MCQ
Fill in the Blanks
Select the appropriate answer from the alternative given below and rewrite the sentence.
When shares are forfeited, share capital account is _____________.
Options
debited
credited
adjusted
none of the above
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Solution
When shares are forfeited, share capital account is debited.
Explanation: Share Capital Account represents the liability of the company as it is the amount that is borrowed from the public. Therefore, at the time of forfeiture of shares, it is debited with a called-up amount.
Concept: Accounting Treatment of Forfeiture and Re-issue of Share
Is there an error in this question or solution?
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