JOINT STOCK COMPANY

1. CHAPTER 6
COMPANY ACCOUNTS
ACCOUNTING FOR SHARE CAPITAL

2. COMPANY-MEANING
A COMPANY IS AN ASSOCIATION OF
PERSONS WHO CONTRIBUTE MONEY
OR MONEY’S WORTH TO A COMMON
STOCK AND USE IT FOR A COMMON
PURPOSE

3. DEFINITION
SEC.3(1) OF THE INDIAN COMPANIES ACT DEFINES A
COMPANY AS “A COMPANY FORMED AND
REGISTERED UNDER THIS ACT, OR AN EXISTING
COMPANY.” AN EXISTING COMPANY MEANS A
COMPANY FORMED AND REGISTERED UNDER ANY
OF THE FORMER COMPANIES ACTS

4. CHARECTERISTICS OF A COMPANY
SEPARATE LEGAL ENTITY
PERPETUAL SUCCESSION
LIMITED LIABILITY
TRANSFERABILITY OF SHARES
SEPERATION OF OWNERSHIP FROM
MANAGEMENT (Cntd.)

5. CHARECTERISTICS OF A COMPANY
• COMMON SEAL
• RIGHT OF ACCESS TO INFORMATION
• MAINTENANCE OF BOOKS
• PERIODIC AUDIT
• COMPULSORY REGISTRATION

6. TYPES OF COMPANIES

7. PRIVATE COMPANY
• A PRIVATE COMPANY MEANS A COMPANY
WHICH BY ITS ARTICLES,
a)Restricts the right to transfer its shares
b)Limits the number of members to fifty
c)Prohibits any invitation to the public to
subscribe for any shares or debentures

8. Classification of share capital

9. KINDS OF SHARES
PREFERENCE SHARES
EQUITY SHARES OR
ORDINARY SHARES

10. TYPES OF PREFERENCE SHARES
CUMULATIVE
NON -CUMULATIVE
PARTICIPATING
NON-PARTICIPATING
REDEEMABLE
NON-REDEEMABLE
CONVERTIBLE
NON-CONVERTIBLE

11. ISSUE OF SHARES
• FOR CASH
• FOR CONSIDERATION
OTHER THAN CASH

12. ISSUE OF SHARES FOR
CASH
oISSUE OF PROSPECTUS
oAPPLICATION FOR SHARES
oMINIMUM SUBSCRIPTION
oALLOTMENT OF SHARES
oLETTER OF ALLOTMENT/LETTER OF
REGRET
oMAKING CALLS

13. ACCOUNTING TREATMENT FOR ISSUE
OF SHARES FOR CASH
• ON RECEIPT OF APPLICATION MONEY
BANK A/C Dr.
SHARE APPLICATION A/C

14. • ON ALLOTMENT OF SHARES
SHARE APPLICATION A/C Dr.
SHARE CAPITAL

15. • AMOUNT DUE ON ALLOTMENT
Share allotment a/c Dr.
Share capital

16. • ON RECEIPT OF ALLOTMENT
MONEY
Bank a/c Dr.
share allotment a/c

17. • ON MAKING CALLS ON SHARES
a) CALL MONEY DUE
Share call a/c Dr.
share capital a/c

18. b)ON RECEIPT OF CALL MONEY
Bank a/c Dr.
Share call a/c

19. WHEN COMPANY MAINTAINS COMBINED
ACCOUNT FOR APPLICATION &ALLOTMENT
a)On receipt of application money
Bank a/c Dr.
Share application &allotment a/c

20. WHEN COMPANY MAINTAINS COMBINED
ACCOUNT FOR APPLICATION &ALLOTMENT
b)On transfer of application money & allotment
money to share capital
Share application &allotment a/c Dr.
Share capital a/c

21. WHEN COMPANY MAINTAINS COMBINED
ACCOUNT FOR APPLICATION &ALLOTMENT
c)On receipt of allotment money
Bank a/c Dr.
Share application &allotment a/c