---
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id: "66def51b3f8b4e9e69bd6faf"
title: "Accounting for Share Capital"
board: "CBSE"
curriculum: "CBSE"
class: "Class 12"
subject: "Accountancy"
book: "Accountancy Part - II"
chapter: "Accounting for Share Capital"
chapter_slug: "accounting-for-share-capital"
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---

# Accounting for Share Capital
This chapter focuses on the accounting for share capital within companies, which represent a critical component in the capital structure of corporate entities. Companies raise capital through shares and are governed by the provisions of the Companies Act, 2013.

---

## Knowledge Snapshot

| Field | Details |
| :--- | :--- |
| Class | Class 12 |
| Subject | Accountancy |
| Book | Accountancy Part - II |
| Chapter | Accounting for Share Capital |
| Pages | 1-74 |

---

## Chapter Summary

### Short Summary
The chapter outlines the nature of companies, the features distinguishing them from other organizational forms, and the accounting treatment related to share capital.

### Detailed Summary
A company is an organized form of business entity that collects capital from a large number of shareholders who remain distinct from the business organization. Governed by the Companies Act, 2013, a company operates as a legal entity capable of entering into contracts, owning property, and suing or being sued. A company's features include being a body corporate, having a separate legal identity, limited liability for its members, perpetual succession, and a common seal used for signing documents. Shares represent ownership and may be freely transferred in a public limited company.

---

## Topic-Wise Explanation

### Features of a Company
A company is characterized as a body corporate governed by law, possessing a distinct legal identity, and having features like limited liability, perpetual succession, a common seal, and the capability to sue or be sued.

### Kinds of Companies
**Omission:** Specific details regarding the kinds of companies are not provided in the context.

### Share Capital of a Company
Share capital refers to the funds raised by the company through the issuance of shares. This is a crucial aspect of a company’s financial framework.

### Nature and Classes of Shares
**Omission:** Specific details regarding the nature and classes of shares are not provided in the context.

### Issue of Shares
**Omission:** Specific details regarding the issue of shares are not provided in the context.

### Accounting Treatment
**Omission:** Specific details regarding the accounting treatment for share capital are not provided in the context.

### Forfeiture and Reissue of Shares
**Omission:** Specific details regarding forfeiture and reissue of shares are not provided in the context.

---

## Core Ideas

| Idea | Explanation |
| :--- | :--- |
| Company as Legal Entity | A company has its own legal identity, separate from those of its shareholders. |
| Limited Liability | Shareholders are only liable up to the unpaid amount on their shares. |

---

## Important Points for Revision

* A company is a corporate entity created under law.
* Shareholders elect a Board of Directors to manage its affairs.
* The liability of shareholders is limited to their unpaid shares.
* Companies have perpetual succession, unaffected by member changes.
* A common seal is mandatory for validating documents.
* Shares in a public company can be transferred freely.
* A company can engage in legal actions in its own name.

---

## Source Attribution

| Field | Value |
| :--- | :--- |
| Source | Edzy |
| Reference Type | examSubjectBookChapter |
| Reference ID | 66def51b3f8b4e9e69bd6faf |
| Canonical URL | https://www.edzy.ai/cbse-class-12-accountancy-accountancy-part-ii-accounting-for-share-capital |
| Markdown URL | https://www.edzy.ai/okf/chapter/cbse-class-12-accountancy-accountancy-part-ii-accounting-for-share-capital.md |