Question

Balance in share forfeiture account is shown in the balance sheet under the heading _____________.

• A. Capital Reserve
• B. Current liabilities
• C. Share capital account
• D. Current liabilities and provisions

Answer 1

Answer: (C)

Share capital account

When a shareholder defaults in paying allotment money or call money the company has the power to forfeit the shares. Now whatever amount is received by the company on forfeiting the shares is an capital receipt for the company and hence it is shown as a part of the share capital. And also as per the format prescribed by Schedule III to the Companies Act 2013, share forfeiture balance has to be shown under share capital.