COMPANY ACCOUNTS--ACCOUNTING FOR SHARE CAPITAL

 

COMPANY ACCOUNTS--ACCOUNTING FOR SHARE CAPITAL

INDEX

1. Meaning and Features of a company

2. Difference between Partnership & Company

3. Kinds of Companies

4. Difference among one person company, private and public company

5.Incorporation of Company

6. Meaning of Share Capital

7. Kinds of Shares

8. Difference between Preference Shares and Equity Shares

9. Accounting Treatment of Issue of Shares for cash at par and at a premium

10. Oversubscription of Shares

11. Under subscription of Shares

12. Accounting Treatment of Calls-in-Arrear

13. Accounting Treatment of Calls-in-Advance

14. Accounting Treatment of Shares issued for consideration other than cash

15. Accounting Treatment of Forfeiture and Reissue of Shares

16. Concept of Preferential Allotment

17. Private Placement of Shares

18. Employee Stock Option Plan (ESOP)

 

 

 

MEANING & FEATURES OF A COMPANY

“Company means a Company incorporated under this Act or any previous Company Law”

                                    --Section 2(20) of the Companies Act,2013

 

“A Company is an artificial person, created by law having separate entity with a perpetual succession and a common seal.”                             ----Prof. Haney

 

A Company is an association of persons formed and registered

Under the Companies Act. It is set up by the Process of Law. It is a Legal Person not having physical existence and has a separate legal entity that an artificial person separates from its

Members or shareholders. It normally has a Share Capital divided into units called shares, the owners of which are known a shareholders or members. It being separate from its shareholders, Insolvency or Death of a member does not affect the continuity of the company that Company continues even if a member becomes Insolvent or Dies.

 

FEATURES OF A COMPANY

1. INCORPORATION         A Company is an artificial person created by the process of law under the COMPANIES ACT 2013 Or under any previous Company Law.

2. SEPARATE LEGAL ENTITY   A Company is an artificial person having a legal entity separate from its members.

3. ARTIFICIAL PERSON   A Company is an artificial person in the eyes of law. It can own property, enter into a contract, conduct business, Sue or be Sued for its debts and actions.

4. PERPETUAL EXISTENCE     A company has a perpetual succession that the existence is not affected by the death, lunacy, or bankruptcy of its members or shareholders. The life of the company comes to an end only by winding up by the process of Law.

5. LIMITED LIABILITY     The liability of its members is limited to the value of the shares subscribed by them or the amount guaranteed. However, in the case of companies incorporated with unlimited liabilities, the liability of its members is unlimited.

6. TRANSFERABILITY OF SHARES       Shares of a Company are freely transferable, except in the case of Private Companies. Transfer of Shares of Private companies is regulated by its Articles of Association.

7. MANAGEMENT AND OWNERSHIP    A Company is not managed by all the members but by their elected representatives called DIRECTORS. Thus, management and ownership are separate.

8. COMMON SEAL     A company may or may not have a common seal. If it has a common seal, it is affixed to all the important documents of the Company.

Comments

Post a Comment

Popular posts from this blog

cash flow statement

    CASH FLOW STATEMENT CASH FLOW STATEMENT IS CLASSIFIED INTO THREE MAIN ACTIVITIES. 1.CASH FLOW FROM OPERATING ACTIVITIES. 2.CASH FLOW FROM INVESTING ACTIVITIES. 3.CASH FLOW FROM FINANCING ACTIVITIES.   1.OPERATING ACTIVITIES The operating activities section of the cash flow statement is a crucial financial reporting element that delves into the cash transactions directly associated with a company's core business operations. It serves as a detailed account of how a business generates and utilizes cash in its day-to-day activities, offering insights into its operational efficiency and financial health.   At its core, operating activities involve the cash flows resulting from the principal revenue-generating activities of a company. This includes cash receipts from customers, payments to suppliers, wages to employees, and operational expenses. Positive cash flow from operating activities signals that a company is effectively covering its operati...
Read more
CASH FLOW STATEMENT INTRODUCTION  A cash flow statement is a financial document that tracks the inflow and outflow of cash within an organization over a specific period. It provides a comprehensive overview of a company's liquidity, revealing how cash is generated and utilized in operational, investing, and financing activities. Broken down into three main sections, the cash flow statement includes operating activities (cash generated from core business operations), investing activities (cash flows from buying or selling assets), and financing activities (cash flows related to debt, equity, or dividend transactions). This statement is crucial for assessing a company's financial health, liquidity, and its ability to meet short-term obligations.
Read more

“Called-up” and “Paid-up” Capitals.Under the Companies Act 2013.

  “Called-up” and “Paid-up” Capitals Under the Companies Act 2013, "called-up capital" and "paid-up capital" are terms associated with a company's capital structure. Here's an elaboration on both:   1 . Called up Capital :    - Called-up capital refers to the portion of share capital that a company has called or demanded from shareholders.    - When a company issues shares, it may not require shareholders to pay the entire value immediately. Instead, it may ask them to pay in installments or on a specified schedule.    - Called-up capital represents the amount that the company has asked shareholders to pay at a particular point in time, whether in full or in part.   2 . Paid up Capital :    - Paid-up capital refers to the portion of called-up capital that shareholders have actually paid to the company.    - It represents the amount of money that shareholders have contributed to the company by purchasin...
Read more