explain the concept of shares and debentures in company final accounts? discuss the accounting treatment in case of forfeiture and reissue of shares with suitable examples? (20 marks assignment please answer)
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Answer:
A
company form of organisation is the third stage
in the evolution of forms of organisation. Its
capital is contributed by a large number of persons
called shareholders who are the real owners of the
company. But neither it is possible for all of them to
participate in the management of the company nor
considered desirable. Therefore, they elect a Board
of Directors as their representative to manage the
affairs of the company. In fact, all the affairs of the
company are governed by the provisions of the
Companies Act, 1956. A company means a company
incorporated or registered under the Companies Act,
1956 or under any other earlier Companies Acts.
According to Chief Justice Marshal, “a company is
a person, artificial, invisible, intangible and existing
only in the eyes of law. Being a mere creation of law,
it possesses only those properties which the charter
of its creation confers upon it, either expressly or as
incidental to its very existence”.
A company usually raises its capital in the form of
shares (called share capital) and debentures (debt
capital.) This chapter deals with the accounting for
share capital of companies
Explanation: