Page 143 - DCOM205_ACCOUNTING_FOR_COMPANIES_II

Accounting for Companies – II

notes self assessment

Fill in the blanks:
1. If an amount has been wrongly written on the debit side of a nominal a/c, it will ................
the profit or ................ the loss.
2. If any mistake is committed in the real a/c, it will affect.................
3. A bill of exchange must be signed by the .................

4. The due date is calculated after adding ................ days of grace to the actual period of the
bill.
5. If the due date falls on a public holiday, then it becomes due on the ................ working
day.
6. If the agent is to be made responsible for debts, he is to be paid a commission called
.................

7. Amount paid to the person who is not an employee of the organisation is called .................
7.3 companies’ accounts

A joint stock company is formed by way of incorporation under the provisions of Companies
Act, 1956. Such companies are artificial legal persons, having their own legal entity separate
from members. It could be private company or a public company or a govt. company. While a
private company has minimum 2 members and maximum 50, a public or govt. company should
have minimum 7 members without any upper ceiling. In case of public company the minimum
capital should be `5 lac with 25%, from members of the public. The important documents which a
company must have are Memorandum of Association, Certificate of Incorporation and Certificate
of Commencement of business.

Did u know? Whenever a company wishes to raise capital it has to issue shares by way of a
prospectus. Prospectus is an invitation to the public to subscribe to the shares or debentures
which is signed by directors.
So far as share capital is concerned, it may be categorised as Authorised, issued, subscribed or
paid up capital as shown in Table 7.7 below:

table 7.7: Description of types of capital

Nature of Capital Description
Authorised Capital Maximum amount of capital, that a company could raise and is
capital clause in MOA of the company.
Issued capital The amount which has been offered to public for subscription. It
can be maximum up to the authorized capital.
Subscribe capital The number of shares and the face value of the shares which the
prospective shareholders want to take up.
Paid up capital The amount actually received from the shareholder against the
allotted shares.

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