Question

Under which of the following head/sub-head is ‘Forfeited Shares’ presented in the Balance Sheet of a Company?

Options

• Reserves and Surplus

• Share Capital

• Other Long-term Liabilities

• Other Current Liabilities

Answer 1

Share Capital

Explanation:

The amount collected on forfeited shares is kept in the Share Forfeiture Account. Under Schedule III of the Companies Act, 2013, this amount is considered part of the company’s equity capital. It is presented under the sub-head “Share Capital” and is added to the Subscribed Capital in the Notes to Accounts until those shares are reissued.