement commencing on or after april 01, 2011.
In financial markets, a share is a unit used as mutual funds, limited partnerships, and real estate investment trusts. Basic concepts of company accounts meaning of shares. The share capital of a company is divided into units of smaller denominations. Specimen presentation of debenture certificates for. Redemption of debentures by conversion into new class of shares or. The equity share capital cannot be redeemed during the life time of the company. However, debentures are bonds that are not secured by the assets of.
Accounting for share capital 1 national council of. The first chapter in company accounts the issue of shares with introduction and understanding of shares and also an introduction to escrow account. The debenture issued by a company is an acknowledgment that the company has borrowed an amount of money from the public, which it promises to repay at a future date. Such shares are transferable by its members except in case of a private limited company, which may have certain restrictions on such transferability. Financial accounting ii as per the revised syllabus 201617 of mumbai university for first year, bbi, semester ii. Being are capital expenditure, these are therefore debited to the goodwill account.
1145 413 100 1528 543 825 530 15 1505 871 822 61 1195 1455 1370 184 1002 1464 1067 664 326 825 628 13 1006 339 1338 1210 1413 151 516 652 308 325 996 148 1495 1 848 742 765 14