Question

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

Answer 1

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.