Accounting for Share Capital

What is Share Capital?

A company, being an artificial person, cannot generate its own capital which has necessarily to be collected from several persons. These persons are known as shareholders and the amount contributed by them is called share capital.

What is the Company?

A company is an artificial entity that is created by the law with the presence that is independent of its owners. To put it in other words, a company is an artificial person created by law, with a different name, a common seal and a constant continuation of members.

A company normally increases its capital in terms of debentures (debt capital) and shares (called share capital).

A firm is a form of establishment is the 3rd level in the development of forms of the establishment. Its capital is contributed by a huge number of people known as shareholders who are the actual owners of the firm. Neither it is feasible for them to be a part of the company’s management nor contemplated desirable. Hence, they select a Board of Directors (BoD) as their representative to regulate the matter of business concern of the company.

All the matter of business concern of the company is regulated by the provisions of the Companies Act, 2013. A company is a company integrated or certified under the Companies Act, 2013 or below any other previous Companies Acts. In accordance with the Chief Justice Marshall, ‘A company is a person, artificial, invisible, intangible and existing in the eyes of law. Being a minor creation of law, it has only those properties which the treaty of its creation deliberate upon it, either expressly or as incidental to its very existence.

The above mentioned is the concept that is explained in detail about Accounting for Share Capital for the class 12 Commerce students. To know more, stay tuned to BYJU’S.

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