Scribd Logo
Upload

Welcome to Scribd!

  • Notes On Company Accounts

    Uploaded by

    tahreem
    6 views2 pages
    The document provides an introduction to company accounts. It outlines that companies are separate legal entities that normally have limited liability. Companies issue capital in the form of ordinary or preference shares. Owners and management may be separate, creating an agent/principal relationship. Shareholders' liability is limited to their capital contribution, and any unpaid debts become losses for creditors. Companies can distribute profits through dividends or bonus shares. To issue shares, a company needs approval to set its authorized capital and share price. Authorized capital can increase if needed. Shares issued are called issued shares, and amounts paid above par value are share premium. Companies can be public or private, and operate for profit or non-profit.

    Original Description:

    jj j

    Original Title

    Notes on Company Accounts

    Copyright

    © © All Rights Reserved

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document provides an introduction to company accounts. It outlines that companies are separate legal entities that normally have limited liability. Companies issue capital in the form of ordinary or preference shares. Owners and management may be separate, creating an agent/principal relationship. Shareholders' liability is limited to their capital contribution, and any unpaid debts become losses for creditors. Companies can distribute profits through dividends or bonus shares. To issue shares, a company needs approval to set its authorized capital and share price. Authorized capital can increase if needed. Shares issued are called issued shares, and amounts paid above par value are share premium. Companies can be public or private, and operate for profit or non-profit.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    6 views2 pages

    Notes On Company Accounts

    Uploaded by

    tahreem
    The document provides an introduction to company accounts. It outlines that companies are separate legal entities that normally have limited liability. Companies issue capital in the form of ordinary or preference shares. Owners and management may be separate, creating an agent/principal relationship. Shareholders' liability is limited to their capital contribution, and any unpaid debts become losses for creditors. Companies can distribute profits through dividends or bonus shares. To issue shares, a company needs approval to set its authorized capital and share price. Authorized capital can increase if needed. Shares issued are called issued shares, and amounts paid above par value are share premium. Companies can be public or private, and operate for profit or non-profit.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Introduction to Company Accounts

     Company by the virtue of Law of the state is a separate legal entity.


     Companies normally have limited liability
     Companies issues capital in the form of Shares (Ordinary / Common and Preference)
     Owners and Management may be different in which case it will be and Agent / Principal
    relationship
     Liability of the all shareholders will be limited to their capital, any liability which stays unpaid
    due to in sufficient funds / asset by company will be a loss for creditors
     Companies can distribute profit through dividend and bonus share
     To issue shares company needs to get approval from the concerned authority which will
    approve and allow a specific authorized capital mentioning number of shares and base price per
    share
     Authorized share capital can be further increased if needed
     No of shares issued by a company are called issued shares
     If shares are issued over and above base price the same is termed as share premium
     Companies could be public or private and Profit or non profit organization

    Further Share Issue

    1. Right Issue : this is just like a normal share issue this is done in proportion to previous holding ratio

    Entry Made:

    Bank Dr (Total amount received)

    Share Capital Cr (Only by face Value)

    Share Premium Cr (amount over and above face value)

    2. Bonus Issue: Share are distributed to existing share holders In their holding ratios

    Entry Made:

    Reserve (Capital / Revenue) Dr – Face Value

    Share Capital (Cr) Face Value


    Similarly, Shares can also be redeemed if are redeemable:

    For Redemption of Shares Capital Redemption reserve is required to be made equivalent to Share Face
    Value for the protection of creditors.

    Shares Preference or Ordinary redeemable shares can also be redeemed at premium. In this case
    premium if originally received can be adjusted from share premium account any excess amount to be
    adjusted from P & L Account.

    Reconstruction of Shares:

    If the company has negative reserve they cannot issue dividends, so at times when company is
    restructuring itself and looking forward for a new startup can go for a reconstruction where in all
    negative reserves are adjusted against capital reduction in face value to clear negative reserve allowing
    future profit to be distributed if available.

    You might also like