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JAIIB-AFB-MOD-C- Company Accounts

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
PAID UP CAPITAL

ISSUE OF SHARE AT PAR

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

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/
allotment a/c
Share capital A/c
Share premium A/c

Debited
-
-

-
Credited
Credited

Issue of shares at discount

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

Debited
Debited
-

-
-
Credited

Forfeiture of shares

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

Debited
-
-

-
Credited
Credited

Re-issue of shares

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

Debited
Debited
-
-

-
-
Credited
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?