an institution

Golapbag More, Burdwan.

Dumdum, Mobile : 9932926701
1 ACCOUNTANCY THEORY P.P
SUB:- COMPANY ACCOUNTAS jk jkj

Q ) Nominal / Authorised capital:This is the nominal value of the share capital which a company is
authorized to issue by its Memorandum of Association.
Issued capital:This is the nominal value of share capital which are offered to the public for subscription.
Q ) Issued Share Capital
Issued shares are the shares sold to and held by investors of a company. Issued share capital is simply the
monetary value of the shares of stock a company actually offers for sale to investors. The Issued
Capital refers to the number of shares issued by the company to the shareholders.
Q) Subscribed Share Capital
Subscribed shares are shares that investors have promised to buy. These shares are usually subscribed as
part of an initial public offering (IPO). Subscribed share capital refers to the monetary value of all the shares
for which investors have expressed an interest.
Q ) Minimum subscription:The minimum subscription is that amount of capital stated in the prospectus as
being the minimum which, in the opinion of the directors, is necessary for the success of the enterprise. If this
minimum is not reached, all the capital collected must be returned to the subscribers.

Q ) Capital Redemption Reserve

When the redeemable preference shares are redeemed out of profit or reserve available for dividend, a
sum equal to the face / nominal value of redeemable preference shares must be transferred to a reserve
known as Capital Redemption Reserve.
This reserve can only be utilized for the purpose of issuing fully paid bonus share to the existing
shareholders.
Q )Underwriter
An underwriter is a person or firm undertaking to sell shares to the public. In case the underwriter fails
to sell shares to the public, the underwriter himself purchases such shares and pay the purchase price to the
company as per contract.
Underwriting Commission The consideration payable to the underwriters for. underwriting the issue of
shares or debentures of a company is called underwriting. commission. Such a commission is paid at a
specified rate on the issue price of the.
Q )
BASIS FOR
CAPITAL RESERVE RESERVE CAPITAL
COMPARISON

Meaning The profit earned by the company
through special transaction, that is not
available for distributing dividend to
shareholders is known as Capital
Reserve.
The part of uncalled capital,
that is called up only on the
event of company's liquidation
is known as Reserve Capital.

Created out of Capital profits Authorized capital

Disclosure On the equity & liabilities side of the Not disclosed at all
balance sheet under the head Reserve
and Surplus.

Need of creation Mandatory Voluntary

Specific condition No such conditions Special Resolution should be

passed at AGM

Utilization To write of fictitious assets or capital Only when the company is

losses etc. about to wind up.
Q ) Capitalisation of profit / reserve
Capitalisation of profits and reserve is the process of converting profits or reserves into paid up capital.
Source of its are Free Reserves, Secutiries Premium Account, Capital Redemption Reserve Account.
Way to capitalize profits or reserves: (a) by paying up amounts unpaid on existing partly paid shares so as to
make them fully paid up shares, or (b) by issuing fully paid bonus shares to the existing members.
Q ) Bonus share
In spite of having a large amount of profit if a company cannot pay dividend in cash due to shortage of
liquid funds, it may issue new shares to the existing shareholders free of cost out of accumulated profit or
reserves, in lieu of paying dividend in cash. These shares are known as Bonus share.
Bonus share can be issued from the following sources
a) Profit & Loss Account
b) General Reserve
c) Share Premium Account
an institution
Golapbag More, Burdwan.
Dumdum, Mobile : 9932926701
2 ACCOUNTANCY THEORY P.P
d) Capital Redemption Reserve Account jk jkj

*Q ) Right Issue:-Where at any time, a company having a share capital proposes to increase its subscribed
capital by the issue of further shares, right shares shall be offered to persons who, at the date of the offer, are
holders of equity shares of the company in proportion, as nearly as circumstances admit, to the paid-up share
capital on those shares by sending a letter of offer . The offer shall be made by notice specifying the number of
shares offered and limiting a time not being less than fifteen days and not exceeding thirty days from the date
of the offer within which the offer, if not accepted, shall be deemed to have been declined;
*Q 19)Bonus Issue Vs. Right Issue
Right Issue Bonus Issue
1 When Right Shares are Allotted, the Company When Bonus Issue are Allotted the Company does not
receives the issue price of Share. receive anything from the Share holder.

2 The existing Share holder has right to renounce No existing Share holder has a right to renounce the
the Shares offered to him. Bonus Shares.
3 Money received by issue of Right Shares must Since no money is received by the Company by issue
be kept in a Separate Bank Account. of Bonus Shares, there is no requirement of keeping
money in Separate Bank A/c.